MONDAY 28 AUGUST 2023
90
The unravelling of the fast fashion era
BIG READ, PAGE 23
Taking a stand
Sponsors balk
at football kiss
Spanish football fans hold banners in
support of women’s team player Jenni
Hermoso at a match this weekend, after
the head of the country’s sporting feder-
ation was suspended for forcibly kissing
her after the World Cup final.
Luis Rubiales has resisted stepping
down despite public outrage after he
grabbed Hermoso as Spain’s players
received their medals after their World
Cup win last weekend. Hermoso said the
kiss was not consensual. Rubiales dis-
putes that. The incident has triggered a
#MeToo moment for Spanish sport,
with the hashtag #SeAcabo — meaning
“it’s over” — trending on social media.
Corporate sponsors moved yesterday
to distance themselves from Rubiales,
who has been suspended for three
months by global governing body Fifa.
The Spanish football association will
hold an urgent meeting today to discuss
the situation.
China’s sluggish economy will weigh
on global trade, western groups warn
3 Chemicals and travel vulnerable 3 Stimulus efforts bear no fruit 3 Swift recovery ‘not expected’
PATRICIA NILSSON — FRANKFURT
ANDREW EDGECLIFFE-JOHNSON
NEW YORK
ARJUN NEIL ALIM — LONDON
China’s gloomy business outlook threat-
ens to have global repercussions as the
world’s second-largest economy recov-
ers weakly from Covid-era lockdowns,
western companies have warned.
Recent corporate reports from a dis-
parate array of companies around the
world have documented their worries
over China, which has for decades pro-
vided a booming market for everything
from chemicals to cars, healthcare and
travel.
“Demand in China is sluggish,” said
Joel Smejkal, chief executive of US semi-
conductor manufacturer Vishay Inter-
technology. José Ferreira Neves, chief of
Telecoms sector’s pricing
strategy comes under fire
Millions of UK consumers will have to
contend with rises of up to 17.3 per
cent on their telecoms bills this year,
the biggest in Europe. The companies
argue their services are comparatively
cheap and that increases will help fund
much-needed investment. Consumer
rights groups counter that there is
little evidence to justify the ‘inflation
plus 3.9 per cent’ model, criticising it as
an ‘extra premium’ that threatens to
deepen the cost of living crisis.
Taken to task i PAGE 3
Subscribe In print and online
www.ft.com/subscribenow Tel: 0800 028 1407
NATIONAL NEWSPAPER OF THE YEAR
UK ecommerce fashion group Farfetch,
agreed: “The recovery is not as explo-
sive as everyone thought it would be.”
Californian lab instrument maker
Agilent suffered a revenue drop in the
latest quarter for which its China busi-
ness was “the major drive”, according to
chief executive Mike McMullen,
prompting the company to lower its
annual growth targets.
China’s economy lost momentum in
the second quarter of this year, data last
‘This isn’t just a simple,
cyclical issue. It looks
like something secular
and structural’
Tax offset on Ulez clean air levy is ‘shot
in the arm’ for London white van man
JIM PICKARD, GEORGE PARKER
AND PHILIP GEORGIADIS
Tradespeople driving polluting vehi-
cles in London’s controversial low
emissions zone can offset the charge
against tax, in a significant loophole to
mayor Sadiq Khan’s flagship clean air
scheme.
The ultra low emission zone will be
extended to all of Greater London
tomorrow, in a move that has prompted
fierce opposition from drivers in some
of the city’s outer districts.
The policy was blamed for the Labour
party’s failure to win the Uxbridge by-
election last month.
Motorists with vehicles that fall short
of emissions standards will have to pay a
£12.50 daily charge to drive into the
Ulez. The fee generally applies to petrol
engine vehicles built before 2006 and
STOCK MARKETS
month showed, as falling exports, weak
retail sales and a moribund property
sector weighed on growth.
Gross domestic product expanded 0.8
per cent in the three months to June,
down from 2.2 per cent in the first three
months of this year.
In an effort to stimulate the economy
Chinese authorities announced a pack-
age of financial market reforms this
month and have cut interest rates, but
by less than expected. Spending has
failed to pick up, exports are down and
consumer prices fell last month.
Qi Wang, chief investment officer of
MegaTrust Investment, which special-
ises in domestic Chinese stocks, said he
could not remember a time when con-
sumer, real estate and business confi-
dence had been so low. “This isn’t just a
diesel vehicles built before 2016, and
includes people driving into the zone for
work.
But the Greater London Authority
told the Financial Times that self-
employed workers would be able to
claim back the fee as part of their tax
return if the journey was “an excep-
tional trip solely for business”. The loop-
hole will come as a relief to traders who
fear they will have to replace their vehi-
cles at great expense, despite support
from a scrappage scheme.
HM Revenue & Customs said: “Self-
assessment customers are entitled to
tax relief on travel expenses, including
low emission zone charges, if they have
been incurred wholly and exclusively
for the purposes of the trade.”
HMRC said employees would also
be entitled to tax relief on the charges
if they drive in the zone as part of their
World Markets
CURRENCIES
Giving the oligarchs a way out of sanctions
GILLIAN TETT, PAGE 25
simple, cyclical issue. It looks like some-
thing secular and structural.”
“Chinese people are not so happy and
confident with their own government,”
said Martin Brudermüller, boss of
chemicals group BASF, one of the larg-
est foreign investors in China.
“They have a 20 per cent unemploy-
ment rate of young people now. They
have lost a lot of money in real estate.
And they are simply cautious on spend-
ing . . . The fundamentals for the next
decades are not changing but [the recov-
ery] is not kicking in, in the second half.”
Maike Schuh, chief financial officer of
German chemicals group Evonik,
described China’s recovery as “very
slow”, noting construction was still in cri-
sis and “unemployment, especially for
younger people, seems to be a real issue”.
work, although that does not include
commuting.
Small business groups welcomed the
news. “With the tax take at a 75-year
high, it’s rare to get good news from
HMRC at the moment,” said Craig Beau-
mont of the Federation of Small Busi-
nesses. “This, however, is a shot in the
arm for sole traders, whose businesses
will be hit by the Ulez charge.”
But the loophole could lead to fewer
drivers trading in their cars for cleaner
alternatives. It also raises questions
over whether taxpayers far from Lon-
don will partly subsidise drivers in one
of the wealthiest parts of the country.
Ben Spencer, Conservative MP for
Runnymede and Weybridge in north
Surrey, said: “To expect people who
never get a vote for the London mayor to
foot the bill for his schemes is simply
wrong.”
GOVERNMENT BONDS
UK £3.50; Republic of Ireland €3.
Reuters
Markus Steilemann, chief executive of
Covestro, a rival, reported a profit drop
of nearly a third on the year before, say-
ing a “quick recovery in China in the sec-
ond half” was “not to be expected”.
Chinese tourists are going abroad less,
travel group Booking Holdings said this
month. “China is still not producing sig-
nificantly,” said chief executive Glenn
Fogel. “I don’t expect a recovery in China
for us for some time, [a] significant time,
probably.”
But consumer groups such as Apple,
Walmart, Starbucks and Ralph Lauren
are upbeat, with some having reported
strong sales growth.
Additional reporting by George Steer,
Ian Smith and Euan Healy
New economic era page 6
China exploits sanctions page 8
Briefing
i Osborne targets deal with
Greece on Elgin Marbles
British Museum chair George
Osborne believes a swap deal
involving the Parthenon
Sculptures can be sealed despite
the institution’s theft crisis, those
briefed on his thinking have said.
The ex-chancellor is reassured by
Athens’ restraint in not attacking
the body over the thefts.— PAGE 2
i Reeves says no wealth tax
Shadow chancellor Rachel Reeves
has ruled out increased levies on
property income and capital
gains as she stepped up Labour’s
wooing of wealth creators and the
business community.— PAGE 2
i Challenger banks irked
Metro Bank, Close Brothers and
Paragon have grown increasingly
concerned about delays in Bank
of England regulation approvals
that could save them hundreds of
millions of pounds.— PAGE 13
i Arm to fill Son war chest
Analysts have projected that
SoftBank’s listing of the UK chip
designer could boost Masayoshi
Son’s deal coffers to $65bn after
the investor’s boss vowed to
pursue expansion.— PAGE 10
i Prigozhin confirmed dead
Russian authorities have
confirmed the death of Wagner
paramilitary leader Yevgeny
Prigozhin as speculation rose
about potential successors and
the future of the group.— PAGE 4
i Anger over ESG pay rules
Asset managers have lashed out
at the growing number of US
blue-chip companies that are
using environmental and social
factors to decide bonuses for
senior executives.— PAGE 10
i US trade visit to China
Commerce secretary Gina
Raimondo has arrived in Beijing
on a visit to boost business ties
despite Washington’s move to
ban US investment in sensitive
Chinese technologies.— PAGE 6
i Crossword and Lex
The Lex column, Business Life
and the FT crossword can today
be found on Page 19.
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2 ★ FINANCIAL TIMES Monday 28 August 2023

NATIONAL

Cultural treasures Reeves pledge

Osborne hopeful of Elgin Marbles deal
British Museum chair
optimistic of Greek swap
pact despite thefts
GEORGE PARKER — LONDON
ELENI VARVITSIOTI — ATHENS
George Osborne, British Museum chair,
believes that a historic cultural swap
deal with Greece involving the Parthe-
non Sculptures can still be pulled off, in
spite of the crisis over thefts at the Lon-
don institution, according to people
briefed on his thinking.
Osborne and Kyriakos Mitsotakis,
Greek prime minister, have held talks
about an innovative plan in which some
of the sculptures would be loaned to
Athens, with Greek treasures coming to
London as “collateral”.
Although Mitsotakis insists he wants
all of the so-called Elgin Marbles
returned — not dispatched to Athens in
sections on long loans — both sides say
discussions are “ongoing and construc-
tive”.
Revelations this month of a series of
thefts at the British Museum — with
some artefacts turning up for sale on
eBay — attracted criticism from Greek
ministers and officials.
But Osborne has told colleagues that
he is reassured that Mitsotakis, who is
personally handling negotiations over
the 2,500-year-old sculptures, has not
attacked the British Museum over the
thefts.
“You can read a lot into the silence,”
said one person at the British Museum.
“There has been considerable restraint
at the heart of the Greek state.”
One museum insider said it was a sign
Athens thought a deal was close.
Osborne has proposed a series of loan
deals involving the marbles removed
from the Acropolis in Athens by Lord
Elgin in the early 19th century, which
would gradually build up trust.
Under Osborne’s plan, which is still
being negotiated, Greece would not
renounce its claim to the sculptures, but
the British Museum would ship to
Athens potentially one-third or more of
NHS. Patient safety
the marbles for a set period. As part of
the so-called “Parthenon Partnership”,
Greece would send treasures to London
that had not previously been seen at the
British Museum, forming the centre-
piece of blockbuster exhibitions.
In late 2022, the Greek prime minister
told Osborne that he wanted the frieze
back permanently, not on loan and not
handed over in portions, but both sides
still believe a deal is possible.
Mitsotakis said in January — before
his re-election as prime minister in June
— that he hoped to repatriate the mar-
bles soon.
“If the Greek people trust us again, I
believe we could achieve this target after
the elections.”
The British Museum said: “We believe
that this kind of long term partnership
would strike the right balance between
sharing our greatest objects with audi-
ences around the world and maintain-
ing the integrity of the incredible collec-
tion we hold at the museum.”
Osborne has promised to speed up the
completion of a record of all the objects
in the institution’s collection, as the cri-
sis over thefts of treasures escalated.
The former Conservative chancellor
admitted on Saturday that as many as
2,000 items had been stolen or gone
missing. Hartwig Fischer, director of the
British Museum, quit on Friday over his
response to the theft of artefacts from its
collection.
Labour party
rules out
introducing
wealth tax
GEORGE PARKER — POLITICAL EDITOR
Rachel Reeves, the shadow chancellor,
has vowed that an incoming Labour
government would not hammer the
wealthy, in the latest attempt to stress
the party’s commitment to fiscal
discipline.
Reeves confirmed Labour had “no plans
for a wealth tax”, ruling out higher levies
on capital gains and property income, as
she stepped up her party’s wooing of
business and wealth creators.
Rishi Sunak, prime minister, is under
pressure from within his party to make
tax an important dividing line with
Labour at the next election, with Tory
MPs clamouring for him to announce

Letby case shines light on whisteblower failings

Experts call for urgent cultural
change to ensure staff feel safe
reporting concerns about care
SARAH NEVILLE
GLOBAL HEALTH EDITOR
The demands of Covid-19, Brexit and fis-
cal austerity distracted health leaders
from the goal of improving patient
safety, a renowned health expert has
suggested, as Britons reel from Lucy
Letby’s conviction for murdering babies
in her care.
Dr Don Berwick was speaking after
Letby, a former neonatal nurse, was sen-
tenced to life imprisonment for killing
seven babies and attempting to end the
lives of six more. Doctors who worked
with Letby said they tried to raise the
alarm but were ignored by managers.
Berwick was among a number of lead-
ing healthcare figures interviewed by
the Financial Times who suggested that
NHS culture still needed to change to
ensure staff felt safe reporting concerns
over poor care.
A decade ago, Berwick was commis-
sioned to examine what lessons should
be learned from a different tragedy —
the deaths of 1,200 patients who died
needlessly at Mid-Staffordshire NHS
Foundation Trust between 2005 and
2009. An inquiry found the victims had
been failed “by a system that ignored
the warning signs and put corporate
self-interest and cost control ahead of
patients and their safety”.
In his report, Berwick concluded “the
most important single change . . .
would be for [the NHS] to become,
more than ever before, a system
devoted to continual learning and
improvement of patient care, top to bot-
tom and end to end”.
Despite the commitment of many
healthcare leaders, not enough progress
had been made in the decade since, he
suggested. This had partly been because
of the pressures of Covid, and austerity
cutbacks which meant health trusts
became “worried about their financial
status and deficits”, he argued.
Brexit “was another shock” and
“attention to patient safety as a primary
concern, [or] first duty, waned”. Point-
ing to the challenges of changing NHS
culture, Berwick said that at Mid-Staffs
the leadership had “responded more
with fear and justification than they did
System under with openness and inquiry”. Likewise in
pressure: in the Letby case, staff who were suspi-
England there cious about what was happening “were
is no single not responded to with the kind of open-
overarching ness and embrace and trust that is nec-
regulator for essary for learning”. The NHS was not
safety and alone in falling short, he said. “Every
healthcare large system is finding it difficult to
FT montage/Dreamstime
achieve this culture change.”
Chris Ham, co-chair of the NHS
Assembly that advises NHS England,
who is a former director of strategy at
the Department of Health, said that
while the Letby case was “an extreme
example”, there had been other recent
instances of concerns going unheeded.
He highlighted an inquiry into Uni-
versity Hospitals Birmingham NHS
Foundation Trust, which found staff
had not felt supported to express wor-
ries because of a culture described as
“bullying” by Mike Bewick, a former
NHS England deputy medical director,
commissioned to lead the investigation.
A junior doctor at the hospital died by
suicide.
Ham lamented that Don Berwick’s
recommendations had not been imple-
mented, suggesting that if they had
been, “it’s much less likely that we’d be
in the position we are today”.
Alison Leary, professor of healthcare
modelling at London South Bank Uni-
versity, said a key reason why the NHS
often proved unable or unwilling to
learn the lessons of past disasters lay in a
“command and control culture from
central government” that valued activ-
ity over quality.
This was manifested in ministers’
“promises to the population — ‘we will
cut waiting lists, we will give people
faster cancer treatment’ — when we
don’t have the capacity to actually do
that in the system,” she said. Leary cited
the saying that between “good, fast and
cheap you can only pick two”.
She added that “50 years worth of
inquiries” had vowed that lessons would
be learned “and of course they never are
because the environment isn’t created
where the learning from those situa-
tions can be applied”.
Although the vast majority of treat-
ment in the NHS turned out well,
healthcare was “a high harm-potential
environment”, she said. Yet in England
there was no single overarching regula-
tor for safety and healthcare. Contrast-
ing this with airline, rail and nuclear
sectors, she said it was “the only high-
risk, high-harm industry that doesn’t
have a safety infrastructure”.
Rob Behrens, the health service
ombudsman whose role is to investigate
complaints about poor care brought by
patients and their families, echoed
Leary’s concerns about the complexity
of structures to scrutinise safety in the
NHS. In the wake of the Letby affair, he
has written to the health department
urging “an independent review of what
an effective set of patient safety over-
sight bodies would look like”.
A public servant for 40 years, he said
he had “never come across a more regu-
lated sector than health but the problem
is that it’s uncoordinated, it’s arcane, and
people don’t understand how to use it”.
Official watchdogs such as the health
and safety inspectorate division, the
patient safety commissioner, separate
ombudsmen for health and social care,
and the Care Quality Commission were
‘Staff were “not as effective as they need to be
because they’re not integrated or joined
not up”, he said.
[treated] Unlike most of his ombudsman coun-
terparts around the world, Behrens did
with the not have the authority to investigate
openness incidents unless a specific complaint
had been made, he added.
and trust In a letter to senior health managers
necessary after the Letby verdict, Amanda Pritch-
ard, NHS England chief executive, and
for learning’ other senior colleagues said the NHS
was “committed to doing everything
Don Berwick possible to prevent anything like this
happening again, and we are already
taking decisive steps towards strength-
ening patient safety monitoring”.
“We want everyone working in the
health service to feel safe to speak up —
and confident that it will be followed by
a prompt response,” they added.
Opinion page 25
tax cuts ahead of polling day.
Reeves is determined not to allow the
Conservatives to rerun previous elec-
tion campaigns, which have focused on
alleged “tax bombshells” that would
detonate if Labour were elected with
unfunded spending plans. Speaking to
the Sunday Telegraph, Reeves said
Labour had no need to levy any wealth
taxes because her party would be rigor-
ous in holding down public spending.
In 2021, Reeves criticised a plan by
Sunak, then chancellor, for a £12bn rise
in national insurance to fund the NHS
and social care. She had previously said
it would be better to tax “people who get
their income through wealth”.
‘I don’t have any spending
plans that require us
to raise £12bn’
Rachel Reeves
Reeves specified at the time that this
referred to “people who get their
incomes through stocks and shares and
buy-to-let properties”. But Sunak’s pro-
posed tax rise was later scrapped by
then chancellor Kwasi Kwarteng.
“The government said they needed to
raise £12bn and I said, ‘Well, why do you
always have to come to working people
and ask them to contribute more?’”
Reeves said. “I don’t have any spending
plans that require us to raise £12bn
worth of money. So I don’t need a wealth
tax or any of those things.” She added:
“We have no plans for a wealth tax.”
With taxes already at their highest
level since the second world war, Labour
has made relatively few pledges to raise
them further. A notable exception is the
removal of tax breaks for private
schools and non-domiciled UK resi-
dents. Reeves also said two years ago
that she would end a loophole used by
private equity executives to reduce the
amount of tax they pay on their share of
the profits, known as carried interest.
In an interview with the Financial
Times in May, Reeves joked she would
not impose “a special FT reader tax”,
adding that she had “no plans” to equal-
ise capital gains tax rates with income
tax, or to cut tax breaks on pension con-
tributions for higher earners.
Labour officials said there would be
no “mansion tax” — a policy proposed
by former Labour leader Ed Miliband
before the 2015 election — or increase in
the 45p top rate of income tax.
Conservative MPs believe that a
promise of Tory tax cuts in the next par-
liament could be a potent issue at the
next election and want Chancellor Jer-
emy Hunt to start the process now.

Broadcasting Westminster

BBC freezes chair’s salary at Dorries quits as MP with blast

MAKE A WISE £160,000 after Sharp scandal at Sunak’s ‘zombie parliament’
INVESTMENT
Subscribe today at DANIEL THOMAS Heppinstall KC into the process GEORGE PARKER son in his resignation honours list.
ft.com/subscribetoday reported disappointment at the lack of Many Tory MPs believed she was delay-
The salary of the next BBC chair has Former culture secretary Nadine Dor-
diversity in the pool of applicants for the ing the announcement to inflict maxi-
been frozen at £160,000 even as the ries has carried out her threat to quit as
role at the time. mum damage on Sunak, who is forced to
government seeks to attract a wider an MP, denouncing Rishi Sunak in a
The job description said that the chair hold a by-election at a time when he is
FINANCIAL TIMES Reproduction of the contents of this newspaper in pool of candidates after a controversy
would receive £160,000 annually for
resignation letter.
trying to relaunch his premiership.
Bracken House, 1 Friday Street, London EC4M 9BT. any manner is not permitted without the publisher’s over the appointment of former board
three to four days of work a week — the Her move, two months after she Both the Liberal Democrats and
prior consent. chief Richard Sharp.
Published by: The Financial Times Limited, same amount as offered to Sharp, a promised to go with “immediate effect”, Labour believe they can take the seat,
Bracken House, 1 Friday Street, ‘Financial Times’ and ‘FT’ are registered trade marks The Department for Culture, Media and wealthy former City executive who will trigger a challenging autumn by- which Dorries won in 2019 with a major-
London EC4M 9BT. of The Financial Times Limited.
Tel: 020 7873 3000
Sport posted the job details this week, donated his wages to charity. The BBC election for Sunak in her Mid Bedford- ity of 24,664.
Editor: Roula Khalaf The Financial Times and its journalism are subject to formally starting what will be a closely board meets at least 11 times a year. shire seat. Dorries will attempt to twist the knife
a self-regulation regime under the FT Editorial Code scrutinised search for the national Sharp’s abrupt departure has forced Dorries, an ally of ex-premier Boris further with the publication on the eve
Subscriptions and Customer Service of Practice: www.ft.com/editorialcode broadcaster’s next chair. the government to fill the vacancy as the Johnson, quit on Saturday, accusing the of the Conservative party conference
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Advertising logo or contact details inserted if required (minimum arrangement involving Boris Johnson, number of scandals. She believes Sunak helped bring ple Johnson. Sunak, the former chancel-
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letters.editor@ft.com One-off copyright licences for reproduction of FT chair of the public broadcaster when he tiny over its response to allegations that was involved in stopping her appoint- Her resignation letter accused Sunak
Executive appointments articles are also available. was prime minister. presenter Huw Edwards had made pay- ment to the House of Lords. She said of “demeaning his office by opening
Tel: 020 7873 4909; www.exec-appointments.com
For both services phone 020 7873 4816, or
Rishi Sunak, prime minister, is under ments for sexually explicit images. In Sunak was presiding over a “zombie the gates to whip up a public frenzy”
Printed by alternatively, email syndication@ft.com pressure to avoid obvious political March it was criticised for a decision to parliament” and “history will not judge against her, saying the police had had
Newsprinters (Broxbourne) Limited, Hertfordshire, appointments, with officials admitting suspend Gary Lineker from hosting you kindly”. to visit her home because of “threats to
Newsprinters (Knowsley) Limited, Merseyside, Newspapers support recycling they need to bring in a wide field of can- football show Match of the Day after say- Dorries announced her intention to my person”.
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Dublin, Ireland 2018 was 69.2% didates to show the process is fair and ing he had breached impartiality rules. resign on June 9, but then delayed her She wrote: “You have no mandate
open after criticism of the previous sys- The recruitment process is being decision, saying she wanted to find out from the people and the government is
© Copyright The Financial Times Limited 2023. All tem, which led to Sharp’s appointment. overseen by headhunters Saxton Bamp- why she did not win the peerage for adrift. You have squandered the
rights reserved.
In April an investigation by Adam fylde on behalf of the government. which she had been nominated by John- goodwill of the nation.”
Monday 28 August 2023
Telecoms
groups taken
to task over
bill increases
Price rises of inflation plus 3.9% attacked but
justified by sector as needed for investment
ERI SUGIURA
At BT’s general meeting last month, out-
going chief executive Philip Jansen told
investors in Britain’s largest telecoms
operator that its users were getting “ter-
rific value for money” on mobile and
broadband deals.
“Customers are definitely getting
more for less. Prices here in the UK are
among the lowest in Europe,” he said.
Jansen’s comments reflected efforts
by his industry to capitalise on growing
demand for its services. Telecoms com-
panies say yearly bill increases are not
only comparatively cheap but also help
fund much-needed investment.
But as millions of bill payers contend
with rises of up to 17.3 per cent this year,
the biggest in Europe, on the back of
record price growth, that argument is
coming under greater scrutiny from
consumer groups and regulators.
These annual increases typically add
3.9 per cent to the annualised rate of
consumer or retail price inflation in
December or January, and can take
effect mid-contract.
Natalie Hitchins, head of home prod-
ucts and services at Which?, the con-
sumer rights group, said there was “lit-
tle evidence to justify” the inflation plus
3.9 per cent model, criticising it as an
“extra premium” that risked exacerbat-
ing the cost of living crisis. Ernest Doku,
head of commercial for broadband and
mobiles at price comparison company
Uswitch, said such a model lacked
“data-driven justification”.
The Competition and Markets
Authority, the competition watchdog,
‘[Companies are] trying
to make as much extra
money as possible and do
their best for shareholders’
last year criticised the “anti-consumer”
nature of in-contract price rises and said
there was “unlikely to be a direct con-
nection between [different inflation
measures] RPI or CPI and telecoms pro-
viders’ actual costs”.
Some analysts, though, point to the
growth of in-contract price rises as evi-
dence of companies seeking to sustain
billions of pounds of investment in full-
fibre and 5G networks at a time of weak
revenue and earnings growth, which
have led their shares to slide.
“During this period of tremendous
cash investment, they’re trying to make
as much extra money as possible from
this situation and do their best for
shareholders,” said Robert Grindle, ana-
lyst at Deutsche Bank research. “Opera-
tors could have chosen not to apply [the
inflation-plus price mechanism], and
they didn’t.”
Telecom operators have imposed
unplanned and frequent price changes
for many years. But in September 2020,
when inflation was close to zero, BT
announced a supplementary charge of
3.9 per cent on top of CPI from March
2021, citing higher costs and customers’
increasing use of data.
The index, which reached a 41-year
high of 11.1 per cent last October, stood
at 10.1 per cent in January. It gradually
subsided to 6.8 per cent in July, accord-
ing to the Office for National Statistics.
RPI follows a similar trend but at a
higher level, reaching 13.4 per cent in
January and 9 per cent in July.
BT’s move was quickly replicated by
most competitors, including Vodafone,
Virgin Media O2 and later Three, and
some “virtual” mobile operators such as
Talkmobile, which have wholesale
Philip Jansen: BT customers are getting ‘terrific value’ — Hollie Adams/Bloomberg
★ FINANCIAL TIMES 3
NATIONAL
Average mobile prices in the UK have been
decreasing as data usage has grown
2016 2017
16
2018
Average contract cost
(£ per month)
14
2019
2020
12
2022
10
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0
Data usage (Gb per month)
Prices are average monthly prices for average mobile use, excluding handset cost
The UK has among the lowest telephone
prices in the G7
Combined price of fixed broadband and mobile services
(£ per month)
80
agreements to use others’ infrastruc- 60
ture. Research by Which? last month US
found only one in 20 consumers was 40 Japan
able to calculate changes to their France
Italy
monthly bill by estimating future CPI Germany
correctly. The consumer group said 20 UK
recently it had asked Ofcom to Spain
“urgently investigate concerns” that
Virgin Media was breaking the law by 0
lifting broadband bills by “unlimited 2017 18 19 20 21
sums whenever it chooses”. 30-100 Mbps fixed broadband and a 5 Gb mobile data allowance. £ at PPP
Sources: Ofcom; Assembly Research, EC
Customers are typically charged for Investigation: Ofcom is probing the transparency of telecoms price rises — Mike Kemp/In Pictures/Getty Images
ending their contract early, but Doku
said they should “be able to leave with-
out penalty, or be able to have contracts
that are fixed for the duration”.
Ofcom, which regulates wholesale but
not retail telecoms prices, in February
began investigating whether companies
had been transparent enough with cus-
tomers about bill increases, noting that
operators faced “a range of cost rises”.
In research released that month, it
found understanding of in-contract
prices was low. Consumers were likely
to face in-contract increases of about
8.2 per cent in spring, based on Bank of
England estimates for CPI. That is
because the probe and a subsequent
public consultation will not conclude
before operators fix their pricing for
2024-25.
In recent years, consumers have seen
an overall drop in monthly broadband
and mobile prices due to discounts
offered by companies to entice new cus-
tomers. In a December report, Ofcom
noted that average mobile prices in
2022 were 34 per cent lower compared
with 2016, and that the UK ranked bot-
tom among six countries, including the
US, France and Italy for mobile costs.
According to a study by Assembly
Research, commissioned by Virgin
Media O2, average monthly household
spending on telecoms services has fallen
by almost a fifth since 2017. The report
also found the telecoms industry was
investing up to £2.5bn a year in mobile
networks and about £3.8bn in fixed
broadband.
Karen Egan, analyst at research group
Enders Analysis, said companies opting
for identical price rises was “not an
example of tacit collusion but rather the
copying of a good idea” because none
“wants to stand out as having higher
increases, yet it is incredibly difficult to
make slightly lower increases a point of
differentiation”.
The impact of the inflation plus
3.9 per cent model on operators’ per-
formance is likely to remain marginal in
the long term. Enders Analysis forecast
UK mobile operators’ revenue growth to
slow from 7.5 per cent in the three
months to June 2023 to 6 per cent over
the full year and 3 per cent in 2024, with
some customers set to re-sign at lower
prices once contracts expire.
But consumer groups continue to
question how fair mid-contract price
rises are at a time when consumers are
squeezed.
BT said its pricing strategy was key to
absorbing rising costs, adding: “If we
didn’t have the [pricing] mechanism,
we’d potentially have to pause or delay
ongoing investments.”
Virgin Media O2 said it applied
increases only to data usage and that “an
inflation-only metric would provide no
additional headroom for . . . continued
network investment”. The company
added that it rejected Which?’s “base-
less allegations” around price rises.
Three said its prices were among “the
most competitive in the market”
because its latest price increase applied
only to a small proportion of customers
who had joined since November 2022.
Vodafone was contacted for comment.
4 ★ FINANCIAL TIMES Monday 28 August 2023

INTERNATIONAL

Paramilitary group Yandex co-founder

Moscow confirms Prigozhin died in crash
Officials say genetic tests
prove Wagner leader was
on board fatal flight
POLINA IVANOVA — WARSAW
Russian authorities have confirmed the
death of Wagner paramilitary group
leader Yevgeny Prigozhin, amid specu-
lation about potential successors and
the future of the group as a whole.
Genetic testing proved that Prigozhin
had been onboard the private jet that
crashed outside Moscow on its way to St
Petersburg on Wednesday, according to
results released yesterday. Western offi-
cials assumed that the warlord was
killed on the orders of Vladimir Putin in
retribution for a mutiny he led in June,
which posed the biggest challenge to the
Russian president in decades. The
Kremlin has denied any involvement.
Russia’s aviation agency had listed
Prigozhin’s name among the passengers
on the aircraft shortly after the crash
but officials said they would wait for
DNA testing before confirming his
death.
“According to [DNA] results, the iden-
tities of all 10 victims have been estab-
lished, and they correspond to the list
stated in the flight manifest,” the inves-
tigation committee said yesterday.
Dmitry Utkin, Wagner founder and
Prigozhin’s right-hand man, was also
confirmed dead.
Wagner-affiliated channels on Tele-
gram yesterday continued to share
images of small memorials set up for the
Eurozone. Industrial development
two men around Russia. The irregular
force is accused of war crimes in
Ukraine and in African countries, but
became popular in Russia after winning
the battle for Bakhmut in Ukraine, the
only victory for Moscow this year.
‘According to [DNA]
results, the identities
of all 10 victims have
been established’
Made up of thousands of armed and
battle-hardened men, many of them
convicts Prigozhin recruited directly
from Russian prisons, Wagner has
partly relocated to Belarus since the
aborted mutiny in June. Others remain
in Russia and some also make up Wag-
ner’s large international operation.
The Kremlin has not commented on
what lies in store for Wagner.
The Russian army has long sought to
bring the group to heel, following
months of blistering personal critiques
by Prigozhin of the army’s leadership.
Their efforts to disband the group this
spring and absorb its fighters were the
ultimate trigger for Prigozhin’s uprising
and march on Moscow.
On Saturday, the Kremlin made a
fresh move to rein in Wagner and other
militias. Putin signed a decree ordering
all members of such units, which also
include volunteer battalions and terri-
torial defence groups, to swear alle-
giance to Russia, a formal oath made by
regular soldiers.
Wagner-affiliated channels on
Telegram have sought in recent days to
counter claims that their fighters were
leaderless and were being absorbed into
the regular armed forces.
One, an anonymous channel called
Wagner Orchestra with almost 1mn sub-
scribers, said that Anton Elizarov, call
sign “Lotus”, was the most senior Wag-
ner leader left after the crash and was
“already in charge of the company’s
combat and training work”.
Another leading figure being floated
as a potential Progozhin successor is
Andrei Troshev. Troshev, a veteran of
the Soviet invasion of Afghanistan, was
sanctioned by the EU in 2021 for being a
“founding member and executive direc-
tor” of Wagner and for being directly
involved in its Syria operations.
Russian
billionaire
pleads for
relief from
EU sanctions
HENRY FOY — BRUSSELS
MAX SEDDON — RIGA
Arkady Volozh, co-founder of Russian
technology group Yandex, has formally
asked the EU to lift sanctions against
him in the first big test of whether the
bloc will reward prominent figures who
publicly break with the Kremlin.
Lawyers for Volozh petitioned the EU to
repeal the measures days after the busi-
nessman condemned Vladimir Putin’s
“barbaric” invasion of Ukraine, accord-
ing to people familiar with the move.
The request will be discussed by EU offi-
cials next month.
Volozh this month became only the
second prominent Russian billionaire to

Ireland keeps faith in life sciences despite tax rise
Dublin confident it can still
attract foreign investment
after corporate levy shake-up
JAMIE SMYTH — DUBLIN
A surge in life sciences investment that
helped make Ireland the EU’s top per-
forming economy in the past two years
will continue despite a rise in the corpo-
rate tax rate to 15 per cent, the country’s
investment chief said.
Michael Lohan said Ireland was
poised to win several big investments
from pharmaceutical and medical
device companies attracted by the
country’s blend of tax incentives, politi-
cal stability, skilled workforce and EU
membership.
“As uncertainty continues around the
globe, Ireland’s certainty has become
more attractive. People are seeking
those islands of tranquillity, and Ireland
is one of those,” Lohan, chief executive
of the foreign investment authority IDA
Ireland, said.
The number employed in life sciences
in Ireland has surged by 80 per cent to
almost 100,000 over the past decade on
the back of almost $15bn in capital
investments in the sector. Last year a
record 301,475 worked at multination-
als, which paid 86 per cent of all corpo-
rate taxes in the country of 5mn.
Ireland has built its record as being
one of the EU’s largest recipients of for-
eign direct investment on its attractive
headline corporate tax rate of 12.5 per
cent, but Lohan is confident that the rise
to 15 per cent in January for all compa-
nies that generate $750mn or more in
annual revenues is “not making a
marked difference in terms of invest-
ment decisions”.
But as countries such as the US pursue
a “reshoring” manufacturing policy and
consider tax incentives for pharma
companies, analysts and investors warn
that the wider OECD-led shake-up of
corporate tax rules, as well as housing
and energy shortages, could dent Dub-
lin’s ability to attract multinationals.
“The key challenge for Ireland is
addressing infrastructure constraints
and other bottlenecks such as housing,
which are raising the costs for foreign
investors,” said Conall Mac Coille, an
economist at Dublin stockbroker Davy.
A downturn in the tech sector that is
Helping hand: spurring job losses at Meta, X (formerly
Ireland’s Twitter) and Accenture, all of which
National have operations in Ireland, has added to
Institute for concerns about its competitiveness.
Bioprocessing A second tranche of tax reforms
Research and called Pillar One, which are being over-
Training centre seen by the Paris-based OECD, would
trains almost result in a portion of taxable profits gen-
5,000 people erated by large multinationals being
a year, including reassigned from Ireland to other mar-
staff from global kets. The change reflects how modern
regulators businesses can make profits in foreign
Donal Murphy/NIBRT
markets without necessarily having a
physical presence there.
Most investors are playing down the
risks, suggesting access to skills and
support services in Ireland are more
important than tax reforms. Mac Coille
noted that Ireland would maintain a
corporate tax advantage over its rivals,
including the UK, which in April raised
its rate from 19 to 25 per cent. European
OECD countries levy an average corpo-
rate rate of 21.5 per cent, according to
the Tax Foundation think-tank.
Ireland-based life science companies
have tripled R&D spending as they
undertake higher-value activities
including manufacturing of complex
biologic medicines. Since December the
pace of investment has picked up, with
Eli Lilly, Pfizer and AstraZeneca plough-
ing more than $2bn into manufacturing
plants in Ireland, which is one of the
world’s largest exporters of medicines.
Japanese drugmaker Takeda made its
first investment in Ireland a quarter of a
century ago when corporate tax was
10 per cent. It now employs 1,000 and
last year opened the country’s first cell
therapy manufacturing plant.
“People and talent are key. The aca-
demic institutions are really impor-
tant,” said Shane Ryan, general man-
ager Ireland at Takeda.
Ireland has the highest level of Stem
(science, technology, engineering and
maths) graduates per capita in the EU,
according to the government’s statistics
office.
Ireland’s EU membership was
another factor as it provided access to a
broader European workforce, said
Ryan, adding that Takeda employs 43
nationalities across its four Irish sites.
Takeda is one of several life sciences
companies that collaborate with Ire-
land’s National Institute for Bioprocess-
ing Research and Training, an academic
centre that provides training and
research aimed at expanding the biop-
harma manufacturing industry. Almost
5,000 people a year train at the centre,
including staff from global regulators.
Matt Moran, director of BioPharma-
Chem Ireland, an industry group, said
that NIBRT highlighted the benefits of
close collaboration between pro-enter-
prise Irish governments, academia and
industry. “Compliance and regulation is
very good. Many of these plants are
approved by the US Food and Drug
Administration,” Moran said.
Initial Irish investments by Pfizer and
Bristol Myers Squibb more than half a
century ago encouraged other multina-
tionals to follow, he said. Ireland is now a
manufacturing centre for some of the
world’s top-selling drugs, including
Merck’s cancer therapy Keytruda and
Pfizer’s Covid-19 vaccine.
Moran said that competition for life
sciences investment from the US was
becoming more intense following a US
push to “reshore” manufacturing, a key
plank of President Joe Biden’s economic
programme. “Ireland was a bit of a no-
‘People are brainer [for new investment]. Now
companies look at US states as well — so
seeking we just need to be better.”
those The pharma industry is focusing on
the resilience of supply chains following
islands of recent disruptions caused by the pan-
tranquillity, demic and a spate of drug shortages
linked to manufacturing problems in
and Ireland India and the US. The IDA said this
is one of trend was benefiting Ireland, which
manufactures everything from drug
those’ ingredients to tablets and more complex
biological medicines.
Dublin’s decision to keep its borders
open and facilitate exports of life-saving
drugs while competitors erected trade
barriers during the pandemic helped
the IDA win two life science investments
initially destined for the US and China,
the agency said. “We have benefited
from the more conservative approach to
managing the supply chain,” said Rory
Mullen, head of biopharma and food at
the IDA. “Covid has changed that deci-
sion-making process.”
Additional reporting by Emma Agyemang
unreservedly denounce the war in
Ukraine, prompting calls from diplo-
mats, officials and other sanctioned
individuals for the EU to respond.
The only person to so far overturn
western sanctions on the basis of their
anti-war stance is the eccentric fintech
tycoon Oleg Tinkov, who has loudly
denounced Putin and the invasion. The
UK removed sanctions against him last
month, citing his statements as a reason
for the decision.
Volozh’s case has raised the issue of
whether policymakers should include
“off-ramps” for sanctioned Russian elite
figures who speak out against the inva-
sion.
The oligarch’s decision to publicly
condemn the war “poses a tricky ques-
tion” for the EU, given its aim to use
sanctions as a tool to encourage targeted
individuals to change approach and
weaken the Kremlin, two western offi-
cials told the Financial Times.
“Frankly, it is hard to imagine what
else he could do,” said a person close to
Volozh. “And there are hundreds of
other sanctioned Russian businessmen
watching closely to see what Brussels
does.”
Volozh, 59, has lived in Israel since
2014 and has not returned to Russia
since Putin ordered the invasion in Feb-
ruary last year. He declined a request for
comment. He resigned as chief execu-
tive of Yandex, Russia’s answer to
Google, and surrendered his voting
rights after the EU sanctioned him last
year for what it described as Yandex’s
complicity in the war.
Although Volozh, like many others in
Russia’s elite, was horrified by the war
from the outset, he refrained from
speaking out against it until this month
after drafting and scrapping several
other similar statements.
“Arkady wanted to say all of this from
day one of the war. But he felt he was
responsible for his people [in Russia],”
one of them said. “They are finally all
out — that is the main reason why this
happened now.”
Volozh has been criticised by anti-war
Russians, who said he was insufficiently
penitent about Yandex’s role in spread-
ing Kremlin propaganda through its
online news platforms. Yandex sold
them to state-owned VK last year.
EU sanctions relating to Russia’s inva-
sion of Ukraine are reimposed every six
months. Volozh hopes he can convince
the EU not to renew the sanctions
against him when they expire on
September 15, according to people
close to him.
Gillian Tett see Opinion

Grain shipments

Romania pledges to double capacity of Ukraine export routes

MARTON DUNAI — BUCHAREST
Romania will double the capacity of its
main Black Sea port and Danube ship-
ping lanes within two months to help
Ukraine ship its grain out of Russia’s
reach, according to the country’s prime
minister.
Marcel Ciolacu said his plan would be
implemented irrespective of Russian
attacks on Ukrainian ports on the other
side of the Danube river on the border
with Romania.
“Ukraine will have about 40mn tons
of grain for export in 2023,” Ciolacu said.
MAKE A WISE INVESTMENT “To [facilitate] that, we have increased
the capacity both in Constanța harbour
and the pathways leading to Constanța
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• React to trusted global news everywhere you The Romanian pledge to boost the
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• Get the iconic FT newspaper delivered to your ube and expanding ports’ infrastructure
home or office from Monday to Saturday comes after Russia backed out of an
• Enjoy our award-winning lifestyle journalism agreement allowing Ukrainian grain to
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Moscow has also threatened commer-
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cial vessels leaving Ukrainian ports,
prompting a rerouting of exports via the
Danube. “We have learnt our lessons on
Russia well,” he said. “We are at zero
dependency on Russian energy or
resources. Our support to Ukraine is
unconditional.”
In his first interview with interna-
tional media since becoming prime
minister in June, Ciolacu said Bucharest
would not be intimidated by Moscow
and expressed confidence that his coun-
try’s Nato membership would deter
Russia from any direct hostilities.
The increased capacity of the Black
Sea port of Constanța and other routes
would allow Ukrainian grain exports to
double to 4mn tonnes a month, he said.
“Investments are under way in the
Sulina channel,” he said, referring to the
Romania’s main deepwater shipping
lane through the Danube delta.
Despite repeated Russian attacks on
Ukraine’s grain silos in the ports of
Izmail and Reni along the Danube river,
he said there were “solutions”, for
instance by allowing ships to transit also
by night from October and increasing
freight traffic to a minimum of 14 ves-
sels a day. Doubling the size of the
barges that carried grain “means
Ukraine won’t have to use grain ware-
houses as much”, he said.
Shipping industry insiders said the
plan was feasible. Ciolacu said Romania
would open more road border crossing
points and improve its rail infrastruc-
ture at stations bordering Ukraine to
accelerate the transfer of cargo.
Romania has been tight-lipped about
military assistance to Kyiv, but Ciolacu
said its partners knew Bucharest pro-
vides much more than humanitarian
aid and logistical support. The country
also participates in training Ukrainian
pilots to fly a growing fleet of F-16 fighter
jets donated by Nato members.
“I expect to sign the protocols in the
next few days, which is the last remain-
Constanța: Romania will use the port
to help lift Ukrainian grain exports
ing hurdle,” he said. “The logistics are in
place, as far as we are concerned.”
Increased military and infrastructure
spending linked to the war in Ukraine
had an impact on the country’s budget,
he said. The Romanian central bank has
projected the deficit to jump to 7.5 per
cent of gross domestic product this year,
far above a 4.4 per cent target, and 6.2
per cent in 2022. Ciolacu said he would
meet EU officials in Brussels this week
to discuss measures to contain the gap.
“We have had to reorganise the budget
to aid the Ukraine shipments,” he said,
adding he would try to get an EU nod to
account for war-related items outside
the deficit calculations. “These were
unforeseen expenses . . . so we will need
an exemption from the fiscal code.”
His Hungarian counterpart, Viktor
Orbán, had used his veto in the EU and
Nato to hold up various membership
applications, in a bid to force Brussels to
release frozen EU funds, Ciolacu said.
“[Hungarians] speculate with this,”
he said, adding that it was wrong to
politicise such strategic matters.
“There is a war between a dictator and
the free world . . . one that Europe can-
not afford to lose.”
Monday 28 August 2023 ★ FINANCIAL TIMES 5
6 ★ FINANCIAL TIMES Monday 28 August 2023

INTERNATIONAL

Beijing trip Southern Africa

US visit aims to boost China business ties
Commerce secretary
seeks travel and tourism
gains despite tech squeeze
AIME WILLIAMS — WASHINGTON
JOE LEAHY — BEIJING
US commerce secretary Gina Raimondo
has arrived in China, where she is aim-
ing to boost business ties and tourism
between the world’s two largest econo-
mies despite Washington’s move to ban
US investment in sensitive Chinese
technologies.
Raimondo, the fourth senior White
House official to visit Beijing this sum-
mer, said she would stress that the US
did not want to “decouple” from China’s
economy. But she insisted protecting
national security was “the top priority,
period”.
“The US and China share a large,
dynamic, growing economic relation-
ship, one of the largest trade relation-
ships in the world,” Raimondo said
ahead of her trip. “Both of our countries,
in fact the entire world, need us to man-
age that relationship responsibly.”
Joe Biden, president, this month
announced a ban on US investment in
some of China’s critical technology
industries, including quantum comput-
ing, advanced chips and artificial intelli-
gence.
The flurry of senior visits to China is
Jackson Hole. Annual meeting
part of a concerted effort by the Biden
administration to smooth relations.
High-level engagement stalled this year
when China flew an alleged spy balloon
over US soil.
Raimondo, whose visit comes as
China’s economy is struggling to recover
after pandemic-related lockdowns last
year and amid a deep property slow-
down, said she would “lean into” pro-
moting travel and tourism between the
two sides.
She estimated that a return to pre-
pandemic levels of Chinese visitors to
the US would generate tens of thousands
of jobs for workers. But she warned that
there were “many challenges” to “doing
business in China and exporting to
China”, alluding to what she called
Beijing’s “unfair trade practices”.
“If you wanted to put a tagline to the
trip and the mission, it is protect what
we must and promote where we can,”
Raimondo said.
The commerce secretary will face
deep scepticism from Chinese officials,
who question Washington’s sincerity in
wanting to improve trade ties while the
administration tightens controls on
technology investments.
The restrictions announced this
month, which come into force next year,
are an effort to stop the Chinese military
from accessing US funding, knowledge
and capital. They are expected to affect
private equity and venture capital firms
as well as US investors in joint ventures
with Chinese groups.
The order was the latest in a series of
actions designed to limit Chinese access
to advanced technology in what Jake
Sullivan, US national security adviser,
has called a “small yard, high fence”
strategy.
Raimondo’s visit follows recent trips
to Beijing by other US cabinet officials,
including Antony Blinken, secretary of
state, Janet Yellen, Treasury secretary,
and John Kerry, climate envoy.
During her trip in July, Yellen told an
audience in Beijing there was “ample
room” for US and Chinese companies to
boost trade and investment, despite
security tensions.
Zimbabwe
opposition
cries foul over
Mnangagwa
re-election
JOSEPH COTTERILL — JOHANNESBURG
KUDZANAI MUSENGI — BULAWAYO
Zimbabwe’s president, Emmerson
Mnangagwa, has been re-elected as
leader of the troubled southern African
nation after a vote that international
observers said was marred by irregu-
larities.
Mnangagwa won more than 52 per cent
of the vote in elections held on Wednes-
day and Thursday to secure a second
term, versus 44 per cent for Nelson
Chamisa of the main opposition Citizens
Coalition for Change, according to Zim-
babwe’s election commission.

Central bankers braced for new economic era
Officials concerned that
established policies will need
rewriting in time of upheaval
COLBY SMITH
JACKSON HOLE, WYOMING
Gathering for their annual meeting in
the foothills of the Teton Range in Jack-
son Hole, Wyoming, leading officials
and economists traded last year’s angst
about inflation and central banks’ credi-
bility for fears that the upheaval caused
by the pandemic and the war in Ukraine
have ushered in a new era for the global
economy.
During the US Federal Reserve’s
three-day symposium, current and
former policymakers from around the
world voiced worries that the well-
established economic relationships that
underpinned governments’ policy deci-
sions were in jeopardy.
They issued an urgent call for a
revised playbook to better understand
and respond to a rapidly changing land-
scape that threatened to stoke more fre-
quent supply shocks, higher prices and
heightened volatility across financial
markets.
Articulating this point most directly
was Christine Lagarde, president of the
European Central Bank, who spoke at
length about the ramifications of tighter
labour markets, the transition to a
greener economy and the fragmenta-
tion of the economy into competing
blocs.
“There is no pre-existing playbook for
the situation we are facing today — and
so our task is to draw up a new one,” she
said.
The shift in focus to longer-term
structural problems comes amid grow-
ing confidence about central banks’ bat-
tle against inflation.
“Last year there was this massive
trepidation about whether policymak-
ers had gotten things really wrong with
inflation and it felt a little bit like a bat-
tening down of the hatches, whereas this
year I feel like there is more breathing
room,” Heather Boushey, who serves on
the Joe Biden administration’s Council
of Economic Advisers, told the Finan-
cial Times.
Policymakers were adamant it was
too early to declare victory on inflation,
keeping open the prospect of further
interest rate increases. Ben Broadbent, a
deputy governor at the Bank of England,
said on Saturday that it was “unlikely”
inflation would disappear as fast as it
had arrived and that interest rates
Big hitters: “will probably have to remain in
Christine restrictive territory for quite some time
Lagarde, yet”.
president of the But signs that it is being tamed have
European boosted expectations that officials are
Central Bank, indeed near or at the end of their his-
left, Kazuo toric monetary tightening campaigns.
Ueda, governor Still, Lagarde warned that the
of the Bank of upheaval of the past three years was
Japan, centre, likely to bring about more persistent
and Jay Powell, price pressures that were more unpre-
Federal Reserve dictable and harder to root out. That is
chair, meet likely to mean central banks must keep
before the interest rates elevated for an extended
Jackson Hole period.
symposium Other policymakers repeatedly
on Friday flagged the same risks. On Saturday,
David Paul Morris/Bloomberg
Kazuo Ueda, governor of the Bank of
Japan, warned that in light of mounting
geopolitical tensions and tendencies
towards “reshoring” — the return of
manufacturing activities and jobs to
home countries — the global economy
could well be “slowly approaching an
inflection point beyond which things
will change”.
While that could lead to local growth
booms, it could also result in production
inefficiencies, he said.
One growing debate is what these
changes might mean for the so-called
neutral rate of interest, known as R-star,
that neither stimulates nor suppresses
growth. At the US central bank, more
officials have nudged up their estimates
for R-star, even though the median fore-
cast as of June was unchanged at a pre-
pandemic level of 2.5 per cent — or 0.5
per cent in real terms, once adjusted for
inflation at 2 per cent.
Jeremy Stein, a former Fed governor,
said he expected R-star to be higher sim-
ply because “inflation may stubbornly
want to be 3 per cent” versus the Fed’s
2 per cent target, preventing the central
bank from easing any time soon.
Others expected population ageing to
again act as a depressant once the infla-
tion crisis passed, though they sug-
gested the debate was far from resolved.
To grasp the magnitude of these struc-
tural shifts and their consequences,
Boushey — like Lagarde — has called for
a rethink of the assumptions govern-
ments rely on to make sense of the eco-
nomic transformations under way and
to formulate the right policy responses.
Pierre-Olivier Gourinchas, the chief
economist at the IMF, saw benefits in
more “disaggregated”, granular models
that take into account the fact that
shocks — including those associated
‘There is no with Covid-19, Russia’s invasion of
Ukraine and the climate transition —
pre-existing are affecting different sectors within
playbook and across countries in different ways.
In a widely discussed presentation at
for the Jackson Hole, Barry Eichengreen at the
situation we University of California, Berkeley,
issued a stark warning about public
are facing debts, saying it was politically and finan-
today’ cially unfeasible to reduce them, no
matter how desirable it might be.
Christine Emerging and developing economies
Lagarde, ECB were acutely vulnerable, Carmen Rein-
hart, who previously worked at the
World Bank and the IMF, told the FT.
Roughly 60 per cent of the poorest
countries were already in or close to
debt distress, a particular concern in a
“shock-prone, fragmented environ-
ment”.
Even if he was not concerned about
debt dynamics in the US or in most
European countries, Gourinchas said he
was worried about this capacity issue on
a wider scale in the event of another
large shock that would require govern-
ments to inject 10-20 per cent of gross
domestic product in fiscal support.
“I do not think they can do it again,”
he said. “We do not have an insurance
policy any more. We are at the edge.”
The credibility of the second election
held in Zimbabwe since the fall of Rob-
ert Mugabe, the late dictator, was a key
test of whether Mnangagwa’s Zanu-PF
would be able to access international
financing to clear debts and revive an
economy wrecked by currency collapse.
The poll was undermined by the elec-
tion commission’s failure to deliver
ballots to opposition strongholds, which
forced voting to be extended to a second
day, and by government attacks on
local and international observers,
who pointed to signs of rigging and
intimidation.
Chamisa’s party indicated it was
preparing to contest the vote after it said
the official result had “glaring” discrep-
ancies with tallies that were published
at polling stations. “We will not roll over
and accept fictitious lies,” it added.
“We are rejecting the election as a
sham,” Chamisa said yesterday, calling
Zanu-PF’s victory a “coup on the ballot”,
six years after Mnangagwa replaced
Mugabe in a literal military takeover.
“As far as we are concerned, a credible
election must be declared and hon-
oured.”
Citizens Coalition for Change has been
conducting a parallel tabulation of votes
based on the polling station records. It
has not yet published the tally in full.
“This endeavour is firmly rooted in hard
evidence collected from all regions of
Zimbabwe,” the party said.
The election’s fallout has also sparked
a rare rift between Mnangagwa’s gov-
ernment and southern Africa’s main
regional body, which has often been
seen as a rubber stamp for flawed Zim-
babwean votes in the past.
This time observers from the South-
ern African Development Community
said the vote was mostly peaceful
but raised several concerns, including
ballot delivery delays, voter intimida-
tion and state media bias towards
Zanu-PF.
The SADC secretariat on Saturday
criticised “crude, scurrilous and mis-
leading” attacks on the group’s observ-
ers in Zimbabwe’s media, which is dom-
inated by state outlets.
Mnangagwa’s officials have accused
the SADC observers, led by Zambia’s
former vice-president Nevers Mumba,
of supporting the opposition.
“No doubt [Mnangagwa’s] legitimacy
is going to be an issue at home, but
abroad he will probably be accepted by
his peers in the African Union and SADC
outside some of the issues they raised,”
said McDonald Lewanika, Zimbabwe
country director for the non-
governmental organisation Accounta-
bility Lab.
Parliamentary election results indi-
cate Zanu-PF remains in control of the
legislature but was denied a two-thirds
majority by Chamisa’s party.

Electricity supply

Power-starved North Koreans turn to solar energy to help keep the lights on
CHRISTIAN DAVIES AND KANG BUSEONG
SEOUL
North Korea is increasingly turning to
solar power to help meet its energy
needs, as the isolated regime seeks to
reduce its dependence on imported
fossil fuels amid chronic power short-
ages.
Prices of solar panels have dropped in
recent years due to an influx of cheap
Chinese imports and a rise in domestic
assembly of panels within North Korea,
according to the Stimson Center think-
tank in Washington.
This has allowed many North Koreans
to install small solar panels costing as
little as $15-$50, bypassing the state
electricity grid that routinely leaves
them without reliable power for
months. Larger solar installations have
also sprung up at factories and govern-
ment buildings over the past decade.
Jeong-hyeon, a North Korean escapee,
confirmed that many residents in Ham-
hung, the country’s second-most popu-
lous city, “relied on a solar panel, a bat-
tery and a power generator to light their
houses and power their television”.
But solar power is still only a partial
solution to the country’s energy woes.
“It is really hard to get electricity when
the rainy season comes,” Jeong-hyeon
said. “We would turn the light on when
we ate and then we turned it off right
away.”
North Korea’s ramshackle electricity
grid draws on ageing hydro and coal-
fired thermal power stations, many
built during the cold war with Chinese
and Soviet assistance. UN sanctions
restrict the regime’s imports of refined
oil and petroleum products. Pyongyang
relies on shipments from China and
Russia, as well as networks of smugglers
and organised criminal groups.
“North Korean citizens buying and
installing solar panels at their homes
illustrates not only the challenges they
face, but the initiative they show in
replacing basic services the state does
not provide,” said Martyn Williams, a
senior fellow at the Stimson Center.
The need for alternative power
sources is even more acute in remote total power generation capacity in 2021 to siphon off power from local factories.
areas. One North Korean escapee told was 8,225 megawatts. The equivalent David von Hippel, a senior associate
researchers from the Stimson Center’s figure for South Korea, which has a pop- at the Nautilus Institute in California
38 North programme that they only ulation about twice that of the North, who has worked on renewable energy
received electricity for a few hours a was 134,000MW. projects in North Korea, said
year, for example on January 1, so they Under North Korea’s two-tier energy Pyongyang’s interest dated to the 1990s
could watch leader Kim Jong Un’s new system, which prioritises industrial when the country suffered power short-
year address. facilities, the only way for many citizens ages after the collapse of the Soviet
According to Statistics Korea, a South to access electricity is to pay state func- Union.
Korean government body, North Korea’s tionaries to allow them to install cables In 1997, the regime sent a delegation
of engineers to the US National Renewa-
ble Energy Laboratory in Colorado. The
team also met US energy department
officials in Washington. “North Korea
may not have the greatest weather con-
ditions for solar, but it is no worse than
Britain or South Korea,” said von Hip-
pel.
Renewable energy has also provided
an opportunity to extract money from
UN climate programmes. Pyongyang
received millions of dollars in UN fund-
ing between 1997 and 2014 for projects
ranging from small wind energy devel-
opments to improving seed production
for sustainable agriculture.
Solar panels are seen on a residential building in Pyongyang — Charles Dharapak/AP The regime has accelerated the
construction of solar installations over
the past decade, according to the Stim-
son Center, with a wind and solar farm
run by the air force and panels on the
finance ministry, central bank, foreign
exchange bank and IT ministry.
The Korea Energy Economics Insti-
tute in Seoul estimated that 2.88mn
solar panels, mostly small units, were in
use across North Korea, accounting for
about 7 per cent of household power
demand. The KEEI estimated that more
than 1mn panels were transported into
North Korea from China in a probable
contravention of UN sanctions.
Signs have emerged in recent months,
however, that the regime intends to
assert tighter control over the sector. In
June, a state television broadcast
encouraged citizens to give up their pan-
els and connect to collectivised solar
energy farms. The private panels dem-
onstrated how citizens were “becoming
more self-supporting and self-suffi-
cient” from the government for electric-
ity, said Ji-young, an escapee and former
Pyongyang resident.
Monday 28 August 2023 ★ FINANCIAL TIMES 7
8 ★ FINANCIAL TIMES Monday 28 August 2023

INTERNATIONAL

China exploits sanctions to undermine dollar

FT series Weaponisation of the world’s reserve currency in developing markets advances push for global renminbi
MICHAEL STOTT AND JAMES KYNGE
LONDON
Argentina faced a familiar problem at
the end of last month. The South Ameri-
can nation was struggling to repay the
IMF $2.7bn from its latest $44bn bail-
out. The solution, however, was uncon-
ventional. With its net dollar reserves in
the red, Buenos Aires settled the pay-
ment partly in renminbi. “Argentina
will not use a single dollar from its
reserves to make the payment,” crowed
Sergio Massa, economy minister.
The transfer in the Chinese currency
was only Argentina’s second to the IMF.
“These are indications of broader
changes happening in the international
financial system, which will become
permanent,” said a senior official at the
Argentine economy ministry. “These
shifts will take time, but they will not be
reversed.”
On the other side of the globe, Bangla-
desh also alighted on the renminbi as
the answer to a problem it had in April:
how to make stalled payments to Russia
for a nuclear power plant. Dollars were
not an option because of US sanctions,
and rouble payment was not feasible for
Dhaka, so the two nations opted for the
renminbi instead.
Developing economies have long
chafed at the dominance of the US dollar
in global trade and finance, particularly
as America’s share of the global econ-
omy has more than halved since the sec-
ond world war and new powers such as
Brazil, China and India emerged.
“De-dollarisation” has been on the anti-
imperialists’ radar for decades but the
overwhelming power of the US currency
meant it amounted to little more than a
slogan until recently, say economists.
With the expansion of US economic
sanctions and the explosion of new tech-
nologies for international payments,
cracks are starting to appear in the dol-
lar’s once-impregnable position. And
China, with its embrace of the digital
renminbi, or e-yuan, and its drive to
develop an alternative global payments
system, is hoping to take advantage.
The aim is not to depose the dollar but
to chip away at its dominance — and,
crucially, to create enough space for
China’s economic survival if the US one
day targets it with the type of sanctions
it has imposed on Russia.
“The US uses its financial power as a
geopolitical weapon and the hegemony
of the US dollar is a big part of this,” said
one Chinese official, who declined to be
identified. “If the US targets any devel-
oping country with sanctions through
the payments system, we will suffer.”
FT montage; Dreamstime
The list of individuals and entities US Interests, traces three key develop-
placed under sanctions by the US Treas- ments: Iran being banned from the Swift
ury’s Office of Foreign Assets Control global financial messaging network in
now runs to 2,206 pages and lists more 2012, economic sanctions on Russia in
than 12,000 names. Their use has accel- 2014 after its annexation of Crimea —
erated sharply in the past decade as suc- making it by far the biggest nation ever
cessive US presidents have opted for an under sanctions — and the US trade war
apparently low-cost, bloodless solution with China starting in 2018.
to foreign policy problems. “These three events really accelerated
Agathe Demarais, author of Backfire: the shift in thinking of rogue coun-
How Sanctions Reshape the World Against tries . . . to turn away from western
financial mechanisms,” she said.
Western sanctions have not just upset
authoritarian states. They have also
angered emerging powers such as Bra-
zil, which believe the international
financial system should not be weapon-
ised.
“Today there is a lot of discomfort
with the international financial system
based on the dollar,” said Celso Amorim,
top foreign policy aide to Brazilian pres-
ident Luiz Inácio Lula da Silva. “The
main factor behind that is sanctions.”
Eswar Prasad, professor at Cornell
University, agrees that “practically
every country around the world, includ-
ing rivals as well as traditional allies of
the US, would dearly love to ditch the
dollar-denominated financial system”.
The difficulty for emerging powers
seeking an alternative is that the dollar
is so deeply embedded in the interna-
tional financial system. Economists
have long held that the “network effect”
of such widespread dominance will
doom any effort to replace the dollar.
But across the financial system, China
has been chipping away at the US cur-
rency, offering its own alternatives.
Beijing’s focus has been to gradually
More on ft.com dilute the power of Belgium’s Swift, the
This is part of a global platform through which about
series on what 90 per cent of money moved across bor-
the US-China
stand-off means ders is arranged. China’s strategy to
for other achieve this is multipronged, persistent
countries and starting to show important results,
ft.com/ analysts say. One part is to create a
middlepowers larger pool of renminbi liquidity in off-
shore capital markets so as to increase
the supply of Chinese currency to trad-
ers and investors.
Another is the establishment of the
Cross-Border Interbank Payment Sys-
tem (Cips), a Chinese rival to Chips, the
world’s largest private sector dollar
clearing and settlement system, and to
Swift. Total settlements on Cips jumped
more than a fifth to Rmb97tn in 2022.
Other strands are the international
launch of the digital renminbi, which
allows for transactions to take place
without going through Chips or Swift.
“That is going to become a totally dif-
ferent system . . . completely cut away
from the western financial regulators,”
said Zongyuan Zoe Liu at the Council on
Foreign Relations think-tank in New
York. “The e-yuan coupled with Cips
would be quite a potent force for anti-
western sanctions because, for a sanc-
tion to be triggered, [the US authorities]
have to know the information about the
transaction.”
China’s desire to promote its own cur-
rency has been stymied by the fact that
it is not fully convertible. Nevertheless,
in March the renminbi surpassed the
dollar and became the most-used cur-
rency in China’s own cross-border pay-
ments, according to China’s State
Administration of Foreign Exchange.
Stephen Jen, a former Morgan Stanley
currency expert, said in April that the
dollar was losing its international
reserve status faster than generally
accepted. When adjusted for exchange
rate movements, he said its share of
global reserves had fallen to 58 per cent
in 2023 from 73 per cent in 2001.
While there are signs of progress,
other analysts say Beijing is still years
away from being able to even dream of
‘The US breaking the US dollar’s “hegemony”.
One success has come in offshore cap-
uses its ital markets. Cross-border debt denom-
financial inated in renminbi has boomed this
year with sales of “panda bonds” by for-
power as a eign issuers rising to Rmb75bn
geopolitical ($10.4bn) so far — already topping the
full-year record set in 2021, according to
weapon Chinese data provider Wind.
and the Issuance of renminbi-denominated
“dim sum” bonds in Hong Kong is also at
hegemony a new high over the same period, having
of the US topped Rmb320bn, according to data
from Bloomberg.
dollar is a In energy markets, where dollar pric-
big part ing is the global norm, President Xi Jin-
ping told Gulf Arab leaders at a summit
of this’ in Saudi Arabia in December that he
wanted to see the Chinese currency
used to trade oil and gas. The first ren-
minbi-settled liquefied natural gas
transaction on the Shanghai exchange
was reported in March between China’s
national oil company and France’s
Total.
Emerging powers have also been
quick off the mark with digital pay-
ments systems, such as WeChat Pay in
China, Unified Payments Interface in
India, Pix in Brazil and the M-Pesa
mobile money service in Kenya. The
west is lagging behind, with the US and
Europe examining the possibility of dig-
ital currencies and payments systems
still dominated by Visa and Mastercard.
Few believe the dollar is likely to be
toppled from its perch soon. But they do
see an increasingly fragmented interna-
tional financial system, with the ren-
minbi playing a bigger role. All this will
satisfy emerging powers’ desire to diver-
sify. “This is less about the dollar losing
its position as the world’s top currency,”
said Daniel McDowell, a professor at
Syracuse University.
“But I genuinely do believe there are
risks here for US power, especially the
ability to use sanctions against China.”
Additional reporting by Andres Schipani in
Lima and Hudson Lockett in Hong Kong

Housing

Germany’s ruling party plans rent curbs

PATRICIA NILSSON — LÜNEN
Germany’s ruling Social Democratic
party is set to propose a three-year rent
break across the country, as tenants
struggle to cope with the soaring cost of
housing in Europe’s largest economy.
“We need to create breathing room — we
need a rent freeze for the next three
years,” senior SPD lawmaker Verena
Hubertz told Bild am Sonntag, adding
that Chancellor Olaf Scholz would out-
line measures today to tackle the coun-
try’s cost of living crisis. The SPD is the
most powerful group in Germany’s
three-party coalition government.
Rents have this year risen at record
rates across Germany, where the cost of
housing has traditionally been stable
enough for families to live in rented
accommodation throughout their lives.
Among Germany’s 41mn households,
slightly less than 60 per cent live in
rented accommodation, according to
the German Federal Statistical Office.
Germans are also facing higher prices
for other goods. Overall consumer price
inflation was 6.2 per cent in the year
to July, against a eurozone average of
5.3 per cent.
Existing rules aimed at regulating the
property market cap rent increases at
20 per cent over three years — or 15 per
cent in areas that have been designated
as having particularly tight housing
markets. The coalition had agreed to
lower this cap to 11 per cent, something
the SPD has now signalled is not enough.
The party’s plans, according to a pro-
posal seen by news agency Deutsche
Presse-Agentur, is to allow rents to rise
by a maximum of 6 per cent in cities
where demand is very high, while a
blanket freeze would apply across the
rest of the country.
Berlin and Leipzig have seen rents rise
steeply. But a survey by property portal
Immowelt found midsized cities had
also see sharp increases. In Dormagen in
North Rhine-Westphalia, average rents
rose 18 per cent in the past year.
The plans also propose stricter pun-
ishments of landlords who skirt rules
and charge tenants illegally high rents.
Germany’s housing market was
suffering from supply shortages before
the war in Ukraine. Since then, inflation
for food and energy has soared, while
the arrival of nearly 1mn Ukrainian ref-
ugees has placed more pressure on the
stock of existing housing.
Concern has also grown over a loom-
ing shortage of housing, especially
cheaper flats. With rising interest rates,
building housing has become more
expensive and a recent study found the
country needed 700,000 more flats.
The rent freeze proposal has already
caused a rift between the SPD and its
coalition partner, the liberal Free Demo-
cratic party. The FDP has said rising
rents are mainly attributable to a lack of
housing — a problem it wants to solve by
liberalising housing markets rather
than introducing more regulation.
Daniel Föst of the FDP said the gov-
ernment had “rightly” put €15bn
towards social housing, but added:
“Only when we build more, faster
and cheaper will we create enough
affordable housing.”
Monday 28 August 2023 ★ FINANCIAL TIMES 9
10 ★ FINANCIAL TIMES Monday 28 August 2023

Sphere of influence Content creators beware: the leap from YouTube fame to an initial public offering is no easy feat y PAGE 24

Growing use of Rallying cry Japan central bank urged to

come out fighting for faltering currency
SoftBank’s
war chest set
ESG metrics in to hit $65bn
via Arm float
setting bosses’ LEO LEWIS AND KANA INAGAKI — TOKYO

SoftBank’s listing of chip designer Arm

is set to boost Masayoshi Son’s deal war

pay draws flak chest to as much as $65bn after he

3 Asset managers express concerns
3 Profitability-tied factors decline
PATRICK TEMPLE-WEST AND EVA XIAO
NEW YORK
A growing number of blue-chip US com-
panies are using environmental and
social factors to decide bonuses for top
executives, but investors are worried
that the metrics are being gamed to
increase payouts.
Three-quarters of S&P 500 compa-
nies have disclosed that environmental,
social and governance metrics contrib-
uted to executives’ pay, up from two-
thirds of companies in 2021, according
to data from The Conference Board and
Esgauge, an ESG data analytics firm.
More than half of all S&P 500 compa-
‘We are sceptical . . . Often
they are very subjective,
fluffy and easily gamed’
Ben Colton, State Street
nies have diversity and inclusion com-
ponents in executives’ pay, according to
Semler Brossy, a consultancy. Almost
half of these businesses included envi-
ronmental metrics as part of bonuses,
up from a quarter of companies in 2020.
Since 2015, pay factors tied to profita-
bility and business matters have
declined at more than 13,000 global
companies, while environmental and
social pay factors have surged, accord-
ing to ISS ESG, a division of Institutional
Shareholder Services.
Now some of these determinants of
executive pay are coming under fire
from asset managers.
“We are sceptical of ESG metrics being
used in compensation,” said Ben Colton,
head of stewardship at State Street
Global Advisors, which manages
$3.79tn. “Oftentimes they are very sub-
jective, fluffy and easily gamed.”
At Southwest, chief executive Robert
Jordan’s pay increased 76 per cent to
$5.3mn last year even though the airline
angered passengers by cancelling more
than 16,700 flights during the holiday
season.
The pay plans at Southwest have
drawn fire from Strive Asset Manage-
ment, a conservative-leaning firm that
has criticised ESG investing principles.
Strive was co-founded by Vivek Ramas-
wamy, now running as a Republican in
the 2024 US presidential primary.
In a letter this week to Southwest, it
said: “There is no easier way to cut the
company’s carbon footprint than to
ground thousands of flights.”
Southwest did not respond to
requests for comment.
About 190 executives at S&P 500
companies have an employee engage-
ment pay metric, the Esgauge data
shows. Unlike financial metrics tied to
earnings or share price performance, it
was almost impossible for outsiders to
tell if ESG pay metrics are worthwhile
“or merely line CEOs’ pockets with
performance-insensitive pay”, two Har-
vard researchers said in January paper.
American Express paid 15 per cent of
executives’ annual bonuses for diver-
sity, talent and culture achievements. It
was unclear how those achievements
were met, the Harvard professors said
in their research. Boss Stephen Squeri
earned the maximum annual bonus
allowed by the company for 2022:
$10.3mn, up from $8mn in 2021.
At Dow, executive pay ESG metrics
include a “customer experience index”,
which measures prospective customer
sentiment, as well as workforce diver-
sity. ESG metrics comprised 20 per cent
of executives’ annual bonuses at Dow.
CEO Jim Fitterling earned a $3.5mn
annual bonus for 2022, down from
$5mn in 2021.
Dow said its executive pay pro-
gramme was “in line with market prac-
tice” and it had added “quantifiable ESG
metrics” in 2020.
ESG ‘war’ page 12
Yen falls to lowest level against the dollar since November
¥ per $
Sep 2022
Source: Refinitiv
MARY MCDOUGALL
The yen slumped to its lowest level
against the dollar since November on
Friday, cranking up pressure on the
Bank of Japan to tighten its ultra-
loose monetary policy and support
the faltering currency.
The Japanese currency slid to
146.6 per dollar after Jay Powell, chair
of the US Federal Reserve, raised the
prospect of further domestic interest
rate rises, potentially widening the
vast gap between US and Japanese
borrowing costs.
Japan has been the only major
developed market not to raise interest
rates over the past 18 months as coun-
tries have grappled with the worst
inflation shock for a generation.
Although the country has spent
decades fighting the threat of defla-
tion, signs of economic resilience and
domestically driven price rises are
raising market expectations that the
BoJ will tighten its stance.
“Given the resilience of the Japa-
nese economy with the most recent
services producer prices surprising to
the upside, I believe that there will be
greater pressure on the Bank of Japan
to tighten monetary policy at a faster
pace to lean against a yen deprecia-
tion,” said Tomasz Wieladek, chief
European economist at T Rowe Price.
The strain on the currency comes
three weeks after the BoJ’s surprise
decision to loosen controls on its gov-
ernment bond market, easing a cor-
nerstone of its ultra-loose monetary
policy.
The BoJ said it would tolerate yields
on 10-year government bonds of up to
1 per cent, from a previous level of
0.5 per cent. Yields on benchmark
Japanese government bonds have
drifted higher since, rising 0.03 per-
centage points this week to 0.66 per
cent. Investors expect this trend to
continue while inflation remains
above its 2 per cent target.
“We think that higher inflation will
cause the BoJ to adjust their forecasts
at their next quarterly monetary pol-
icy meeting . . . This may serve as a
prelude to the BOJ declaring victory
Richard A. Brooks/AFP via Getty Images
125
130
135
140
145
150
2023 Aug
over deflation and scrapping yield
curve control,” said Mark Dowding,
chief investment officer at RBC Blue-
bay Asset Management. “We would
see this pushing 10-year yields
towards 1.25 per cent. Until then, we
think that yields will continue to
creep higher.”
Investors say the rise of Japanese
yields will accelerate bond sales in
other major markets as Japanese
investors seek out higher returns
closer to home.
According to Commerzbank
research, Japanese investors owned
more than $2tn in foreign long-term
debt securities at the end of 2022,
with large holdings in the US, France,
the Netherlands, and Germany.
Many big Japanese investors such as
insurers routinely hedge their cur-
rency exposure when they buy for-
eign bonds. Rising interest rates in the
rest of the developed world have
sharply driven up the cost of doing so,
in many cases more than cancelling
out the growing yield gap between
Japan and other economies.
vowed to go “on the counteroffensive”
in pursuit of expansion.
Analysts, who based their projections
on the Japanese group’s past dealings,
said SoftBank could raise almost half
that sum if it took advantage of Arm’s
IPO by using its own stash of shares as
collateral for loans from banks.
As of the end of June, SoftBank had
accumulated cash of ¥5.1tn ($35bn)
after the group offloaded a string of
assets to bolster its balance sheet follow-
ing record losses at the Vision Fund, an
investment vehicle that the Japanese
conglomerate manages.
The sale included most of its shares in
the Chinese ecommerce group Alibaba,
Son’s most lucrative bet and an asset
SoftBank had frequently used as collat-
eral to raise cash.
“Arm will become the new Alibaba
funding source,” said David Gibson, a
SoftBank analyst at MST Financial.
“Masa is likely in the next six to 12
months to begin a spending spree over
the next few years with over $50bn in
capacity that we have not seen since the
first Vision Fund.”
Some investors believe Son has been
preparing since last year to make a
transformational, large-scale acquisi-
tion in an effort to regain his footing in
the technology sector.
The Arm listing comes at a critical
juncture for SoftBank, as the value of its
investment portfolio had been battered
by the tech downturn.
Last year Son appeared at a press con-
ference and declared that he was going
into “defensive mode” — a phase that
appeared to involve ceding day-to-day
control of SoftBank to the more con-
servative chief financial officer Yoshim-
itsu Goto.
Yet when Son returned to the public
eye in June, he declared that interlude
over, saying the company was ready to
go on a “counteroffensive”. SoftBank,
the largest technology investment con-
glomerate, would focus on artificial
intelligence, he said.
Gibson said that it was possible that
following the Arm IPO, Son’s company
could hold about $65bn in cash and bor-
rowings to finance an investment spree.
That figure would include about $30bn
in structured finance.
SoftBank declined to comment.

Support services. Training

Europe races to close green skills gap
Demand surges for workers
who can fit and maintain
renewable energy sources
MARTHA MUIR — LONDON
Companies and educational groups
across Europe are ramping up training
programmes to close the burgeoning
green skills gap, as demand surges for
workers who can install and maintain
renewable energy sources.
The training targets the areas of great-
est immediate shortage, including heat
pump and solar panel installation, resi-
dential and commercial building
upgrades and electric vehicle charging
installation. Across Europe, more than
1mn solar workers will be needed in the
next seven years to meet 2030 renewa-
ble energy targets, the SolarPower
Europe industry body estimates.
In the UK alone, PwC forecasts that up
to 66,000 new heating engineers, insu-
lation specialists and glaziers will need
to be added to the workforce each year
in the medium term. Many skills in
demand, however, require a high level
of professional and scientific expertise
that involves years of training, rather
than weeks or months. Roles in nuclear
power, and safety and engineering made
up more than half of the job advertise-
ments surveyed by labour market ana-
lytics company Lightcast. Mechanical
and electrical engineer positions
accounted for another 20 per cent of
“green” vacancies, it found.
But for roles that do not require sev-
eral years of education, corporate in-
house training and technical academy
programmes are attempting to fill the
gap. The British renewable energy
group Octopus runs a training centre in
the industrial area of Slough, where it
says it can provide fully funded training
for up to 1,000 staff a year in installing
renewable energy systems.
“Most of [those] who we employ right
now are people who have some experi-
ence in gas or heating and are thinking
about whether there will be a career
installing gas boilers in five or 10 years
from now,” said Octopus energy services
chief executive John Szymik.
Training is carried out in two houses
where staff can practise removing gas
boilers and installing heat pumps, as
well as how to interact with customers
and explain the new technology to
them. Szymik said it usually takes three
to four weeks to retrain new staff.
Munich-based renewable energy
company BayWa r.e. started an internal
“engineering academy” this year, run-
ning courses attended by about 40 staff
a month, mostly by would-be solar engi-
neers. Statkraft, another renewables
provider headquartered in Oslo, is offer-
ing stints in design and procurement
across different types of renewable
energy projects.
Recruitment companies are also tak-
ing advantage of government-funded
schemes aimed at training the work-
force of the future.
The UK’s new £5mn heat training
grant offers £500 towards learning how
to install heat pumps at 60 approved
training centres. The government has
also pledged £8.9mn to train retrofit-
ters, and promised a heating technician
apprenticeship scheme later this year.
Another £63mn is earmarked for
“returnerships”, which would include
green reskilling, designed to attract
those aged 50 and above who are look-
ing to re-enter the workforce.
UK-based employment group Reed
last month launched a green jobs arm
aimed at recruiting 1,000 people each
year, in partnership with the Oxford
Energy Academy, a heating and plumb-
ing training and assessment centre.
The training will involve building
insulation, double-glazing, improved
ventilation design and installation of
more efficient heating systems.
Reed Environment said it would tar-
get those registered as unemployed, as
well as local businesses and authorities,
with the training supported by the fees
paid by the participants and govern-
ment grants.
The Oxford Energy Academy also
offers training in EV charger and solar
panel installations, paid for by self-
employed individuals and companies.
Most of those it trains are already estab-
lished as plumbers, electricians and
engineers, it says. “We get a mixed bag
in each classroom, some people sail
More than 1mn solar workers will be
needed in the next seven years
through the course in three days, other
take five. It depends on their level of
knowledge and plumbing skills going
in,” said OEA director David Bendell.
Reed Environment director Tom
Hoines said retrofitting also offers an
opportunity for new starters, such as
school leavers, as well as those changing
jobs. “You don’t need years of experi-
ence or an existing qualification,” he
noted.
London-based education provider
City and Guilds has also launched
courses in EV charger installation and
retrofitting, which can be funded by the
government depending on age and
income, and has awarded bursaries to
disadvantaged individuals to train in EV
charger installation.
But industry associations note there
remain large hurdles to developing at
scale and speed the skill base needed for
the green energy shift among existing
small business owners. Many trades-
people are self-employed, so taking
time out to reskill carries a risk of lost
income.
“I think we’ve got to be mindful that
the £500 might cover the cost of the
course, but it won’t cover the amount of
money they would have made in the five
days they haven’t worked,” said Char-
lotte Lee, chief executive of the Heat
Pump Association in the UK, estimating
that about 40,000 people from its mem-
bership base could be trained to install
heat pumps each year.
Tradespeople nearing the end of their
working lives also may not see an incen-
tive in preparing for new technologies.
“The question for some of them is: ‘Can I
just keep doing what I’m doing for a few
more years until retirement?’” said Carl
Sizer, PwC UK’s head of regions.
Monday 28 August 2023
Big Oil poised to open new frontier in Namibia
Shell and Total are leading efforts to open an offshore field just as demand starts to fall amid green energy transition
TOM WILSON
Two of Europe’s biggest energy compa-
nies are stepping up efforts to open a
potentially giant oilfield off the coast of
Namibia in one of the clearest signs that
the industry is pursuing new fossil fuel
resources.
UK-based Shell, which has drilled four
exploration wells in the Atlantic Ocean
off Namibia’s southern coast since 2021,
received approval in June to drill 10
more. This year France’s TotalEnergies
will spend $300mn — half of its global
exploration budget — in the country.
If they succeed in identifying com-
mercial volumes of oil, the southern
African nation could become one of the
world’s newest petrostates, just when
global oil demand, according to some
estimates, has started to decline due to
the transition to cleaner sources of
energy.
Both Shell and Total have plans to
slowly cut their dependence on oil pro-
duction to reduce their corporate emis-
sions to net zero by 2050. Shell has
already reduced its oil output by 25 per
cent in the past three years and says it
will maintain production at current lev-
els until 2030.
But they also argue that the world will
continue to consume significant vol-
umes of oil until 2050, even as the sup-
ply of less-polluting energy sources
increases, adding that new oilfields will
be needed to meet demand even as it
falls.
“Namibia continues to be a fantastic
opportunity because it plays into the
strength of our portfolio in deepwater
[oil production],” Shell chief executive
Wael Sawan told investors in July,
although he added it was too early to
judge how quickly the oilfields could be
developed.
The expansion in activity in Namibia
by both companies, which operate sepa-
rate offshore projects, follows the drill-
ing of several successful exploration
wells in the past 18 months.
Total and its partners — QatarEnergy,
Impact Oil and Gas and Namibia’s state-
owned oil company Namcor — first
announced the discovery of “significant
light oil and associated gas” at the Venus
site in February 2022.
This field has the most potential and
is likely to hold more than 3bn barrels of
oil, which would make it the eighth big-
gest oil discovery in the world since
2000 and the largest in sub-Saharan
Africa, according to consultants Wood
Mackenzie.
Although significantly smaller than
Saudi Arabia’s Ghawar field, the largest
in the world, holding more than 60bn
barrels, the development of Venus alone
would make Namibia a major oil
producer.
Total has drilled an appraisal well on
the Venus site and plans to run flow tests
this month, with results expected in
September. “Our focus will be Namibia
first,” Total chief executive Patrick
Pouyanné said in July. “We have a lot of
oil in place.”
Shell, which is also working with
QatarEnergy and Namcor, has drilled
three exploration wells, one appraisal
well and has already conducted a suc-
cessful flow test, which it said was the
first in the country.
Oil exploration is a challenging and
costly business that involves using geo-
logical knowledge and seismic imaging
Property
Real estate sector crisis puts Hanoi to the test
GREG MCMILLAN — HONG KONG
Vietnam’s leadership is under pressure
to introduce reforms to reinvigorate
the property sector after leverage
restrictions designed to limit risks to
the economy and an anti-graft crack-
down last year hobbled developers and
sent bond prices tumbling.
International bonds issued by the coun-
try’s largest property developers have
plunged to trade at cents on the dollar
after the government introduced new
reporting requirements, tightened
access to credit, and made arrests of
property tycoons on charges including
bond market fraud.
Vietnam’s property woes mirror those
in China, where the sector has been
roiled by a liquidity crisis for more than
two years after authorities moved to
rein in leverage, triggering a series of
high-profile developer defaults. Ever-
grande, the world’s most indebted prop-
erty developer, filed for bankruptcy
protection in the US this month.
In Vietnam, developers expanded
aggressively before the pandemic, tap-
ping domestic banks and bond markets
to fund growth. However, crossholdings
between developers created contagion
risk, while the extent of lenders’ expo-
sure to the sector raised concerns about
Namibia’s most promising areas are 200km-300km from the coast and in water more than 2,000 metres deep — Bilal Jawich/Xinhua/Alamy Live News
Total’s Venus discovery is eighth-largest this century
Top 15 liquid discoveries since 2000 (bn barrels)
0 2
Kashagan (Kazakhstan)
Eridu (Iraq)
Búzios (Brazil)
Libra/Mero (Brazil)
Tupi (Brazil)
West Irkinskoye (Russian Federation)
Yadavaran (Iran)
Venus (Namibia)
Johan Sverdrup (Norway)
Namavaran (Iran)
Bacalhau/Bacalhau Norte (Brazil)
Tulimaniq (US)
Sepia (Brazil)
Aram (Brazil)
Theta West (US)
Sources: Wood Mackenzie; Namcor
to guess what might be buried under-
ground and then sinking expensive
exploration wells to find out.
In Namibia’s case, the work is compli-
cated by the location of the most prom-
ising areas: between 200km and 300km
from the coast and in water depths of
more than 2,000 metres.
‘There is a big risk of
encouraging the initiation
of an industry that, long
term, is in secular decline’
“This clearly is pushing the bounda-
ries of previous deepwater and ultra-
deepwater developments,” said Ian
Thom, upstream research director at
Wood Mackenzie.
The early results have raised specula-
tion in the industry that the finds could
rival the series of discoveries from
2015-18 in Guyana, which turned the
tiny Latin American nation into a major
producer.
“This is incredibly early stages but
you can see the excitement,” Thom said.
“The amount of focus that Shell and
their ability to absorb losses in the event
of a downturn.
In a sign of the economy’s sensitivity
to the sector, the arrest last year of
Truong My Lan, chair of Van Thinh
Phat Holdings, sparked a run on Saigon
Commercial Bank until the country’s
central bank intervened to reassure
depositors.
The tumult set off a fire-sale of Viet-
namese real estate bonds, many of
which fell deep into distressed territory.
Hundreds of smaller developers and
property groups were forced into bank-
ruptcy, and thousands of projects were
suspended.
One $300mn bond maturing in 2026
from developer Novaland fell to 32 cents
The World Bank has cut its Vietnam
growth forecast from 8% to 4.7%
★ FINANCIAL TIMES 11
COMPANIES & MARKETS
unequal societies, second only to South
Africa, according to the World Bank.
Namibia’s oil ministry and represent-
atives of Namcor were not available for
comment. International groups have
mined diamonds and uranium in
Namibia for decades but there is no his-
tory of oil production. Successful devel-
opment of the offshore fields would
require the building of an entire new
industry, as it did in Mozambique on
Africa’s east cost, where Total has led a
fraught attempt to develop an offshore
gasfield since 2010. The French energy
major suspended operations in 2021
after attacks by Islamist insurgents.
Given the time it may take to develop
the Namibian fields — Shell has said it
would not expect any oil from the coun-
try until after 2030 — there is a chance
that oil demand could already be declin-
ing when the projects start to produce.
“There is a big risk of encouraging the
initiation of an industry that, at least
long term, is in secular decline,” said
Mike Coffin, a former BP geologist who
is now the head of oil, gas and mining at
the think-tank Carbon Tracker. “That
doesn’t seem like a great bet for the eco-
nomic development of any country.”
The oil companies argue that demand
will remain significant even as it
declines, with potential developments
such as Namibia offering opportunities
to use advanced technology to produce
oil with lower operational emissions.
200 km
“Whatever scenario you look at, it’s
4 6 8 10 12 very clear that, even in 2050, oil and gas
NAMIBIA will remain a key part of our energy
mix,” said Impact’s Ahmed.
However, operational emissions only
Exclusive
economic zone make up 15 per cent of the carbon emis-
sions associated with a barrel of oil; the
Blocks rest is produced when it is burnt.
“The elephant in the room is that
Partners 2912
2913B
2913A
TotalEnergies 2914B projects like Namibia might have lower
SOUTH AFRICA
QatarEnergy emissions intensity, but you’re still add-
Impact Oil & Gas Partners ing a lot of barrels that will get com-
Namcor Shell busted and increase atmospheric CO₂,”
QatarEnergy said Coffin.“If they’re sanctioned to go
SOUTH ATLANTIC OCEAN Namcor
ahead, it’s unlikely that some existing
production somewhere else would shut
earlier.”
TotalEnergies are putting into Namibia,
it is clear that they see enormous poten-
tial here.”
When the privately held UK-based
exploration group Impact entered
Namibia in 2014, the number of failed
wells meant it was seen as a “graveyard”
for oil exploration, said chief executive
Siraj Ahmed. “A place where there’s no
real potential for hydrocarbons.”
But Impact’s thesis was that over
thousands of years, the Orange River
that runs across Namibia and South
Africa had dumped resource-rich sedi-
ment further into the Atlantic Ocean
than had previously been explored.
Total acquired part of Impact’s licence
in 2017 and was joined by QatarEnergy
two years later. QatarEnergy did not
respond to a request for comment.
Although oil executives caution that it
is too soon to predict whether the fields
will be developed or how much revenue
they might generate, the initial finds
have raised Namibian hopes of a future
economic windfall that could help fur-
ther develop the country.
Namibia, with its small population of
2.5mn, has a GDP per capita of about
$5,000, similar to Indonesia and Mongo-
lia, and is also one of the world’s most
on the dollar, while a $200mn bond
maturing the same year from rival BIM
Land dropped to 52 cents.
Real estate demand has sputtered
while consumers delay purchases of
new homes over doubts that struggling
developers will complete existing
projects.
The crisis has ramifications for the
country’s economic recovery from the
pandemic.
While Vietnam was one of Asia’s fast-
est-growing economies last year, the
World Bank cut its GDP growth forecast
this month to 4.7 per cent from an 8 per
cent expansion last year, citing weak
domestic consumption.
Vietnam’s Communist party-run gov-
ernment was expected to consider addi-
tional actions to support the property
market and shore up economic growth
during the 25th session of the National
Assembly Standing Committee, the leg-
islature’s top body, this month in Hanoi.
As yet, there have been no announce-
ments on measures to support the prop-
erty market.
“We might see measures that incen-
tivise banks to deal with these issues [in
the property market]. We might see a
relaxation of rules,” said Xavier Jean,
south-east Asia corporate ratings lead at
S&P Global.
12 ★ FINANCIAL TIMES Monday 28 August 2023

COMPANIES & MARKETS

Travel & leisure Financials

Fledgling Riyadh Air lays out niche strategy BlackRock

Focus is on point-to-point
traffic rather than taking
on Gulf transfer-hub rivals
SAMER AL-ATRUSH — DUBAI
New airline Riyadh Air plans to focus on
the niche market for flights to and from
Saudi Arabia rather than competing
with Gulf neighbours’ hubs, its chief
executive has said, in an explanation of
its “super- aggressive” growth plans.
Tony Douglas was speaking after the
airline in March announced its first air-
craft order, for at least 39 Boeing 787
wide-body jets with options for 33 more.
Riyadh Air is also in talks with manu-
accused of
facturers for a fleet of narrow-body jets,
which Douglas said should allow Riyadh
Air to serve more than 100 destinations
by the end of the decade.
However, Douglas, a former chief
executive of Abu Dhabi’s Etihad, said
Riyadh Air would not use the aircraft to
take on directly Qatar Airways or
Dubai’s Emirates, the region’s top two
carriers. Both airlines, as well as Etihad,
have grown by offering connecting
flights through their home airports.
Douglas said Riyadh Air would focus
on carrying passengers going to and
from Saudi Arabia, which has been woo-
ing tourists and investors.
“If we look at our closest neighbour,
Qatar, obviously Qatar Airways have got
Market questions. Week ahead
an incredible international network,
global reach, and a population of give or
take 2mn people.”
Qatar’s population was “relatively
small” and Qatar Airways did a “bril-
liant job” of offering its home country
“world-class connectivity”. But “a very
substantial percentage of that traffic is
transfer. Very little of it proportionally is
point-to-point”.
Riyadh Air is owned by Saudi Arabia’s
PIF sovereign wealth fund. Its creation
has led to questions about whether the
country needs another carrier alongside
Saudia, the flag carrier, and budget air-
line Flynas.
The $650bn public investment fund,
chaired by day-to-day ruler Crown
Prince Mohammed bin Salman, has
taken on a big role in the economy, with
involvement in everything from video
gaming to tourism, sport, electric vehi-
cle manufacturing, camel milk produc-
tion and nicotine vapes.
Douglas accepted that the airline’s
plans were “super-aggressive”. But he
insisted that it would be a commercially
viable company and there was an abun-
dance of demand.
“The demand for its citizens to have
better connectivity around the globe is
obviously growing,” he said of Saudi
Arabia. More tourists and visitors were
expected to come to the kingdom.
Saudia is expected to shift towards
catering to the millions of pilgrims who
visit holy sites in the country. Douglas
said that Riyadh Air would offer “abso-
lutely obsessional attention to detail”
about the “guest experience” on board.
“For many international guests in
the future, the first impression they’ll
get is at 38,000 feet with Riyadh Air,”
he said of the airline’s importance to
Saudi Arabia.
The airline is meant to receive its first
11 jets from Boeing in 2025 and more
incrementally as they come off the
assembly line.
Resurgent demand has been strong in
the Middle East. According to an Oliver
Wyman forecast, fleets in the region are
expected to grow 5 per cent annually
over the next decade.
putting up
white flag in
ESG ‘war’
NICHOLAS MEGAW, BROOKE MASTERS
AND MADISON DARBYSHIRE — NEW YORK
Liberal-leaning US pension fund lead-
ers and politicians have warned Black-
Rock and other big asset managers
against backtracking on their commit-
ment to environmental, social and gov-
ernance causes, after a sharp drop in
support for shareholder proposals at
annual meetings.
New York City comptroller Brad Lander
accused BlackRock, the largest money
manager, of caving in to a “misinformed
and shortsighted war against ESG at the
behest of special interests”.

Jobs growth holds clues for US inflation battle
Will US jobs data bolster hopes of
a ‘soft landing’?
Another solid month of US job creation
could help keep alive investor hopes
that the world’s largest economy is
heading for a so-called soft landing,
even as the Federal Reserve maintains
its hawkish bias towards inflation.
Economists are predicting that
employment numbers this Friday will
show non-farm payrolls grew by about
170,000 in August.
If correct, that would mark the slow-
est rate of job creation since January
2021, but still roughly at the level
needed to absorb most new entrants to
the jobs market.
“We expect further signs of gradual
labour market moderation, but not out-
right weakness,” Credit Suisse’s eco-
nomics team said in a note to clients.
Fed chair Jay Powell noted in a speech
last Friday the unusual jobs market con-
ditions where the number of new open-
ings was falling but unemployment
remained very low.
“There is evidence that inflation has
become more responsive to labour mar-
ket tightness than was the case,” he
added. “These changing dynamics may
or may not persist, and this uncertainty
underscores the need for agile policy-
making.”
The US economy grew by 2.4 per cent
in the three months to June, according
to a first estimate of gross domestic
product. A fuller report on Wednesday
is expected to show little change to that.
Jennifer Hughes
Where is China’s economy
heading?
This year has been a grim one for the
Chinese economy. With the country’s
long-awaited post-pandemic rebound
fizzling out, metrics such as industrial
output, retail sales and inflation have
repeatedly underperformed already-
lean forecasts. Separate figures showed
youth unemployment surging to a
record, before the measure was sus-
pended entirely.
August was a busy month for gloomy
headlines. The economy sank into two
separate measures of deflation for the
first time since November 2020, a prop-
erty sector liquidity crisis returned and
a cut to the one-year loan prime rate,
designed to stimulate lending, fell short
of market expectations.
Output from China’s factories, a
source of growth during previous eco-
Sightseers nomic cycles, has lagged while an ini-
take a break tially strong services sector rebound has
at the Lincoln lost momentum.
Memorial in Analysts at ING expect August’s
Washington: US Caixin China General Manufacturing
economists are purchasing managers’ index, a private
predicting the survey of activity, to slip to 49.1 on Fri-
slowest rate of day, which would be its lowest reading
job creation in this year. They expect a similar reading
August since for the official PMI, which places a
January 2021 greater emphasis on larger, state-owned
Shawn Thew/EPA-EFE/
Shutterstock
companies and is set for publication on
Thursday.
“We expect these figures to show a
further deterioration, as we await more
substantial support from the govern-
ment to boost domestic demand while
global demand remains weak,” the ana-
lysts wrote, adding that China’s slow-
down could drag on the economies of
trading partners such as Japan, South
Korea and Taiwan.
The consensus forecast for the official
non-manufacturing PMI, which covers
sectors including services, construction
and agriculture, is 51.3, which would
also be the weakest reading this year.
William Langley
Will eurozone inflation ease the
pressure on the ECB?
Eurozone inflation has halved from last
year’s peak of 10.6 per cent and it is
expected to show a further drop when
August data is released on Thursday.
The key question is whether it will slow
enough to convince the European Cen-
tral Bank to stop raising interest rates.
Recent business surveys indicate the
single currency bloc is heading for a
fresh downturn, prompting investors to
hedge their bets on the ECB raising rates
for a tenth consecutive time when it
meets on September 14. But much of
this hinges on inflation.
Economists polled by Reuters fore-
cast eurozone inflation to decline from
5.3 per cent in the year to July to 5 per
cent in the year to August, despite a
recent rebound in oil prices.
‘If inflation Angel Talavera, head of European
economics at consultants Oxford Eco-
fails to nomics, said the ECB’s decision “still
decline, this looks a coin toss”, while predicting a
“small decline” in inflation would be
could be enough for the central bank to pause its
enough for hiking cycle. But he warned: “If the
annual figure fails to decline, this could
ECB hawks be enough for ECB hawks to gain the
to gain the upper hand and push ahead with
another rate hike in September.”
upper hand A rebound in European tourism this
and push summer could keep services inflation
high. This would complicate matters for
ahead with the ECB, which has said that underlying
another inflation needs to fall sustainably before
it will stop raising rates.
rate hike’ “Given sticky core inflation — with
our forecast for 5.3 per cent year-on-
year in August and continued firm serv-
ices inflation — we maintain our base-
line for a final hike [by the ECB] in Sep-
tember,” said Sven Jari Stehn, head of
European economics at Goldman Sachs.
Martin Arnold
His comments came after data
released this week showed that
BlackRock voted in favour of just 7 per
cent of environmental and social-
related proposals at company annual
meetings in the 12 months to June.
The $9.4tn asset manager has been a
frequent target of attacks from US
Republicans who have accused it of
becoming too “woke”, and chief execu-
tive Larry Fink said earlier this year he
had stopped using the term ESG because
it had become too divisive.
BlackRock denies that the criticism
influenced its voting record.
Investor support for shareholder pro-
posals has fallen across the board since a
The NYC comptroller says
the asset manager caved in
amid a ‘misinformed and
shortsighted’ backlash
rule change in 2021 made it harder for
companies to block their inclusion on
proxy ballots. However, the decline at
BlackRock has been sharp.
The median support for environmen-
tal and social shareholder proposals so
far this year has fallen to 15 per cent,
according to Institutional Shareholder
Services data, from 25 per cent last year
and 32 per cent in 2021.
BlackRock supported 47 per cent of
such proposals in 2021 and 22 per cent
last year.
Michael Frerichs, Illinois state treas-
urer, said: “We think it’s important
everyone we work with is managing risk
responsibly and is not letting political
pressure influence the service they
provide.”
Tobias Read, treasurer for the state of
Oregon, did not comment directly on
BlackRock’s latest data but said he
would be emphasising “the importance
of recognising the risks that ESG issues
pose” to “all our partners and the com-
panies we invest in”.
Oregon invests hundreds of millions
of dollars in BlackRock funds and
owns a direct stake in it, according to
filings.
Some institutional investors make
their own voting decisions at share-
holder meetings rather than delegate
the responsibility to fund managers.
The New York City and Massachusetts
retirement systems, for example, said
that they voted based on their own
guidelines.
BlackRock declined to comment on
its relationships with clients. But it said:
“Our proxy voting decisions are made
solely to advance the financial interests
of our clients.”
Monday 28 August 2023
Premier League prepares for
TV rights auction kick-off
Analysts warn of drop in £5bn
value as broadcasters feel the
pinch from a slowing market
DANIEL THOMAS, SAMUEL AGINI
AND JOSH NOBLE
Premier League officials are sounding
out broadcasters ahead of a forthcoming
auction for the rights to show top-flight
football games on TV, in what will be an
important test of media spending as
their own customers endure a cost of
living crisis.
The 2019-22 Premier League rights
contracts with Sky, BT and Amazon —
worth about £5bn — were rolled over to
2025 during the pandemic, meaning
this will be the first competitive domes-
tic auction since 2018. But analysts have
warned there is a risk of a drop in values
due to the pressure on broadcasters.
The total value of European football
media rights has already stagnated,
according to analysts at Enders.
“If post-Covid inflation was factored
in, we estimate that the value would be
down 17 per cent on 2018-19 by 2023-24
in real terms,” they said, pointing to the
competitiveness of the broadcasting
market.
The retreat of telecoms operators
using football as a draw for broadband
packages in recent years has taken the
heat out of European auctions, media
executives say. Meanwhile, broadcast-
ers in the pay-TV market are under
pressure as consumers rethink increas-
ingly expensive subscriptions, alongside
a downturn in the advertising market.
“Obviously in a cost of living cri-
sis . . . the price of everything is a con-
cern,” admitted Richard Masters, chief
executive of the Premier League, earlier
this month. “That is down to our broad-
cast partners to set the price of those
subscriptions. All of these things we
think about in the round when we are
planning for our auction.”
Richard Broughton, executive direc-
tor at consultancy Ampere Analysis,
said he did not envisage any of the
potential bidders being particularly
aggressive. “I don’t think there’s much
incentive for anyone to go all out, partic-
ularly given their focus on cost-control
measures,” he added.
One Premier League club executive
also raised doubts over where there
would be a big uplift in values. “If we
came 5 per cent ahead I’d be delighted
because it’s a slowing rights market,” the
person said.
Premier League officials and broad-
casters are watching the troubled auc-
tion of rights to show Serie A in Italy,
which has still not been decided despite
successive rounds of broadcaster bids.
The “product” the Premier League
wants to sell is more valuable, according
to broadcast executives, with strong
domestic and global interest in English
top-flight football.
Sky has said that the 2022-23 season
was the most watched in history, and
this season saw a record start with more
than 8mn tuning in across the opening
weekend. The Premier League’s increas-
ing global popularity means that, unlike
all other European football competi-
tions, it already makes more money
from international broadcasts than
from its home market.
However, many households — in the
UK and elsewhere — are seeking to
reduce the amount of money spent on
TV subscriptions, which is likely to
★ FINANCIAL TIMES
Sport. Football
Making a pitch: weigh on bidding. Sky is the one of the
a match at Old few guaranteed bidders, given how
Trafford, important sports rights have become to
Manchester, last its brand. Losing a significant number of
year is covered Premier League games is all but
by Amazon, unthinkable, according to analysts.
which is seen as “Sky might pay a premium just to keep
likely to take everyone else out. They need those
part in the rights rights,” said the Premier League club
auction but executive.
focus on gaining But Sky’s revenue decreased 11.5 per
games around cent to $17.9bn last year and the com-
important pany has begun to cut jobs amid a slow-
retail dates ing advertising market. Sky’s par-
Naomi Baker/Getty Images
ent, Comcast, has already written down
the value of the business by $8.1bn from
$18.1bn, in part owing to “reduced esti-
mated future cash flows as a result of
macroeconomic conditions in Sky’s
territories”.
BT was its main rival in the last auc-
tion but the dynamics have changed
after it merged its sports operations
with those owned by Warner Bros Dis-
covery to create TNT Sports this
year. BT is also on a cost-cutting drive,
with plans to cut up to 42 per cent of its
workforce by the end of the decade.
Warner Bros Discovery, which is
expected to eventually take control of
the TNT Sports business, is also facing
challenges in a streaming market where
investors are demanding profits rather
than more spending on expensive
content.
With Norway streaming service Via-
play under pressure after struggling to
Value of domestic live TV rights
£mn
2,000
1,500
1,000
500
0 “And obviously we’re considering our
2014 2016
Source: Ampere Analysis
UK COMPANIES
break through in a crowded market,
DAZN, the lossmaking sports-streaming
service backed by billionaire Sir Leon-
ard Blavatnik, will also look to add top-
flight English matches. Adding pre-
mium sports in the UK is seen by execu-
tives as important to the London-based
group, but people close to DAZN say it is
unlikely to want to spend big sums.
The wild cards will be the large tech
companies such as Amazon, which in
the last auction acquired a small pack-
age of rights. Analysts see the US ecom-
merce giant as likely to participate, but
to focus on securing games around
important retail dates, as previously.
Apple, which has been buying sports
rights in the US to show globally, is seen
as less likely to be interested in an
expensive set of rights for a single
country.
DAZN said: “The UK market is of
clear interest, but only if we can deliver
the value and innovation that support-
ers want and the market needs.”
TNT is keen to retain premium sports
rights, according to a person close to the
company. When still wholly owned by
BT, it had already renewed its rights to
the Champions League and other Uefa
competitions until 2027. Sky declined to
comment.
Premier League officials are now
looking at how to structure the auction,
which could take place before the end of
the year, to encourage greater bidding
interest. Mark Oliver, of Oliver &
2018 2020 2022
Season starting
‘I don’t Ohlbaum Associates, a consultancy,
said the league’s strategy needed to “cre-
think ate tension” and divvy up the rights into
there’s packages that incentivised broadcasters
to compete against each other.
much Broadcast executives say that the
incentive most likely outcome is that the Premier
League will try to push up the overall
for anyone value by allowing more games to be
to go all out, broadcast, to gain a higher absolute
price but potentially mask a fall in value
particularly of the price per game. Uefa was able to
given their raise headline revenue from its rights
auctions last year in part by increasing
focus on the number of games on offer.
cost-control This was also the strategy pursued by
the English Football League, which
measures’ managed to raise the price of the rights
by 50 per cent but only by increasing the
number of fixtures fourfold to more
than 1,000 matches per season. Sky
retained the exclusive rights for the
five seasons until 2028-29 for £895mn
in fees and £40mn in “marketing
benefits”.
Broadcasters are barred from show-
ing games at 3pm on a Saturday, so more
Premier League games are being shifted
to Fridays, Sundays and Mondays. One
option will be for more — or even every
— non-3pm game to be put into the auc-
tion for the first time.
One executive said that the league
could raise the number of matches from
200 at present to between 250 and 270,
which could be divided into packages of
sufficient scale to allow bidders to build
their subscription services.
“Bidders need to see the chance to get
at least one decent-sized package with
top matches every week,” another said.
“They will look at adding more inven-
English tory to monetise the league,” said
Premier another broadcast executive, who said
League that the Premier League could also
review the three-year term of the rights.
Bundesliga Masters told reporters ahead of the
La Liga new season: “I know people are frus-
Serie A trated that they can’t watch every game.
Ligue 1 We have progressively put more
matches into our live-rights packages.
We’re at 200 now.
packaging strategy — the volume of
matches going into it for the auction. All
those things are under consideration.”
13
Financials
Challenger
banks irked
by delays to
regulatory
approvals
LAURA NOONAN
Three of the UK’s oldest challenger
banks are growing increasingly con-
cerned over delays to regulatory
approvals that could save them hun-
dreds of millions of pounds.
Metro Bank, Close Brothers and Para-
gon have spent years pushing the Bank
of England’s Prudential Regulation
Authority to allow them to use their own
internal models to calculate their risk-
weighted assets, according to people
familiar with the situation.
RWAs provide the denominator in
banks’ all-important capital ratios that
they must maintain.
Banks prefer internal models rather
than a standardised version set down by
global regulators because they tend to
be less punitive. Typically, only banks
with long records of lending have been
allowed to use internal models.
If the trio of challenger banks suc-
ceeds in getting the PRA’s sign-off, it
would enable them to set aside less capi-
tal for future losses in line with big
banks such as HSBC and Barclays. This
would help them lend more or return
capital to shareholders.
The failure to reach agreement over
regulatory approvals has already forced
some challenger banks to curb lending,
say the people.
The talks between individual banks
and the regulator have dragged on for
more than three years.
The situation has become more
There is a strong wish to
reach an agreement before
new global capital rules
come into force in 2025
fraught as the banks want to reach an
agreement before new global capital
rules come into force in 2025, say people
with knowledge of the process.
While variation between the output of
internal and standardised models has
been smoothed by regulators in recent
years, the latest iteration of the global
rules, known as Basel IV, imposes
harsher risk treatments for some types
of activity, such as development
finance.
This leads to increased capital
requirements and a higher incentive for
banks to move on to internal models.
Some challenger bank executives
blame the delays on staff shortages at
the specialised PRA teams involved in
the talks, as well as the volume of other
work they have to carry out.
The PRA, which does not publish data
on how long its approval process for
modelling takes, declined to comment.
One challenger bank chief executive
described how the 2025 rules could lead
to a significant increase in capital for his
bank if it could not use tailored models
to calculate its potential losses.
Metro Bank chief executive Dan
Frumkin said his bank would like to give
investors an implementation date for
new models, which it had applied for in
2018 — but “it’s outside of our gift”.
He said investors were “very inter-
ested in discussions with regulators” on
moving to internal models. “It comes up
in the majority of conversations with
debt and equity investors.”
Close Brothers and Paragon declined
to comment.
Additional reporting by Siddharth
Venkataramakrishnan in London
14 ★ FINANCIAL TIMES Monday 28 August 2023

MARKET DATA

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous day’s trading (%)
S&P 500 Nasdaq Composite Dow Jones Ind FTSE 100 FTSE Eurofirst 300 Nikkei Hang Seng FTSE All World $ $ per € $ per £ ¥ per $ £ per € Oil Brent $ Sep Gold $

-0.01% -0.24% -2.05% -1.40% -0.36% -0.646% -0.791%

No change
0.23% 0.07% 0.663% 0.117% 1.39% 0.02%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Jul 26 - - Index All World Jul 26 - Aug 25 Index All World Jul 26 - Aug 25 Index All World Jul 26 - Aug 25 Index All World Jul 26 - Aug 25 Index All World Jul 26 - Aug 25 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
4,537.41 20,561.64 7,692.76 16,406.03
32,668.34 2,603.81
4,376.04 19,858.26 31,624.28 2,519.14
7,338.58 15,651.06
Day -0.01% Month -4.20% Year 4.21% Day 0.24% Month -3.54% Year -1.73% Day 0.07% Month -4.51% Year -1.81% Day 0.07% Month -0.29% Year NaN% Day -2.05% Month -3.25% Year 11.74% Day -0.73% Month -4.16% Year 2.93%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
54,753.39 1,865.60 9,694.70
14,050.11 19,639.11
53,039.24 3,304.96
13,431.50 1,788.54 9,338.90 17,956.38 3,189.88
Day -0.24% Month -5.04% Year 6.27% Day 0.11% Month -1.57% Year 11.41% Day 0.00% Month -3.33% Year 4.58% Day 0.15% Month -2.14% Year 13.90% Day -1.40% Month -3.70% Year -6.70% Day 0.29% Month -2.33% Year -1.38%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
35,282.72 7,465.24 66,707.20
119,989.64 28,980.45 3,216.67
34,179.21 116,410.38 7,229.60 28,208.45 64,886.51
3,064.07

Day 0.23% Month -3.60% Year 2.62% Day -1.08% Month -5.16% Year 1.92% Day 0.21% Month -2.66% Year 13.20% Day 0.49% Month -2.42% Year 25.75% Day -0.59% Month -3.16% Year -4.70% Day -0.56% Month -2.39% Year 9.66%

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Monday 28 August 2023 ★ FINANCIAL TIMES 19

A productivity salutation
Which CEO’s morning routine will
get your day off to the best start?
Z WORK & CAREERS

Love plus
work — it’s an
emotional
{ Second homes:
Britons reshored }
minefield Reasons for having a second
home
More British second-home
owners are buying properties
Households owning a second home in England
in England (%*, 2021-22)
Location of second homes (%)
Long-term Holiday home England Other UK France
investment 44.9 Spain Other EU Non-EU
35.0 100

80

60

40
Retirement Other
home 12.7
8.8 20

Working away Previous

Emma Jacobs from home
3.8
main home
6.5
2008- 09- 10- 12- 13- 18- 21-
09 10 11 13 14 19 22
0

Business Life Source: gov.uk *More than one reason may have been given

he comedy-d -drrama You Hurt
My Feelings pivots on what
seems a tiny event. Beth, a
New York writer played by
Julia Louis-Dreyfus,
overhears her husband saying he
doesn’t like the manuscript of her
novel. “I am never going to be able to
look him in the face ever again,” she
says, utterly wounded.
My initial reaction to the film written
and directed by Nicole Holofcener was,
“lucky her!” Not because it was, to
use the jargon du jour, a first-world
problem, which Beth acknowledges. “I
know the whole world is falling apart,”
she says. “But this is my world. My
small little narcissistic world.”
But because she did work that her
spouse could understand. Many office
jobs are opaque to outsiders — and, no
doubt, to some who do them. In the
television series Friends, the mystery of
Chandler Bing’s profession is a running
gag. “Something to do with numbers,”
guesses Rachel in a quiz, before settling
on “transponster!” “That’s not even a
word!” Monica replies. Its humour is
bleakly resonating.
Another challenge the film’s central
character Beth avoids is that by
working on a solo project she does not
have to map out personalities and
processes in the workplace. Office
politics is only interesting to people
involved in the intrigue. And trying to
keep up can be stupefying.
However, I suspect there has been
more understanding due to lockdowns,
which forced people to inhabit their
partners’ white-c
e-coollar worlds. Some
took to social media to share their
revelations. “My husband has learnt I
am the ‘let’s make sure that this is
brand-aligned’ person, and he is mildly
horrified,” a woman wrote. “I’ve also
learnt that HE is the ‘OK we’ll hammer
out the details when I ping you about
this later’ guy.”
The film underlines a significant
professional issue: a partner’s support.
“The most important career decision
you’ll make is about whom to marry
and what kind of relationship you will
have,” asserts Money and Love: an
Intelligent Road Map for Life’s Biggest
“ Couples in the same
industry might understand
the job but other pressures
come into play with the
potential for jealousy ”
Decisions published this year. It’s more
than finances, splitting childcare and
chores. When Blake Dustin Mathias,
professor of entrepreneurship at
Indiana University’s Kelley School of
Business, looked into the impact of
spouses on entrepreneurs, he found
“emotional support [was] critical”, more
so than tangible assets — including
money, he told me. This topic frequently
arises in sessions with Kate Franklin, an
executive coach. Yet she says few clients
know what such assistance looks like
because it’s so private. “Those who have
spousal support, won’t say, ‘I’m lucky.’
It’s smug.” Some behaviour Mathias
identified among entrepreneurial
partners seems broadly applicable —
like empathising with the challenges,
listening, celebrating milestones and
offering distractions — particularly
during the lows or when experiencing
loneliness at the top.
Love plus work adds up to an
emotional minefield. Couples in the
same industry might understand the
substance of the job, provide networks
or job openings, but other pressures
come into play with the potential for
jealousy. An actor friend observes
“misery loves company”; however, if
one’s career picks up and becomes
Kenneth Andersson
successful, the other “can be
devastated”. The film raised an
existential question for Beth: can her
husband love her if he does not respect
her work? It can require partners to
buy into long-term ambitions. Or, as
my actor friend puts it, understanding
that stints handing out leaflets dressed
as a chicken are stepping stones.
Respect is an issue raised in therapy
sessions with Philippa Richardson,
founder of The Circle Line, and aimed at
corporate clients. It applies not just to
artists and creatives but lawyers, chefs
and businesspeople whose self-worth
can depend on their career. “It’s like
they forget everything else they are,” she
says, advising people to see themselves
as more than just their work.
The belief a partner does not respect
their work might also reflect their own
feelings. This was the case for Chandler
in Friends, who finally changed jobs
after admitting he was unhappy.
Ditching your partner can be the
solution. And here there’s good news.
Recent research found many going
through divorce felt it harmed their
work. But a surprisingly large number
(39 per cent) found it had “a positive
impact” and amplified motivation.
Sometimes self-reliance wins out.
The UK’s second-home capital is a
seaside resort in south-west England.
Nearly a fifth of all homes in Salcombe,
Devon, and its surrounding villages are
used for holidays, to the chagrin of
priced-out locals. House prices there
have spiralled to a mean of £1.2mn,
around four times the national average.
In Britain, the proportion of
households with a second home is
unchanged at 3 per cent over the past
decade. That is less than in France,
where the ratio is one in 10, or China,
where more than a fifth of urban
households own multiple homes.
But the location of British boltholes
has shifted. Ten years ago, Britons were
more likely to opt for a second home in
France or Spain. Brexit has since
restricted the time UK citizens can
spend in the EU. As a result, six out of
10 second homes are within the UK.
International buyers are more likely
to opt for a Mediterranean villa, Alpine
ski chalet or Tuscan farmhouse.
Climate change might reshuffle the
pack. Properties with good rail
connections could appeal to buyers
keen to limit the expansion in their
carbon footprint. In Sweden, epicentre
of the flight-shaming movement, there
is already a tradition of holidaying close
to home.
Climate change will also take a toll on
prized destinations, notably
lower-altitude ski resorts where snow
will be rarer and coastal destinations
that are vulnerable to sea-level rises.
Scorching summers may increase the
popularity of northern Europe at the
expense of the south.
There is an increasingly hostile
political climate. UK second
homeowners already pay stamp duty
surcharges. Many more are set to pay
higher council tax when new legislation
is passed. Wales recently hiked its
maximum council tax premium for
second-home owners to 300 per cent.
Deterrents can backfire. A Swiss ban
on the construction of new second
homes in some areas was ineffective
and led to a rise in unemployment,
according to research published by the
Centre for Economic Performance. It
found that existing second-home
investors were the real beneficiaries.
That helps explain why price rises for
prime ski resort properties — 15 per
cent in the year to June — were more
than twice the holiday home average
recorded by Savills. The pandemic-era
boost has not fully dissipated. Hybrid
working will underpin demand for
second homes by allowing people to
spend more time away from city bases.

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20
Starting the
day like Jamie
Dimon set me
up for success
Grace Lordan
Management
US graduates struggle to find work
despite tight labour market
ry-l-leevel jobseek
eker
kers fa
face
ce di
disa
sapp
ppooin
ev i n Mo n a h a n , a s s o c i a t e
dean at Pittsburgh’s Carnegie
Me l l o n Un i ve r s i t y , h a d n o
trouble helping his students
find jobs last year. Seniors
took their pick of employment options,
and companies made offers a year in
advance or waded into bidding wars to
secure the best candidates.
This year, however, many are gradu-
ating without offers at all. “We’ve been
talking with our students about
resetting expectations,” Monahan said.
Similar conversations have taken
place on campuses across the US, as last
year’s post-pandemic graduate hiring
spree has turned into a drought. Fearful
of recession, employers have curtailed
on-campus recruitment, perplex exiing
g r a d u a t e s w h o h a d h o p e d t o e n j oy
a hot jobs market.
Amazon is among the companies
that hav avee reduced graduate hiring ,
saying it had pushed back its start date
for college recruits by up to six months
“in light of the challenging e conomic
conditions”. It has offered financial
assistance to some hires as a result.
O n e re c r u i t e r s a i d a p p l i c a n t s t o
h o m e w a r e r e t a i l e r Wa y f a i r a n d
Facebook owner Meta had also been
inform
inf ormeed of hir hiring
ing cut
cutbac
backs ks.. Wayfa yfair
ir
said this month that it was being
“very thoughtful” abo bou ut rececrruitment.
Me t a d i d n o t re s p o n d t o a re q u e s t
for comment.
“There’s clearly been a pullback from
what we were seeing in early 2022,” said
Nick Bunker, economist at jobs site
Indeed. “What is particularly interest-
ing this time round is how much of it
For many chief executives, morning
routines are a go-
o-tto fix for taking
control of their day. It makes sense.
There is a widespread belief that a
purposeful start boosts productivity
and wellbeing. The problem is there is
a great variation in the types of ritual
being recommended.
JPMorgan CEO Jamie Dimon likes to
rouse at 5am and voraciously read for
up to two hours. When Jack Dorsey ran
X Corp, he favoured a morning ice bath.
As part of my behavioural science
research I often take academic insights
and apply them to myself to analyse
the effects they have. Recently I
decided to find out which morning
routine touted by a CEO would make
me more productive and less frazzled.
I ended up convinced morning
routines offer a canvas for cultivating
discipline, creativity and self-care if
chosen correctly. Starting with purpose
and certainty gave me a sense of calm
that carried throughout my day.
The first conundrum to crack is when
to rouse. A good starting point is to pick
a specific time to wake up and stick to it,
bearing in mind that most successful
CEOs get up no later than 6am. You can
experiment with being like Indra Nooyi
when she ran Pepsi, or Ariel
Investment’s Mellody Hobson or Apple’s
Tim Cook, by getting up at 4am. Or you
Recruitment
intm
tmeent as em
empl
plooyers shi
hift
ft away fr
from
om co
colllleg
egee hi
hiri
ring
ng,, wr
has been in higher income, traditional
office jobs. And for new grads, unlike
people in other parts of the labour
market who can easily find new jobs, it is
relatively rocky.”
Faced with labour shortages after
millions left the workforce during the
Covid
vid--19 pan pandedemicmic,, and dea dealinlingg wit
withh
changing demand from consumers,
US businesses rushed to hire young
wo r ke r s a s l o c k d ow n re s t r i c t i o n s
eased. In 2022, the number of advertise-
ments for entry-level positions was
8 0 p e r c e n t h i g h e r t h a n i n 2 0 1 9,
according to Revelio La Labbs, a workforce
intelligence firm.
I n t h e f i e l d s o f t e n f avo u re d b y
g r a d u a t e s, i n c l u d i n g t e c h , l a w a n d
consulting, those openings have all but
disappeared.
In May, entry-level job openings had
c o o l e d t o j u s t 3.7 p e r c e n t a b o v e
2019 levels, according to Revelio. The
number of postings for internships fell
by 15 per cent compared with May 2022,
according to Indeed, although it was still
higher than pre- e-ppandemic levels.
Meanwhile, demand for experienced
w o r ke r s re m a i n e d h e a l t h y : R e ve l i o
f o u n d m o re s e n i o r v a c a n c i e s w e re
up 55 per cent compared with 2019.
“The fast-growing, sexy companies
that these students grew up with and
t h o u g h t t h ey wo u l d w a n t t o wo r k a t
are not hiring,” said Christine Cruzver-
gara, chief education strategy officer
at Handshake, a US jobs site targeting
college students. Handshake’s data
showe d a de cline in full-time jobs
open to the class of 2023 compared with
last year, she added.
★ FINANCIAL TIMES Monday 28 August 2023
WORK & CAREERS
‘
can try imitating Mark Zuckerberg and happiness. Instead I share Huffington’s routines without raising breakfast.
rise at 8am. You might even try desire for a calmer start to the day with Some people like to eat as soon as they
emulating Arianna Huffington by
relying on your internal alarm clock.
For me, the magical compromise
a bit of meditation. I simply bring to my
mind the top three things I need to
achieve each day and visualise what
rise; others will only have a beverage.
Ludwig van Beethoven apparently
brewed coffee using exactly 60 beans.
turned out to be channelling my inner
Dimon and surfacing at 5am. This
“good” looks like. I come away from my
20-minute meditation clear in my mind
Warren Buffett liked a morning Coke.
More commonly a decent breakfast
offered ample time to set myself up for
the day before anyone could interfere
what my mission is for the day ahead.
For each successful person who
Surfacing at 5am comes after exercise. This is an area
where you can avoid decision fatigue
with my mood. Your ideal rise- e-aand- reveals their morning routine, there is offered ample time by having the same thing every day. I
shine o’clock will depend on the an exercise regime. Research has shown to prepare for the settled on scrambled egg ggss on a slice of
activities you hope to squeeze into engaging in morning exercise can lead to seeded loaf with a decaf latte. I landed
those early hours. So what should these improved mood and cognitive function day before anyone on this combination having monitored
activities be? throughout the day as well as could interfere the energy levels various food
’
To limit the choices you need to make stimulating the release of endorphins, combinations gave me at 6.30am.
in the early hours your routine should often referred to as “feel-good” with my mood For me, work starts at 7.30am.
be robotic. Research shows the quality hormones. I experimented with a Already aware of the three most things
of decisions deteriorates as the day myriad of exercise options post I need to achieve, I start with a task
progresses due to the depletion of meditation. These included boxing, that requires deep thinking or
mental resources. By curbing the horseback riding, jogging, the martial creativity. Others may be ready for
number you make in the morning, you art Krav Maga, pilates, swimming and emails or need to get on with their
preserve mental energy and enhance yoga. For me, the winner ended up commute. The most important thing is
the quality of your choices throughout being stretching and a long walk. I could that if you haven’t already made a plan
the day. Zuckerberg has said he wears simultaneously catch up on some of my for what a good day looks like, do it
his signature grey T-shirt almost every favourite podcasts or simply enjoy the now. Otherwise you will be dragged
day to eliminate wardrobe deliberation, sounds of nature depending on my around like a plastic bag by other
reserving his cognitive firepower for mood. You may prefer the tension people’s wants and expectations.
consequential decision making. release of judo or a dance workout. The There is really no one size fits all. The
Some people — for example Apple’s key to experimenting is that you key is to figure out the combination of
Cook — read emails early in the continue until you find the physical activities that make you happiest and
morning. But this rapidly made me activities that feel most right for you. most productive. Of course, your
grumpy and did not set me up for a When you find them, keep doing them morning routine need not be static.
great day. Neither did digesting the news
first thing do anything to improve my
as long as you are getting benefits.
We cannot talk about morning
If you find yourself lethargic and
lacking energy, simply make a tweak.
Business books
A postgenerational
society, and the
science of trust
FT journalists recommend this month’s top titles
‘The Perennials: The
Megatrends Creating a
‘How Trust Works: The
Science of How
Postgenerational Relationships Are Built,
writ es Taylo
ites lorr Nic
icoole Roge
gerrs Society’, by Mauro
Guillén
Broken, and Repaired’,
by Peter H Kim
Regardless of who we are
or where we were born, we
know what it means to
have our trust broken —
or perhaps the
embarrassment of having
our own trustworthiness
called into question. As we
Just because you’re in your are all vulnerable to these
late teens, do you have to experiences, sometimes
wait years before you run a we need to confront the
big company? Conversely, y sense of loss and betrayal
if you’re in your fifties, is it and find a way to move
wrong to start studying for forward.
a law degree? Kim, a professor of
For more than a century, y management and
one studied when young, organisation at the
then worked and then Marshall School of
retired. But this “sequential Business, has devoted
model of life” was never more than two decades of
naturally preordained, his career to researching
writes management how trust works. He
academic Mauro Guillén in presents some of the
his latest book. findings in the book, as
It only began after well as tools on how to
universal schooling and build strong and
old-age pensions took off supportive relationships.
in the 19th century. As we The book is not a
live longer, fitter lives, with superficial step-by-step
a new suite of guide for those interested
technologies, Guillén in simple quick fixes.
thinks we are on the brink Instead, Kim provides a
of a postgenerational deeper understanding of
revolution that will how trust can arise, how it
reshape companies,
economies and societies.
This year’s
At the heart of this
graduates face a
transformation will be
tougher market
perennials, an “ever-
than 2022’s rush
blooming group of people
to hire young staff
Bing Guang/Bloomberg
of all ages, stripes, and
types” defined by their
interests or activities, not
Young graduates are venting their according to Julia Pollak, an economist their age. is damaged and what it
frustrations online. Some sp e culate at jobs site ZipRecruiter. Guillén paints a means to repair it. He also
that redundancies at tech firms have That retreat comes despite a histori- beguiling picture of the offers practical insights
c re a t e d a g l u t o f m o re e x p e r i e n c e d cally tight labour market. Unemploy- benefits of this shift. Multi- into how to rebuild our
workers willing to do jobs once reserved ment in the US was 3.5 per cent in July, generational workforces own social connections in
for college leavers. a near-record low. In June, employers could give companies more the face of the turmoil and
“I see new jobs being posted to a dve r t i s e d 3 4 p e r c e n t m o re ro l e s insight into the disappointments we so
LinkedIn . . . but not entry-level,” one than in the same month in 2019, marketplace. Life-long frequently experience.
2023 leaver noted on the forum Blind. according to labour department education could ease the Through a combination
An employee at HR software company data. But there are signs of a slowdown. pressure on young of research and real-life
Workday replied that early- career The June numb er of job op enings students struggling with lessons, the author
budgets were “sufficient” for hiring fell from its March 2022 p eak of fateful decisions before explains the nuances of
experienced developers. 12mn to 9.6mn. they are ready. trust and its
One engineer at payroll servicer ADP D emand for jobs is concentrate d in The loneliness and characteristics. An
a g re e d . “ W h y h i re n o ex p e r i e n c e l e i s u re , h o s p i t a l i t y a n d , t o a l e s s e r emptiness of retirement interesting concept is how
w h e n yo u h av e t w o - t h r e e [ ye a r s o f extent, government, while hiring in could be alleviated if we give importance to
experience] willing to fill entry roles?” business and professional services, classrooms and offices some elements of trust
For Monahan, the first hint that the category that includes many welcomed all comers, when evaluating
employers were reducing early-career white - collar jobs, fell 10.8 per cent regardless of age. Big credibility. For example,
programmes came last autumn, as he between June 2022 and June 2023. shifts in thinking will be we might care more about
too
ook k yearly rrececrruitment calls w wiith tth he “There’s this dynamic where some needed to bring this about, loyalty than competence
big tech companies that tend to hire o f t h e i n d u s t r i e s, s a y f o r e x a m p l e , not least inside from our spouse, but we
Carnegie Mellon graduates. b i g t e c h , g re w ve r y q u i c k ly ove r t h e educational institutions may prioritise competence
After historically high recruitment course of the pandemic, and now they and executive suites. But over receptivity when
last year, they said they would hold back are retrenching,” said Bunker. “A lot of it’s a change that is long choosing a heart surgeon.
in 2023. “We were told they were going more in-person work is still below its overdue, says Guillén, who We have never been
to be more cautious,” Monahan said. pre-pandemic level — so there’s still pointed to words written more in need of a
“They were using phrases like, ‘We are some catching up to do there.” about a century ago by conversation about how
evaluating our headcount’, [or], ‘We are
‘We were S o m e s t u d e n t s a re re c o n s i d e r i n g anthropologist Margaret to repair trust. Kim
lo oking to make inve stments in told [that post-graduation plans and looking at Mead: “It is utterly false suggests that this
strategic areas’.” options such as graduate school, tempo- and cruelly arbitrary to put conversation should be
Meanwhile, students were not leaving big tech r a r y w o r k , o r j o b s i n o t h e r s e c t o r s. all the play and learning based on rigorous
summer internships with job offers employers] Monahan said many Carnegie Mellon into childhood, all the work scientific research on this
a s t h e y u s u a l ly w o u l d . I n a t y p i c a l graduates that did find jobs were hired into middle age, and all the topic rather than mere
year, about 80 per cent of tech interns were going by smaller companies. regrets into old age.” conjecture. In doing so, we
f ro m C a r n e g i e Me l l o n w o u l d s e c u re to be more “ T h e c l a s s o f 2 0 23 a re p ro b a b ly Guillén is right to now could be better armed to
o f f e r s b y t h e e n d o f t h e s u m m e r, lo oking at some of their friends and make the case that it is make sense of these dark
Monahan estimated. This year, less than cautious’ former classmate s who graduate d in time for this unhappy state times and chart a path
a third did. Kevin Monahan, 2021 and 2022 and saying , ‘Hey, it of affairs to end. forward.
“ T h e b i g g e s t p l aye r s w i t h t h e Carnegie Mellon would have bee been n nice to graduate into ( ilita Clark)
(P k (Leo Cremonezi)
most lucrative offers are in retreat,” University that labour market,” added Bunker.
Monday 28 August 2023
‘Profession of the century’: why so many
people are retraining as therapists
Workers from farmers
to investment bankers are
ditching long-held jobs
to enter the industry,
writes Bethan Staton
W
hen Gareth Barnes’
therapist asked if he
was happy at work,
she did not mean to
suggest he follow in her
footsteps. Yet the question was the
catalyst for him embarking on a new
career in psychotherapy.
“My job wasn’t matching with my
values and what I really wanted to do,”
says the 50-year-old, who was then
working for a law firm. Three years later
he has a counselling qualification, a job
at a workplace therapy provider and his
own private clients. “It’s the best thing
I’ve ever done.”
Barnes is just one of a growing
number of workers, from farmers to
investment bankers, ditching long-held
jobs to retrain as counsellors.
As take-up of talking cures increases,
more people are looking to them not just
to fix personal problems, but as a path
out of the corporate grind to a more
meaningful career. “Psychotherapy has
become more and more popular,” says
Irena Bezic, president of the European
Association for Psychotherapy. “I think
it’s the profession of this century.”
Data from membership organisations
shows numbers joining the industry
have risen in the past five years.
Between April 2020 and April this year,
membership of the British Association
of Counselling and Psychotherapy, one
of the UK’s largest, increased by 27 per
cent to 66,000, and student member-
ship rose by more than a third to 13,000.
The surge follows a sharp increase in
demand for mental health services.
Figures show that between 2017 and
last year, the number of people in
contact with NHS mental health
services rose by 25 per cent, to 4.5mn.
Private providers report more people
seeking self-funded therapy, while char-
ity Rethink Mental Illness says visits to
its advice website increased 175 per cent
in the year from March 2020.
“More people than ever have been for
therapy, which means more see the
benefit of going on to retrain and sup-
port others,” says BACP’s Kris Ambler.
Nathan Shearman, director of ther-
‘In something like
farming, where the future
is uncertain, they see
counselling as an option’
apy training provider Red Umbrella,
has seen this with an unexpected
group: farmers.
When he partnered with a charity to
offer free counselling to agricultural
workers last year, he expected a few
dozen clients. But so far more than 400
have signed up. Some have gone further,
enrolling in training to become mental
health first aiders offered as part of the
scheme, and several are considering
more advanced courses. “In something
like farming, where the future is very
uncertain, they start to see counselling
as an option,” Shearman says.
While a far cry from farming, it is still
a challenging path. In countries such as
Austria and Germany, psychotherapists
must legally hold certain qualifications
requiring several years of study. In the
UK, despite calls for regulation to stop
unqualified people practising, there is
no legal restriction on who can call
themselves a therapist. Practitioners
instead are expected to join accredita-
tion bodies, such as BACP, which
demand similar levels of training.
Typically, would-be therapists take
a foundation course, then a certificate in
counselling skills, usually at a college,
before a longer course at a university or
specialist provider combining class-
room learning with on-the-job training.
Some courses can be funded with
government loans, but many trainees
need to continue working or dig into
savings to finance their new career.
And although hiring is brisk, new
recruits are not guaranteed a job.
On recruitment website Indeed, post-
ings for therapy-related jobs are 80 per
cent higher than pre-pandemic. Interest
in these roles — measured by “clicks per
post” — has also risen 9 per cent, sug-
gesting the influx of trainees is yet to
outpace the growth in available work.
However, in a BACP survey last year,
only 40 per cent of respondents agreed
that they could earn a living from coun-
selling work. Nearly three-quarters
said therapy work brought in an
income of less than £30,000, of which
37 per cent earned £12,500 or less.
Nicola Ball, who founded a counsel-
ling centre in Glasgow after retraining,
says the market has tightened. “There
were more jobs than . . . people for a
long time. Now more people are quali-
fied, you can get really specific about
what you need.”
Samia*, who works in media produc-
tion, is planning a career in therapy for
a better work-life balance and also to
address a “total lack” of people of colour
in the profession.
Despite 20 years on the couch, she
only recently found a therapist who
shared her south Asian heritage, high-
lighting how a lack of cultural under-
standing had been an obstacle. “I
wanted to start offsetting that problem.”
She has had to empty her savings to
fund the training, and believes the costs
stop people like her joining the industry.
Trainees also generally have to be in
therapy themselves, adding costs of
several hundred a month. Established
members of the profession getting paid
by newcomers feels uncomfortable to
some. “It’s really just a Ponzi scheme,”
Kaspar*, who begins study this year,
wryly comments.
Life-long self-reflection is a big attrac-
tion in this trade. “You think you’re
going in to help other people [but]
you’re actually going in to help yourself
and to learn about yourself,” says Ball.
Working on her own psychology,
through personal therapy and classes,
has been “incredible”, if challenging,
Samia adds. “You feel like your whole
being is torn apart and scrutinised.”
At Tavistock Relationships, a couple’s
counselling provider that also trains
therapists, a four-year masters course
delivered in partnership with London
university Birkbeck costs £7,395 annu-
ally. Routinely oversubscribed, it has
this year attracted applicants from jour-
nalism and air travel, where workers
skilled in analytical thinking or commu-
nications have been made redundant.
Andrew Balfour, chief executive of
Tavistock Relationships, says the course
involves “working intimately” on
Gareth Barnes was working for a law
firm before he decided to retrain
★ FINANCIAL TIMES 21
WORK & CAREERS
Case study
From HR manager
to counsellor
Unlike many would-be therapists,
Maria* was not in therapy before
embarking on training. A human
resources manager, she decided
to leave the City and set up
a consulting business after
becoming disillusioned by
unsympathetic treatment of
employees at the investment bank
where she worked.
Then, there was little institutional
support, and staff would not come
forward with problems. “We have
come such a long way . . . People
are now prepared to talk and
disclose,” she says.
After observing mental health
crises in her own family, she
decided to make the step to retrain
as a counsellor. In some ways, it was
an unexpected decision.
“I come from a working-class
Italian background — we didn’t
really discuss feelings and
emotions,” she says. “If you’d asked
me in 2010 would I go down this
route, I’d have said no.”
She has just finished her
foundation year. Next comes
more intensive training, alongside
one-on-one personal therapy. “I’ve
learnt so much about myself . . . I
would highly recommend it as
a journey.”
At 47, she feels her experience
— both in life and in running her
own business — will make her
better at her new career. It is also
practically useful, as she has
savings to fund her studies and
will continue working as a
consultant alongside training.
FT montage/Getty
profound questions — just like the job
students are studying for. “Therapy is
concerned with the tangles we really get
into in our lives and relationships, [and]
understanding that at an unconscious
level,” he says. “It starts to be about the
meaning of life.”
This year, several applicants were
inspired by Couples Therapy, a TV series
filmed in therapist Orna Guralnik’s
consultation room, he adds.
BACP does not recommend newcom-
ers set up their own private practice,
though some do. For many, a more real-
istic first role might be on an employee
assistance programme (EAP). Firms in
this fast-growing subsector offer com-
panies mental health services for their
staff, usually in the form of telephone
consultations or fixed-term, targeted
counselling courses.
Some therapists are sceptical of these
providers, arguing they offer a relatively
superficial form of assistance and lower
pay. But Ambler says they provide a
“good route”, often alongside private
‘The job is concerned
with the tangles we
really get into in our
lives and relationships’
work or pro bono jobs for charities.
Employers including law firms Hogan
Lovells and Linklaters and bank Gold-
man Sachs have also begun offering
psychological support to staff, with
therapists available on-site.
Manchester-based EAP Health
Assured, where Barnes works part-
time, says demand has soared, in part
because employers are worried about
mental ill health driving absence among
their staff. “It’s not letting up and we’re
not turning anyone away,” says clinical
lead Kayleigh Frost.
Clients have more complex needs
than previous years, she adds, and EAPs
have become a “lifeline” in part because
of pressures on public health services.
About 20,000 psychotherapists are
employed by the NHS, according to the
Psychological Professionals Network.
Although the UK government is
expanding talking therapies, limited
funding means waiting lists are long.
And as more people consider working
in therapy, poor public sector pay and
conditions mean sectors such as nursing
and social work have staff shortages.
Lorna*, 34, is an NHS mental health
nurse retraining to become a sex thera-
pist. While she will continue as a nurse
part-time, eventually she hopes therapy
will offer better pay and conditions.
“The system is so pressured, and
when I’m 60 I can’t see myself working
the way I do now,” she says. “It’s about
planning for the future, doing some-
thing I really want to do.”
*Some names have been changed
22
The woman bringing tech and the arts together
Cultural entrepreneur Suhair
Khan wants to unite the best
creative and technological
minds on her new platform as
a force for innovation and
surprise. Jan Dalley meets her
S
uhair Khan is hard to
describe, and even harder to
pigeonhole. She describes
herself as an entrepreneur
connecting culture and tech-
nology. She is the founder of Open-
ended, launched in 2021 as a “creative
incubator and research lab for emerging
tech and AI”. She is a board member of
or adviser to a dazzling range of the UK’s
cultural institutions and businesses,
including choreographer Wayne
McGregor’s studio, the Design Museum,
the British Library, Sadler’s Wells, the
London Design Biennale and the UK’s
Museum of the Year prize. She is cur-
rently a visiting lecturer at Central Saint
Martins art school.
But above all she is, I quickly realise
when we meet in a London restaurant, a
believer. Her fervent belief in the force
for good that can be created at the nexus
of technology and culture informs all
her eager, rapid-fire explanations of
sometimes slightly airy notions, as well
as her overriding mission to expand
“the idea of technology as a hopeful,
optimistic force in the world”.
Khan has described herself as “an
Indo-Pak hybrid — they do exist” (her
mother is Indian, her father from
Pakistan). She grew up mostly in Paki-
stan, where she went to school, sur-
rounded by a cultured family, then
made the shift to the US for university
and, after graduating from Cornell Uni-
versity, worked on Wall Street before
pursuing a masters at Harvard in inter-
national development.
Next, she was recruited by Google,
working in various areas of innovation
and business strategy but principally,
for most of her decade at the company,
in Google Arts & Culture, on projects
connected with culture and sustainabil-
★ FINANCIAL TIMES
ity. Khan talks enthusiastically about
her time at Google — “the people I got to
work with were transformative”. A lot of
the work, she says, was experimental
and hasn’t come to the market, but gave
her an understanding of the reach and
potential of innovative tech thinking
that has formed the rest of her career.
During this period came a move to
Singapore, then to London in 2016,
where Khan furthered a Google Arts and
Culture programme of connections
between artists, museums and machine
technology. “We were working on aug-
mented reality and hybrid reality all
those years ago: very exciting, very
innovative, very productive.”
Among these projects was the launch
at the COP26 climate-change summit in
2021 of a cloud-based platform to help
the fashion industry measure its envi-
ronmental impact at the raw material
stage. It left her with the firm view that
“all tech companies should actively sup-
ARTS
From top: Suhair Khan port culture and lean in to rapid cultural
shot for the FT by Tereza change and innovation.”
Cervenova; Khan is a After being invited to run a Covid-
trustee of choreographer moment architectural teaching pro-
Wayne McGregor’s gramme at Central Saint Martins,
company — theatrepix/Alamy framed around decolonisation and
decarbonisation, she became more
and more interested in spatial aware-
ness, associated technologies and edu-
cation. “I really felt technology should
be working for society, it shouldn’t be
vice versa.”
It was a turning point. “Almost my
entire career had been in one structure
and one large company: it gave me privi-
leged access at high levels, which was
wonderful” — but she felt the need, after
spending time in Pakistan during the
pandemic, for something different.
She launched Open-ended, a platform
where creative technology and innova-
tion would meet, always with a firm
eye on ethical practice and environ-
mental awareness.
The respect for tech’s power
impressed on her at Google made her
feel the need for “bringing machine
learning into cultural experience and
looking at the future through the lens
of technology”.
Greece’s romantic rebel bank robber
PODCASTS
Fiona
Sturges
I
n June 1992, three men walked into
a bank in Kalambaka in Greece
carrying automatic weapons. While
one of them, Costas Samaras, stood
guard by the door, the other two,
Vassilis Paleokostas and his older
brother Nikos, politely asked the
cashier to open the safe. They were in
the bank for just over four minutes,
after which they took off in a getaway
car, switched vehicles and vanished into
the nearby mountains. The trio got
away with 125mn drachmas (then
equivalent to £360,000), making it the
biggest bank robbery in Greek history.
In the wildly entertaining Outlaws: The
Good Thief, host Miles Gray tells the
story of Paleokostas, Greece’s most
notorious robber. Despite the efforts of
Greek authorities and Interpol to
apprehend him, he remains at large and
has a €1mn bounty on his head. But this
isn’t the only unusual part of his story.
Described by Gray as “a bona-fide folk
hero”, Paleokostas has long styled
himself as a crusader against corruption
and been nicknamed Robin Hood for his
habit of handing out the spoils of his
heists to those in need.
Gray and his producers have a lot of
fun recreating Paleokostas’s antics: the
1992 heist opens the series with expert
scene-setting, a jaunty soundtrack and
snatches of imagined dialogue. Later, we
learn of his robbery of a jewellery store
Open-ended is essentially a gathering-
place — in digital form — for practition-
ers working at the edges of their disci-
plines, creative or technological, usually
both. She believes artists and technolo-
gists have a lot in common because both
“are imagining futures, building new
worlds, for themselves and for other
people. I wanted to create a space where
we could explore shared language.” As
she describes it: “Our goal is to spotlight
and connect innovators in culture, and
technology from all around the world.”
And “it was selfish in a way,” she says
with a laugh, “since that kind of creative
community, with colleagues from dif-
ferent disciplines, had been so meaning-
ful to me.”
Eager to increase “the diversity that
technology badly needs”, and thinking
about the decentralisation of tech learn-
ing and development, Khan cites
Artists and technologists
have a lot in common
because both ‘are
imagining futures’
smaller platforms and tech innovators
in the Middle East and Turkey, and fre-
quently mentions Africa. The impor-
tance of this range, she stresses, is that
there must be “less bias in data, less bias
in AI algorithms”. If the same coterie of
westerners are doing the designing and
training, in other words, existing prob-
lems and global inequalities will simply
be perpetuated.
The other connections being made,
across Open-ended’s target communi-
ties, are of course with all the important
tech giants — Google, naturally, but also
TikTok and many others. The core com-
munity is loosely divided across art and
design, tech, activism, sustainability
and science. It includes an impressive
roster of multi-achievers, from Azu
Nwagbogu, whose wide-ranging cul-
tural activities include founding the
Lagos Photo festival, to architect Leila
Meroue, who created the education-
architecture NGO Let’s Build My School.
opposite a police station; after first
padlocking the station doors,
Paleokostas walked across the street,
smashed the shop window and helped
himself to the jewels. Then there are the
daring prison breaks: once Paleokostas
escaped by scaling the walls using torn-
up bedsheets and metal bucket handles;
on two other occasions, a helicopter
arrived and dropped a rope-ladder
down to the prison roof where
Paleokostas was waiting.
In a medium that endlessly spotlights
grisly stories, it is refreshing to find a
true-crime podcast about a criminal
who goes out of his way to avoid causing
distress (he once returned a stolen
getaway car to its owner freshly washed
and with cash under the carpet). Here
the police and prison authorities are
Elmer Fudd to Paleokostas’s Bugs
Bunny, wrongfooted at every turn.
Bank robber Vassilis Paleokostas (centre) being taken to court in 2008,
having escaped from prison two years earlier — EPA/Pavlos Makridis
Monday 28 August 2023
Urbanist Blaze Lightfoot Jones-Yellin
focuses on environmental justice and
community-centric design in New York.
The artists, designers and scientists
are joined in the exploration of even
wider and weirder shores: Sertaç
Taşdelen, an Istanbul-based tech entre-
preneur, has a psychic app dedicated to
fortune-telling.
Everywhere, there’s an emphasis on
“responsible AI” and ethical applica-
tions of emerging technologies. “Tech-
nology doesn’t have its own code of eth-
ics,” Khan points out, “like most other
professions — law, journalism, architec-
ture. I find this fascinating.” For good
and not-so-good: like so much else in
this rapidly moving arena, the morality
and accountability of tech have to be
improvised as it goes along, by compa-
nies and individuals, she believes —
especially in the light of advances in AI
that put the engines beyond the control
even of their creators.
The most important thing, she feels,
“is that we continue to consider the
importance of the values around which
we design for the future — who sets the
rules? Who builds? Who participates?
Who benefits? How does it make
us feel?”
And how, I wonder, are some of these
very admirable aims to be achieved?
Open-ended’s programme offers pod-
casts and discussion events: the next
symposium, Technology & Design Lab
on the Futures of Intelligence, takes
place in London next month as part of
London Design Festival and asks the
question: “In an age of disruption &
innovation: where do we go next?”
But is it enough to ask critical ques-
tions, to stimulate debate around new
and sifting values? Well, there’s still the
faith in the machinery, the invention
and the programming. “Conversations
are important,” she writes to me in an
email after our meeting, “but so is being
generative, and building for new out-
comes. You can design by integrating
values along the way.”
Technology & Design Lab on the
Futures of Intelligence, September 20,
londondesignfestival.com
Left: curator
Azu Nwagbogu
is part of Open-
ended, founded
by Khan
Kristin Palitza/dpa
But there is more to The Good Thief
than merely a collection of cartoonish
set pieces. The series delivers both a
character study — in his autobiography,
Paleokostas describes himself as “an
attacker aiming to dismantle the
system, and a romantic rebel” — and, in
talking to police, politicians and
associates of Paleokostas, paints a wider
portrait of poverty, inequality and the
celebration of the outsider.
One of the most striking elements
of Paleokostas’s story is how Greek
citizens have taken him to their
hearts — and that includes the rich
industrialist whom he kidnapped and
held to ransom. Near the start of the
series, Gray asks whether Paleokostas is
a hero or a criminal. The answer, it
seems, is both.
k-scope.com/thegoodthief
Monday 28 August 2023
The proliferation of cheap, shortlived garments has come at an enormous environmental and social cost.
With pressure mounting on the EU to meet climate targets, Brussels has set out a broad vision of reform.
W
hen journalist Anne-
Marie Schiro reviewed
the arrival of Zara Inter-
national on Manhat-
tan’s Upper East Side in
1989 she used the phrase “fast fashion”
to describe its approach. The new shop
offered fresh styles that only 15 days
earlier had been dreamt up at the com-
pany’s headquarters in Spain.
Zara, Schiro wrote, was speaking a
language understood by young people
on a budget “who nonetheless change
their clothes as often as the colour of
their lipstick”. Her words were a power-
ful prophecy. By 2012, Zara’s parent
company Inditex was churning out
840mn garments a year.
Today, these first-generation fast
fashion giants — a wholly European
group that includes Sweden’s H&M and
Dublin’s discount retailer Primark —
have been joined by more affordable,
more aggressive “ultra-fast” social-
media-savvy brands, such as British
retailer Boohoo and Chinese behemoth
Shein. Collectively, they have super-
charged the speed at which clothes are
made, consumed and discarded.
This surfeit of cheap, shortlived gar-
ments has come at an enormous envi-
ronmental and social cost, however. The
average European throws away 12kg of
clothes every year, the European Com-
mission estimates, and the consump-
tion of textiles is “the fourth-highest
negative impact on the environment”.
Now, the birthplace of fast fashion is
making moves to end it. With pressure
mounting on the EU to meet its climate
target of net zero emissions by 2050,
Brussels has set out a broad vision to
reform the sector. By 2030, it wants tex-
tile products imported into the EU mar-
ket to be “long-lived and recyclable, to a
great extent made of recycled fibres,
free of hazardous substances and pro-
duced in respect of social rights and the
environment”. It is part of what the EU
describes as a “circular economy”, the
effort to consume and discard less.
The EU hopes its legislation will
encourage policymakers around the
world to adopt similar measures and
force brands to rethink their business
practices with benefits for every market
where they sell their clothes. “Industry
was never part of the story and I think
that’s the game changer. That . . . will
inevitably steer them to think in a more
responsible way,” Virginijus
Sinkevičius, the EU’s environment com-
missioner, told the FT last month.
Achieving this, however, involves
changes to existing legislation, aware-
ness campaigns and a new proposal to
require producers — whether manufac-
turers, importers or distributors — to
pay for the treatment of waste textiles.
But critics say the proposals are still
too vague and not underpinned by con-
crete measures. “There are big pro-
nouncements, but the intent of ‘we want
to end fast fashion’ is not [yet] translat-
ing into law,” says Maxine Bédat, a
former lawyer and author of Unraveled:
The Life and Death of a Garment.
These intentions are also not yet
matched by the required infrastructure.
Under new waste and recycling targets,
for example, member states will be
required to collect discarded textiles
from 2025. But in many cases the recy-
cling facilities are not widely available to
deal with fabrics made up of multiple
fibres, such as cotton and polyester.
Elastane, which is added to garments to
increase stretchiness, can act as a con-
taminant during the recycling process
and must be extracted, raising the cost.
“There seems to be a lot of emphasis
on disclosure of information in clothing,
and circularity,” adds Bédat, who wants
a greater focus on tackling emissions.
“We don’t have the technological solu-
tions for this mythical circular world.”
Throwaway culture
The global fashion industry has long
been a dirty business. But it is the ultra-
fast online retailers that has led to an
unprecedented volume of cheap, poor-
quality clothes made from virgin poly-
ester and other synthetic fabrics
derived from fossil fuels. These items
have little to no resale value and end up
being incinerated or languishing for
hundreds of years in landfills, usually in
developing countries.
The glut of low-priced clothes has
contributed to a culture in which con-
sumers increasingly think of them as
disposable. More than half of all fast
fashion is discarded in less than a year,
according to the Ellen MacArthur Foun-
dation, a non-profit that campaigns
against waste and pollution. If the aver-
age price on an item sold by Shein is
★ FINANCIAL TIMES
FT BIG READ. SUSTAINABILITY
By Lauren Indvik and Alice Hancock
The fast fashion clean-up
Fast fashion
giants, joined by
about $7.60, for example, it becomes
more convenient for consumers to buy
more affordable new than to repair existing clothing or
and aggressive buy second-hand.
‘ultra-fast’ The fast fashion model has also been
social-media-
savvy brands,
accused of contributing to exploitative
working conditions in order to maintain
have created an low prices. The 2013 Rana Plaza tragedy,
unprecedented in which a commercial building in Bang-
volume of ladesh collapsed and killed more than
cheap, poor- 1,100 people, mostly women and chil-
quality clothes dren, helped expose the dire circum-
with little or no stances many garment workers face.
resale value;
below right: a
Lawmakers pushing for change often
cite the incident but the pace of those
woman browses efforts since has been slow at best.
at a Shein pop- Bédat, the author, says the EU should
up store in Paris make it a legal requirement for brands
FT montage; Dreamstime;
Christophe Archambault/AFP/
to pay living wages across its supply
Getty Images chain to enable workers and their fami-
lies to meet their basic needs.
Yet, so far, the fashion industry has
been largely left to self-regulate, despite
industry groups and designers, such as
Stella McCartney, calling for greater
government intervention. Out of all the
EU’s member states only France, Swe-
den and most recently the Netherlands
have implemented schemes to make
producers financially responsible for
the waste they create.
This will change when EU-wide legis-
lation comes into force in 2030 but
Emily Macintosh, senior policy offer for
textiles at the European Environment
Bureau, argues the proposed extended
producer responsibility (EPR) scheme
should not simply “allow producers to
pay to pollute for a negligible fee”. She
adds: “We can’t just raise money
through an EPR system to fund collec-
tion, sorting, recycling, circularity . . . in
Europe without recognising that a huge
amount of our fashion and textile prod-
ucts are exported to the global south.”
On the industry’s side, progress has
been slow. Brands including H&M, Zara
The big business of fast fashion
Annual revenues ($bn)
Fast Retailing
Inditex H&M (owner of Uniqlo)
30
20
10
0 0
2005 15 20 2005 15 20 2005
Primark Asos Boohoo
30
20
10
0 0
2005 15 20 2005 15 20 2005
Figures converted to dollars. Shein not publicly available
Sources: FactSet; Hot or Cool Institute, Berlin
and Primark have launched in-store
clothing “take-back” schemes, inviting
customers to drop off worn clothing
from any brand in exchange for a dis-
count on a future purchase. These have
been widely condemned by sustainabil-
ity advocates for encouraging further
consumption. To date, 369 textile,
apparel, footwear and luxury goods
companies have voluntarily committed
to science-based targets, in line with
efforts to keep global warming to 1.5C
above pre-industrial levels. Only 170,
however, have been approved by the
Science-Based Targets initiative, a part-
nership between the Carbon Disclosure
Project, the UN Global Compact, World
Resources Institute and the World Wide
Fund for Nature.
‘The green transition is a
big challenge for fashion
because we want to
change everything in a
short period of time’
Greenwashing, whereby brands mar-
ket themselves as more climate-friendly
and sustainable than they really are, is
rife. How best to measure how compa-
nies’ claims of sustainability is some-
thing the EU has tried to tackle in its
Green Claims Directive. The aim of the
new law is to regulate how businesses
verify their environmental claims.
Statements that do not meet the mini-
mum criteria set will be banned. The
European Commission estimates that
substantiating a single claim about
materials used could cost around €500,
a cost that could rise to €54,000 if busi-
nesses wanted to prove statements
about their overall environmental foot-
print depending on the method used.
Targets, gaps and inequalities: the varying carbon
footprints for fashion consumption of the G20
Kg CO2 eq per capita, forecast for 2030 (with 1.5-degree target noted)
Year 2030 target: 128.7kg
30 Australia
20
Japan
US
10 UK
South Korea
Canada
South Africa
15 20 Mexico
Saudi Arabia
Germany
30 Italy
Argentina
20 Russia
France
10 Indonesia
Turkey 87
China 62
15 20 Brazil 53
India 22
The EU is a member of the G20 but not included in this analysis
The World Resources Institute sets
out guidance for companies to measure
emissions both from their own produc-
tion and that of their suppliers but with
less focus on waste or consumption.
Given the industry involves complex,
multinational supply chains, the WRI
admits that it is difficult for companies
to access the necessary primary data,
particularly on the production of
upstream materials such as cotton.
Efforts have been made to address the
lack of information. The Sustainable
Apparel Coalition launched the Higg
Index in 2012, a set of standards
designed to help companies around the
world trace the environmental and
social impact of their products. It covers
issues from waste and chemical use to
human rights and labour practices.
But the index, since rebranded as
Worldly, has been criticised by NGOs for
being too heavily skewed by industry
interests and not robust enough, which
it has since pledged to address. Other
measures including Life Cycle Assess-
ment and Product Environmental Foot-
print, both designed to calculate the
effects a product has on the environ-
ment from creation to disposal, have
also been accused of falling short.
“The reason [such methodologies]
are falling down is because we are
taking materials from nature, from
a farm, and [mixing them] with
materials of a very different origin”
such as oil-based polyesters, says
Dalena White, secretary-general of
the International Wool Textile Organi-
sation. “We are making natural fibres
much higher in terms of [environmen-
tal] footprint because we never measure
where the oil comes from.”
Burden of change
In an atmosphere of high inflation and
tensions around global trade, many
503
390
387
373
373
335
329
311
276
266
254
211
197 Upstream production
146
117 Use
Disposal
23
companies fear that the EU’s push for
sustainability comes at too high a price.
Part of the issue is the sheer amount of
legislation the commission has intro-
duced. Euratex, the European textile
industry body, estimates that there are
16 pieces of legislation currently being
worked on, touching on everything
from sustainable public procurement to
chemical use and waste shipment rules.
And that is only in the EU. In the US,
fashion trade groups recently endorsed
a proposed bill in California, known as
SB 253, that requires companies with
revenues of more than $1bn to report
greenhouse gas emissions across their
value chain on an annual basis.
A separate proposal in New York
known as The Fashion Act would
require all apparel and footwear retail-
ers with global revenue of at least
$100mn to set and achieve science-
based targets to reduce their climate
impacts — or face fines of up to 2 per
cent of annual sales.
Some in the industry argue that the
EU’s demands are unrealistic. “For what
is probably the oldest industry in the
world, [the green transition] is a big
challenge because we want to change
everything in a short period of time and
the value chain is not prepared for that,”
says Mauro Scalia, Euratex’s director of
sustainable businesses.
Scalia argues a better way to promote
sustainability would be to mandate that
governments have to ensure that they
purchase sustainable fabrics for public
workers and services: “If you start to ask
that all of them have some sustainability
criteria incorporated then you send a
tremendous signal to the market.”
There are others who believe that
changing consumer behaviour is the key
to pushing the industry towards greater
sustainability. One of the ways this can
be done is through so-called ecolabels.
Germany’s “Grüner Knopf”, or Green
Button, for example, launched in the
wake of the Rana Plaza disaster, gives a
seal of approval to products that can
prove they have robust environmental
‘People are and social credentials. Yet just over two-
fifths of German consumers are familiar
buying with it. Similarly, the Nordic Swan has
been around since 1989.
things with The EU, which has a similar system
money for white goods, is working on a revised
version for textiles. Brussels also plans
they don’t to establish a “digital product passport”
that will provide consumers with infor-
have for mation about how an item can be recy-
things they cled or repaired. But officials warn that
the commission must carefully balance
don’t the need to prevent erroneous green
necessarily claims without confusing consumers
with a plethora of labels.
need’ “The problem is we have too many
labels,” says one EU official working on
consumer legislation, who also com-
plains that half of an online sample of
green claims made by businesses did
not meet the criteria.
Online shopping means that meas-
ures like these have less impact. Instead,
young consumers in particular are bom-
barded with advertisements and spon-
sored content on social media sites such
as Instagram and TikTok.
Shein, which has 30.1mn followers on
Instagram, and Boohoo, which has
12.6mn, both make effective use of so-
called influencers to market their
clothes.
Shein says its “on-demand, lean
production model” is aligned with
EU efforts to cut waste, adding that
it has a road map that “outlines our
commitment to addressing social
and environmental challenges”.
Boohoo did not respond to requests for
comment.
Those who represent consumers say
that building a cleaner industry cannot
hinge solely on people changing their
lifestyles. Monique Goyens, director-
general of BEUC, the European con-
sumer association, believes that
addressing the huge damage that the
textile industry causes to the planet
means moving away entirely from a
growth economy that requires people
“to go on buying things with money they
don’t have for things they don’t neces-
sarily need”.
“Circularity doesn’t mean it is not cap-
italistic,” she adds.
But until the industry is forced to
change, a majority of the world’s cloth-
ing will continue to simply be thrown
away. Campaigners are resolute that if
Europe is serious about wanting to clean
up fast fashion it must legally require
companies to meet science-based tar-
gets. “The methodology is already
there,” Bédat says. “If that’s what the EU
wants to achieve, that’s what the law
should be.”
24 ★ FINANCIAL TIMES Monday 28 August 2023

The FT View
Latin America must resist the siren call of the strongman
The appeal of Bukele in
El Salvador is a threat to the
region’s democratic success
Latin America’s turbulent politics often
hit the headlines. Less well reported is
that the region has enjoyed a long and
broad democratic expansion over the
past 35 years. Nowhere else in the devel-
oping world are free elections so well
entrenched. Most of Latin America’s
serving presidents were chosen at the
ballot box in genuine multi-party con-
tests, albeit of varying quality, the main
exceptions being Cuba, Venezuela and
Nicaragua.
Even in chronically unstable Peru,
which is on its sixth president in six
years, the changes of leader were made
in accordance with the constitution
rather than at the behest of generals.
Yet rather than celebrating, many
Latin Americans are fretting about the
ft.com/opinion future of their democracies. One of the
main reasons is the rise of populist lead-
ers with an authoritarian bent, such as
El Salvador’s Nayib Bukele. The bitcoin-
loving self-styled “coolest dictator in the
world” regularly tops regional opinion
polls, largely because of his perceived
success in fighting organised crime.
Bukele’s methods are brutally simple:
round up thousands of young people
suspected of being gang members and
jail them indefinitely, then worry later
about niceties such as criminal charges
or trials.
Salvadoreans who had despaired of
one of the world’s highest murder rates
are now celebrating a record-breaking
incarceration rate. Few worry that their
president is bringing the legislature and
judiciary to heel or that he is violating
the constitution by seeking a second
term in elections next year. A court
picked by his supporters said the move
was legal.
Many Latin Americans like what they
see in El Salvador. From Chile to Mexico,
citizens alarmed by a wave of violent
crime are clamouring for their own
Bukeles. According to a recent regional
opinion poll, 54 per cent of Latin Ameri-
cans agree with the statement “I
wouldn’t mind if a non-democratic gov-
ernment took power, so long as it solved
problems”.
The rising appeal of authoritarianism
comes as transnational drug mafias
spread their tentacles into many of the
region’s traditionally more peaceful
countries. One of the candidates in last
Sunday’s Ecuadorean presidential elec-
tion was shot dead during the campaign.
The victorious anti-corruption candi-
date in Guatemala, Bernardo Arévalo,
has complained of a plot on his life.
Weak economies pose a threat to
democratic leaders: for the past decade,
Latin America has struggled to grow and
the pandemic has set the fight against
extreme poverty back by two decades.
Another risk lurks to the north: a
Donald Trump victory in next year’s US
presidential election. While in office,
Trump proved a good friend of two of
Salvadoreans Latin America’s leading authoritarian
who had populists, Brazil’s Jair Bolsonaro and
Mexico’s Andrés Manuel López Obra-
despaired of one
dor. His entourage still dreams of
of the world’s spreading Trumpian politics across the
highest murder Americas.
rates are now Latin Americans have a history of
celebrating a looking to autocrats to solve apparently
record-breaking insuperable problems. The “caudillo”, or
strongman, loomed large in the 19th
incarceration century despite often dire results: Mex-
rate ico’s Antonio López de Santa Anna lost
more than half the country’s territory to
the US and Paraguay’s Francisco Solano
López triggered a war with his bigger
neighbours that slaughtered about half
the population.
Today’s authoritarian populists may
be less bloody than their caudillo fore-
bears, but they are unlikely to prove
more effective. That makes it all the
more urgent for the region’s democratic
presidents to deliver the sustained eco-
nomic growth, effective crime-fighting
and better public services that Latin
Americans crave.

Opinion Society
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Email: letters.editor@ft.com
Include daytime telephone number and full address
Corrections: corrections@ft.com

Converting YouTube
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fame to an IPO is not easy Generative AI still relies on a human’s sense-check calculation
The adage “rubbish in — rubbish out”
María Hergueta
came to mind after reading John
Thornhill’s article “The sceptical case
on generative AI” (Opinion, August 18)
in which he raises concerns about the
perceived unreliability of generative
artificial intelligence models.
It is as though walking is discarded as
a dangerous activity just because
toddlers fall over sometimes.
Generative AI models are still young
and are learning at a rapid pace.
What is indisputable is that they
make connections that are too difficult
for humans to find in gigabytes of data
and can do so many times faster than
humans. The skill of the human is the
ability to contextualise that data.
Generative AI models and humans will
get better and better at doing this.
Consider for a moment the analysis
of geopolitical risk. The amount of
relevant data is almost infinite and yet
understanding the connections within
that data is extraordinarily important
for decision making. An AI model able
to identify and report these
connections does not purport to be an
absolute truth but illuminates for the
analyst where to look for better and
more precise information. It enhances
the role and individual ingenuity of the
analyst. Analysts are therefore not
simply replaced by the AI but their
work is significantly enriched.
I started work in a different age and
recall that, as pocket calculators grew
in use, there was still great value in a
rapid sense-check calculation in one’s
head. Why should it be any different
with this new technology? We need to
embrace it, not pour scepticism on it,
invest in it to enhance productivity,
solve specific problems, and in due
course create new services and
products.
As a professional investor for many
years I prefer to take the long view.
Let’s develop solutions to real problems
and generate real revenue. With
generative AI, both are possible now
but always while maintaining a native
instinct for common sense.
Sir Donald Brydon
Chair, Adarga (The AI Defence Group)
London SE1, UK

178mn subscribers. He started posting
Elaine on YouTube when he was 11. Speaking
to podcaster Joe Rogan a year ago he
Moore described himself as “hyper obsessed”
with the platform. He studied ways to
Demographic challenge is Ah, the halcyon days when Let’s give government a
less pressing than appears a coffee cost just 28 kopeck taste of its own medicine
I read with interest your report on the
falling number of babies born in the
Almost four decades ago Mikhail
Gorbachev allowed us, the Russians, to
Your recent articles on how to reform
the NHS, including “NHS capital
UK. It is disappointing you didn’t
extend it to look at the economic
travel abroad and I visited many
European countries where I used their
spending cuts leave hospitals
crumbling” (Report, August 18), have

O
ne of the most popular
YouTubers in the world
is a 25-year-old from
North Carolina called
Jimmy Donaldson, better
known to his fans as MrBeast. He has
more online followers than Elon
Musk, makes millions of dollars in ad
revenue and wants to turn his devoted
subscriber base into a business. But
swapping virtual fame for the real
world is tricky.
If you didn’t spend your teenage
years glued to YouTube, Donaldson’s
success may come as a surprise. The
videos he makes are reminiscent of
MTV’s Jackass: there is a lot of shout-
ing and elaborate stunts. Escapades
include squashing a sports car in a
hydraulic press and running a train
into a brick wall. Recently, more of his
work has had a philanthropic bent.
Video titles trade in big, eye-catching
numbers: “1,000 Deaf People Hear For
The First Time”, for example.
Even the most successful
content creator lives at the
mercy of algorithms and
social media moderators
Donaldson does not have the
attributes you might associate with
superstardom. He can still look
uncomfortable on camera. While his
videos follow the faux-casual
YouTube style of fast cuts and shots of
friends laughing, he rarely looks
relaxed. Yet his comment section
glows with respect. Under a video of
him sitting in a chair and counting to
10,000, one viewer wrote “This is
handwork and dedication at its finest!
his patience and mental fortitude is
beyond, dont know how or where he
gets the motivation.”
The question for Donaldson and the
other online stars like him is what
comes next. Even the most successful
content creator lives at the mercy of
social media company algorithms,
moderators and the vicissitudes of
digital advertising. YouTube, owned
by Google’s parent company Alpha-
bet, is currently trying to persuade
more creators to upload short videos
to compete with TikTok. TikTok has
been threatened with bans in the US.
As creators gain more followers, lack
of control can start to chafe.
Content creation is gruelling work
too, since audiences demand a con-
stant stream of new videos — another
incentive to build up offline busi-
nesses. He may be young, but it has
taken Donaldson a while to reach his
make videos go viral, looking at how
bright thumbnail images for videos
were, for example. His own are car-
toony and hyper-real.
MrBeast videos are a model of the
genre: not too long and opened with
explainers that are useful for viewers
with wavering attention spans. He
likes to get other famous YouTubers
involved too.
As his audience grows, so do the
number of businesses. As well as the
55 per cent of video ad revenue he
gets through YouTube’s partner pro-
gramme, his business endeavours
include a ghost kitchen called MrBeast
Burger and a chocolate bar company
called Feastables plus investments in
other creators via a fintech called
Creative Juice.
Earlier this year, Donaldson tweeted
out an idea to sell parts of his busi-
nesses “for billions of dollars”. He had
previously mentioned the idea of an
initial public offering. Last year, news
website Axios reported that he was
considering external funding that
would value his business empire at
around $1.5bn. In tech parlance, this
would make him a unicorn.
Celebrity-run businesses are not
new. In the late 90s, David Bowie
issued asset-backed securities based
on revenues from his albums. George
Clooney used to sell tequila. Rihanna
has a make-up line.
For online stars who trade in views,
however, valuations are still a work in
progress. Even YouTube megastars
can find that their names mean little
to older audiences, hampering their
chances of building a brand outside
social media.
In 2022, an online media company
made up of 93 content creators and
esports competitors joined markets
via a merger with a special purpose
acquisition company. The FaZe Clan,
as they call themselves, claimed a
combined following of more than
500mn across multiple platforms
such as YouTube, TikTok and Twitch.
Revenue comes from sources includ-
ing ads on videos and brand deals that
include the gruesome sounding
Orange Chicken Pizza Roll. But mar-
ket interest in FaZe Holdings does not
bode well for Donaldson. Spacs tend to
open at $10 a share. FaZe Holdings
now trades at less than 30 cents a
share.
Donaldson’s enthusiasm for an IPO
appears to have waned. He sued Vir-
tual Dining Concepts, the company
behind Beast Burger, following cus-
tomer complaints, and was counter-
sued in response. All the while, the
videos keep coming. Escaping the con-
fines of YouTube is going to be hard.
elaine.moore@ft.com
implications (Report, August 18).
There is an argument that is simple
and often repeated. That as the ratio of
the population over 65 to the working
age population of 15 to 64 — known as
the “dependency ratio” — increases, so
economic pressure grows.
Unfortunately, this is misleading and
underestimates the demographic
changes.
Life expectancy in the UK, and
around the world, has gone up by
decades in a generation. We have
added all those extra years to
retirement. The reality is that the age
of 65 is becoming irrelevant.
Governments everywhere are raising
the retirement age. Witness the uproar
in France. Even minor changes
increase the period working and
decrease the period of dependency.
Governments are already managing the
challenges. They can maintain a
deliverable dependency ratio using
retirement age. The standard UK
dependency ratio still uses 65, even
though the UK retirement age is 66.
But individuals are taking matters
into their own hands. Half of Japanese
men between 65 and 69 work. One-
third between 70 and 74 work. You can
claim state pension from the age of 65.
Of the total Japanese workforce, 13.6
per cent is over that age. In South
Korea the number is 13 per cent. In
France only 1.6 per cent. Across the
whole of the EU27 only 16 per cent of
the 65-69 and 6 per cent of the 70-74
work. There is still a lot of scope. Many
people work because they enjoy it.
Alternative measures of dependency
use the percentage working at all ages,
versus those not working. The growth
in dependency is much lower using this
metric. This is without allowing for
changes to retirement age.
There is still a demographic
challenge. It may not be as pressing as
it first appears, but it is still there.
Within it there is good news. If 13 per
cent of a company’s workforce needs to
come from the over-65s, firms cannot
behave the same. They will have to
compete for the older worker. There
will be fewer and fewer young workers
available. Ageism will be dangerous to
a firm’s survival. Jobs will have to be
redesigned to attract older workers.
There will have to be more flexibility.
More work will be part-time. Older
workers are just as productive and add
“wisdom” to teams.
The current generation of children
may well have a life of 100 years. The
“school, work, retire” paradigm cannot
cope. New life models are needed.
Within them, a dependency ratio based
on age 65 is unlikely to be relevant.
Professor John Bateson
Bayes Business School
City, London University, London EC1, UK
Soviet-era kopeck: a Brics currency
would need a common coinage too
Trust is key to Iran deal —
Biden understands that
Your excellent editorial “The US and
Iran look for de-escalation” (FT View,
August 17) needs further elaboration.
The Islamic Revolution of 1979 took
place, most Iranians and historians say,
as a consequence of the death of
Iranian democracy in August 1953.
That regime had been led by national
heroes Mohammad Mossadegh and
Hossein Fatemi, my uncle and the
person who proposed the
nationalisation of Iranian oil assets.
The people of Iran have never
forgotten what they lost and the role
the British and the US played in prime
minister Mossadegh’s overthrow.
Almost four decades of darkness
passed in relations between Iran and
the US, before Barack Obama and Joe
Biden his vice-president, painstakingly
— with diplomacy and equal measures
of strength and respect — signed the
Joint Comprehensive Plan of Action,
the Iran nuclear agreement of 2015,
starting an incipient trust.
Then came Donald Trump, who
withdrew from the agreement, even
though Iran had complied with its
terms. Darkness returned with a
vengeance.
But now the US has a president who
knows more about the Middle East,
Iran and foreign policy than any of his
predecessors. Biden is again using
diplomacy with strength and respect to
put the potential nuclear genie back in
the bottle, as the saying goes.
The Iran haters do not understand,
as the US president does, that restoring
that trust is a life and death matter.
Since without Iran’s co-operation,
nothing can be or will be achieved to
finally bring some desperately needed
stability to a region that can explode at
any moment.
Fariborz S Fatemi
Former Professional Staff Member
House Foreign Affairs Committee
Senate Foreign Relations Committee
McLean, VA, US
coins: the British penny, the German
pfennig, the Dutch cent, the Cypriot
mil, etc. Countries where coins are still
in circulation can create a common
currency. I now use the euro cent.
It was the same in the Soviet Union.
In St Petersburg as a university
student, I always paid 28 kopecks for a
coffee and 22 for a biscuit.
Unfortunately Russia relies on printing
money and now I pay about 100
roubles for a bottle of milk, with our
kopeck becoming obsolete.
Of course a redenomination may
result in my paying 10 kopecks for my
milk again, but we did that to no avail
in 1998.
That’s why I fully agree with Arjun
Neil Alim and Joseph Cotterill and the
article “Brics creator slams ‘ridiculous’
idea for common currency” (Report,
August 16).
Still there is a Russian saying: there
wouldn’t be happiness hadn’t
unhappiness helped. Besides, can’t a
bloc exist and even thrive without a
common currency like the Hanseatic
League from the 13th to 17th centuries?
Mergen Mongush
Moscow, Russia
Transparency in trading
markets is a ‘must have’
The latest regulatory fine for Morgan
Stanley is yet another in a long line of
communications-related compliance
penalties doled out to global banks
over recent years (“Morgan Stanley
fined £5.4mn for WhatsApp deals”,
Report, August 24).
It adds further discomfort to an
already painful regulatory headache.
These fines aren’t just about the
amount of conversations being had by
traders, but also the way in which they
are conducted — private WhatsApp
discussions among energy traders are
rampant, leading to breaches in market
transparency.
Traders in over-the-counter (OTC)
energy markets use WhatsApp, and
have done for over half a decade now,
because of the nature of how they
work.
As a former energy trader, I know
that the reality of dealmaking in this
market is that communication is across
continents, and in multiple time zones,
which leads to problems like the ones
experienced by Morgan Stanley on this
occasion.
With the increased drive for more
transparency, aggregating and
centralising information in one place is
no longer a “nice to have” for those
trading in these markets; it is a must
have.
Stanislav Ermilov
Chief Executive, Tallarium
London SW1, UK
been very interesting, but seem to miss
the point badly.
I am a member of the patient
participation group at my local GP
surgery and our surgery is currently
being inspected by the Care Quality
Commission. I feel viscerally angry that
the government has the temerity to
inspect our hard-working, dedicated
medical staff. So many of the problems
in the NHS have been caused by the
lies and shockingly bad management of
the Conservative administration,
which still continues to imagine that it
has a right to “govern”.
Inspections matter, as we have seen
from the Lucy Letby case (“Inquiry to
probe murder of babies by neonatal
nurse”, Report, August 19), but these
inspections cannot hope to identify
problems if the government of the day
inspires only fear, while failing to listen
and offer intelligent help.
If we wish to have the NHS working
at its best, can we please start
inspecting the government, the media
organisations that perpetuate the lies
and disinformation, and the outdated
voting system that prevents the public
from holding them all to account. Then
we might have half a chance of saving
the NHS.
Jennifer Deegan
Cambridge, Cambridgeshire, UK
Should your food critic
not go out for lunch more?
In “Beware the rise of competitive
packed lunches” (Opinion, FT
Weekend, July 8) your food critic’s
recommendation of Norwegian
sandwiches for lunch at the office desk
seems dull and puritanical. Should the
food critic not go out for lunch?
If lunch must be taken at one’s desk,
then a lacquered bento box containing
say potted shrimps, smoked salmon,
avocado and crab, perhaps a rice cake
and with a small bottle of champagne
will make an acceptable repas.
Bin all Tupperware and avoid Pret A
Manger. Remember you only live once.
Donald Fraser
London SE22, UK
Correction
c The laboratory of Professor Kim Lewis
at Northeastern University, Boston, US,
discovered the antibiotic darobactin,
not NovoBiotic Pharmaceuticals
as wrongly stated in an article on
August 23.
OPINION ON FT.COM
Europe Express
Austria is something of an anomaly among
European democracies, writes Tony Barber
www.ft.com/opinion
Monday 28 August 2023
‘Secret Hitler’ and the risks of real-life liberal confusion
POLITICS
Ivan
Krastev
I
t is more fun to be a fascist,”
declared my 14-year-old freedom-
loving son, who has spent much
of the summer playing “Secret
Hitler” with his mates — a board
game first released in the Trumpian
year of 2016.
In this strikingly popular game, play-
ers are randomly divided into two
teams: the liberals, who represent a
majority, and the fascists. At the start,
the fascists are revealed to each other
(Hitler alone is unaware who his fellow
fascists are), while the liberals have no
clue who is either a liberal or a fascist.
The fascist team wins if it passes six fas-
cist policies or elects Hitler as chancel-
lor; the liberal team triumphs if it suc-
ceeds in passing five liberal policies or
assassinates Hitler.
Yandex
co-founder’s
sanction travails
FINANCE
Gillian
Tett
L
ast week, headlines have been
dominated by the fate of
Yevgeny Prigozhin — the mer-
cenary leader who, this sum-
mer, led an uprising against
Russian president Vladimir Putin
before reportedly dying in a plane crash
on Wednesday.
But as conspiracy theories swirl, west-
ern investors and policymakers would
do well to take note of another, less pub-
licised development — this time in con-
nection to Yandex, the Nasdaq-listed
technology group that is Russia’s equiv-
alent of Google.
This month, Arkady Volozh, the co-
founder of Yandex, who has lived in
Israel since 2014, issued a formal state-
ment condemning Putin’s war as “bar-
baric”. This is striking, given that virtu-
ally no other prominent Russian busi-
nessman has offered such strong public
criticism to date.
Ukrainians might (understandably)
dismiss this as too little, too late. After
all, Volozh has stayed lamentably silent
about the war until now. What is more,
Yandex has not only provided a search
engine that has benefited the Russian
state, but its news aggregator has been
“promoting state media and narratives
Politics, as well as economics, matter when making climate policy
Jonathan
Ostry
D
aily headlines documenting
the accelerating pace of
climate change remind us of
the imperative of action to
arrest the catastrophe being
wreaked on our planet. The critical
actors here are governments whose
job it is to implement effective climate
policies. Yet, despite the need for
accelerated efforts, the hesitancy of
politicians is remarkable.
This often reflects the political
dimension of policymaking. In July, for
instance, European parliament presi-
dent Roberta Metsola urged lawmakers
to refrain from crossing “an invisible
line” between ambitious green policies
and public support for the changes to
people’s lives that these will require. She
warned that if insufficient attention was
paid to the economic and social impact
of environmental policies, this could
There is a basic co-operation dilemma
at the heart of the game. If the liberals
can learn to trust each other, they will
always have the votes to win. Yet trust-
ing is not easy because the fascists
will say whatever it takes to be mistaken
for a liberal and because, in the course
of the game, sometimes a liberal has
no option but to support a fascist policy.
In Secret Hitler, the fate of democracy
is not in the hands of the voters; it
depends on the talent of liberal elites to
trust friends and uncover conspiracies.
The question the game poses is self-
evident: is this the same as in real life?
In a recently published book, Democ-
racy Erodes From the Top, the prominent
American political scientist Larry Bar-
tels argues that the commonplace idea
that a populist tsunami is destroying
European democracies is empirically
wrong. He has shown that public sup-
port for far-right policies and ideas has
not changed much in the last 20 years,
and there is no evidence that public
opinion has moved to the right.
Democracy, Bartels asserts, withers
from above; unfortunate coalition poli-
cies or institutional changes are really
in its search results, and de-ranking and
removing content critical of the Krem-
lin”. After declaring this last year, the EU
duly slapped sanctions on Volozh for
“materially or financially” supporting
the Kremlin.
But Volozh is now appealing for a
reversal of the decision this September
when the EU conducts its regular half-
yearly review of that list. And it is worth
watching how the case plays out for two
reasons.
First, Yandex is one of the few big Rus-
sian companies that holds intellectual
property and engineering talent that
might matter to the west (never mind
Putin). While it started life (like Google)
as a search engine, it has recently devel-
oped skills in artificial intelligence and
self-driving vehicles, mostly linked to
its international division, which is head-
quartered in the Netherlands. That is
potentially valuable in both a financial
and a geopolitical sense.
Second, Volozh’s bid to remove him-
self from the list has thrown down a
gauntlet to the west’s sanctions regime.
During the past 18 months, this regime
has essentially had two sides: curbs on
exports, imports and financial flows
linked to Russia and sanctions on Rus-
sian politicians and leaders.
However, this initial stage has not
been as successful as hoped. The con-
trols on goods and finances have proved
leaky in multiple ways and the sanc-
tions have not prompted oligarchs to
break ranks with the Kremlin, with the
rare recent exception of Oleg Tinkov,
the maverick Russian banker.
come back to bite politicians as they
headed into next year’s elections to
the parliament.
Political inaction often reflects the
fear of being blamed by special interest
groups for green policies that create eco-
nomic hardship. Losses from addressing
climate risk tend to be concentrated and
immediate, while benefits are diffuse
and lie a long way in the future. Opposi-
tion to net zero policies is mounting
worldwide, mainly reflecting the mas-
sive distributional consequences of the
phasing out of the fuel-driven car and
traditional domestic heating systems.
Economists have long studied the
status quo bias in policymaking, the
hesitancy that worried Machiavelli
when he warned about the perilousness
of “tak[ing] the lead in the introduction
of a new order of things”. In some recent
work, my colleagues and I investigated
the salience of status quo bias to the con-
duct of climate change policies (CCPs).
Do governments implementing such
policies see an erosion in popular
support? Is the fear of implementing
them rational and is there a way to miti-
gate or overcome the political fallout?
★ FINANCIAL TIMES
Opinion
why the far right comes to power.
Italy’s prime minister Giorgia Meloni
would agree.
The impressive majority of the right-
wing coalition at last September’s
election was not a consequence of a
dramatic shift in voters’ preferences,
but of the spectacular inability of the
leaders of the Italian left to co-operate
and trust one other. Poland is not
People can often tolerate
authoritarian rule, but they
do not vote for it when
there is a choice
different. Elections are still for main-
stream parties to lose rather than for
extremists to win.
People can often tolerate authoritar-
ian rule, but they do not vote for it when
there is a choice. Recent European elec-
tions have proved Bartels right: the far-
right Swedish Democrats failed to win
their country’s elections, and in Spain,
Vox did much worse than pollsters had
This is partly due to fears of Putin’s
revenge (illustrated by Prigozhin’s
apparent fate). But another problem is
the lack of any co-ordinated “off-ramp”
for oligarchs who might like to negotiate
a reprieve. While the UK did lift sanc-
tions on Tinkov last month, the process
is capricious.
Hence why Volozh’s case matters. The
billionaire is now seeking to court west-
ern favour by arguing that he has hated
the war, but kept silent to ensure the
safety of his engineers who wished to
leave Russia. “These people are now
out, and in a position to start something
new, continuing to drive technological
innovation,” he said in his statement
this month. Thousands of staff have
now left.
This sounds laudable, but is not the
One problem is the lack of
an ‘off-ramp’ for oligarchs
who might like to break
ranks with Putin
Economists often subordinate
political considerations to the altar of
economic efficiency. They will advocate
the efficient solution (in this case,
taxing carbon), even if a small reduction
in efficiency markedly increases the
chance of political feasibility. Politicians
may thus be more dismissive of
economic policy advice that they regard
as politically naive.
There are four lessons to draw here.
Losses from addressing
global warming’s risks
tend to be concentrated,
while benefits are diffuse
First, the hesitancy of governments
over CCPs is rational. More stringent
policies are strongly associated with
lower popular support, at least on
average across the different CCP
instruments. So Machiavelli’s worry is
an enduring one.
Second, the scale of the political hit
depends on policy design. Market-based
predicted. In my native Bulgaria, the
nationalist Revival party may have
given liberals countless sleepless nights,
but its actual electoral results have
always been far more modest than its
opponents fear.
Both the social scientist Bartels and
the designers of Secret Hitler agree that
the biggest challenge for mainstream
parties is not the strength of a society’s
fascist orientation, but the degree of
“liberal confusion”— and their attend-
ant failure of political judgment. Do not
get confused here: having the right
judgment is not the same as having the
right principles.
The game also suggests that the new
“Hitler” might be very different from
the historic one. While history teaches
us that Hitler was a savage revolution-
ary, drunk on power, the board game
suggests that the new dictator might be
the one most inclined to support liberal
policies (because of the need for liberal
votes in order to be elected chancellor).
Thus, we don’t always know who might
be a fascist before they are in power.
In the coming months Europe will
face several important elections. On
whole story. Alexei Venediktov, former
editor of liberal radio station Ekho
Moskvy, thinks Volozh also “kept quiet
because he thought his silence would
save Yandex’s international projects”.
Most notably, Volozh has been trying to
cut a deal with Putin to spin off the inter-
national arm of the tech group, while
leaving the Russian business under the
control of Kremlin-friendly officials.
Presumably this has now faltered.
But whatever the “truth” (always slip-
pery in such situations), the key ques-
tion now is how the EU will respond. If it
keeps Volozh on the sanctions list, that
will underscore the lack of a co-ordi-
nated off-ramp for individuals, particu-
larly since Volozh is not being sanc-
tioned by the US or the UK.
It would also almost certainly under-
mine Volozh’s international ambitions.
Although he resigned as chief executive
after the EU decision in a bid to save
the Yandex business, Volozh now
wants to grow a new AI-focused ven-
ture, and cannot do this if he is locked
out of western banks, due to sanctions.
Rival Israeli and US groups will proba-
instruments (such as emission taxes)
are entirely responsible for the damage
to popular support; regulations, such as
emission limits, seem far more innocu-
ous from an electoral perspective.
Taxing carbon has long been econo-
mists’ preferred measure on efficiency
grounds, but slightly less efficient
instruments merit consideration if the
political economy is more favourable.
Market-based measures, such as emis-
sion taxes, trading schemes and feed-in
tariffs, and non-market measures, such
as emission limits and research and
development subsidies, have measura-
bly different political impacts.
Third, the distributional conse-
quences of CCPs loom large in the likely
electoral effects. The economic burden
they impose is concentrated among
groups with less resilience, so redistrib-
utive instruments targeted to those who
experience higher economic insecurity
is of the essence.
When CCPs are implemented in
environments in which economic ine-
quality is rising, the political hit is very
large. But when inequality is falling, the
electoral impact is benign. Likewise,
September 30, Slovaks are going to the
ballot box and the chances are real of
their country’s politics shifting in the
illiberal direction that Hungary has
under Prime Minister Viktor Orbán.
In October, Poland will hold elections
that could be fateful for Europe’s future.
The ruling Law and Justice (PiS) party
makes no secret of the fact that it sees a
potential third term as a chance to “but-
ton up” the system. It wants to establish
control over the courts, media and other
independent institutions, so the opposi-
tion loses all opportunity to compete
with the authorities.
When I asked my son why it was more
fun to be a fascist, he didn’t hesitate:
they play as a team, he said, while liber-
als are their own worst enemies, and are
paralysed by suspicion and mistrust.
He is right: it is no fun to be ignorant
about who your allies may be, but what
the Hungary example teaches us is that
if liberals lose in Secret Hitler, there is no
game left for them to win.
The writer is an FT contributing editor, the
chair of the Centre for Liberal Strategies,
Sofia, and fellow at IWM Vienna
Efi Chalikopoulou
bly grab those emigrating engineers.
But if the EU removes sanctions from
Volozh, it will signal to other oligarchs
that a pathway back is possible. And,
perhaps not coincidentally, I am told
that Volozh would probably build his
new AI-focused tech business in Europe
if removed from the blacklist.
So what will Brussels do? It is cur-
rently unclear. There are no easy moral
choices here. It is little wonder that the
tech group’s share price currently val-
ues it at about $7bn, down from $30bn
at the end of 2021. (This matters not just
to Volozh, who owns an 8.5 per cent
stake, but to western investment funds,
such as Capital and Fidelity, which
remain big investors.)
But what is crystal clear is that the
west needs to develop more effective —
and more effectively co-ordinated —
sanctions policies. It needs to both
tighten trade controls, and find ways to
encourage the Russian elite to turn. The
September review would be a good
moment to start.
gillian.tett@ft.com
provision of social insurance against the
effects of CCPs on certain groups is
critical in reducing the political fallout.
This should include direct transfers to
households, unemployment benefits to
workers who lose their jobs when
companies and sectors shut down as a
result of CCPs, and active labour market
policies to reallocate workers to key
sectors in the green transition.
Finally, the electoral cycle is impor-
tant for the timing of all this. The dam-
age is larger when CCPs are enacted
close to elections, and largely benign
when introduced early in the cycle.
Climate change policymaking
involves much more than choosing the
most economically efficient measure,
therefore. Economists need to take
account of social and political dimen-
sions in their recommendations, even
if that comes at some small cost to
economic efficiency. They must, in
short, avoid letting the perfect be the
enemy of the good.
The writer is professor of the practice
in the Department of Economics at
Georgetown University
25
What the Letby
case tells us
about the NHS
culture of denial
Henry
Marsh
I
t is impossible to know what
Lucy Letby was thinking when she
murdered babies at the Countess of
Chester hospital. But such events
are sadly not entirely unknown,
either in Britain or abroad, and reflect
the fact that doctors and nurses have
the power of life and death over their
patients. Perhaps we should not be
surprised if terrible things happen
occasionally.
But Letby’s motivation, and even the
question of her guilt, are irrelevant to
another problem — the relationship of
hospital management to clinical staff in
a state-funded healthcare system such
as the NHS. The doctors at Countess of
Chester had reasonable grounds for
anxiety about Letby’s role in the death
of an unprecedented number of babies,
and yet were over-ruled by the hospital
management. It seems that more babies
died as a result.
I joined the NHS as a “junior house
officer” in 1979. Over the 40 years of
my career, probably the greatest
change I saw was the loss of doctor’s
autonomy. There can be no question
that in the past mistakes and avoidable
harm to patients were routinely hidden
from the public by the medical profes-
sion. The disempowerment of doctors
was accelerated by a series of medical
scandals such as the case in Bristol in
the 1990s where paediatric cardiac
surgeons were carrying out operations
with much worse outcomes than at
other units. But, as with recent events,
responsible authorities such as the
Royal College of Surgeons failed
to take any effective action after a
Hospital managers are
caught in a bad place —
between political masters
and clinical colleagues
whistleblower exposed the problem.
Margaret Thatcher claimed that the
introduction of business management
into the NHS would make it so good that
“no one will want to go private”. The
Griffiths Report in 1983, which created
the new class of hospital managers, and
health secretary Kenneth Clarke’s sub-
sequent introduction of the “internal
market” were a compromise, forced on
Thatcher and her free-market acolytes
by the fact that the NHS was politically
inviolate, a national “religion” as Nigel
Lawson complained. But the problem
with the NHS at that time, and indeed
since, was as much one of chronic
underfunding as of any lack of business
management and competition.
It is easy to understand the role of
managers in private hospitals, which
deal mainly with insurance-funded
elective work. This comes with
price tags, so business management and
planning can be applied. Staff training
costs are largely borne by the taxpayer,
and emergencies go to the NHS. The
private sector does not have to deal
with the consequences of old age,
deprivation and inequality.
Few observers now would consider
the attempts, under both Labour and
Tory governments, to introduce market
competition and choice into the NHS
to have been successful. Given the
long-term underfunding of the service
(with the exception of the Blair and
Brown years), hospital managers are
caught in a bad place — between their
political masters, who want costs to be
contained, and their clinical colleagues
whose work is always driving up costs.
This can easily lead to conflict rather
than trust and co-operation.
I have no doubt that state-funded sys-
tems, for all their failings, are the most
effective and equitable way of delivering
healthcare and must be defended
against their critics. But it fills me with
despair that the failures of the past, with
its culture of secrecy and denial, are now
being repeated — by the very people
who were supposed to prevent them.
The Chester case is obviously excep-
tional, and it is clearly the case that
there are many excellent NHS manag-
ers. But if some of them end up ignoring
the advice of frontline clinicians, as
happened at Chester, and make
decisions that have grave consequences
for patients, they must be held to
account — just as doctors are subject to
the General Medical Council, malprac-
tice litigation and even criminal law.
The writer is a neurosurgeon and author of
‘And Finally: Matters of Life and Death’
26 ★ FINANCIAL TIMES Monday 28 August 2023
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