One year on: Ukraine and the world economy

Right this moment’s high tales

• Nato and US officers mentioned China’s proposed peace plan for Ukraine was tainted by the nation’s support for Russia.

• US core month-to-month private consumption expenditure — the Federal Reserve’s most well-liked measure of inflation — got here in at a higher than expected 0.6 per cent in January, with the year-on-year determine at 5.4 per cent, a lot greater than the anticipated 4.8 per cent, fuelling expectations of extra rate of interest rises. Financial development for the fourth quarter was revised down yesterday from 2.9 per cent to 2.7 per cent. Minutes of the final Federal Reserve coverage assembly confirmed it was nonetheless decided to bring inflation back to target.

• Recession fears returned to Germany after revised figures confirmed the financial system shrank a more than expected 0.4 per cent within the fourth quarter.

For up-to-the-minute information updates, go to our live blog

Good night.

One story dominates world media as we speak: the primary anniversary of Russia’s all-out assault on Ukraine. As we catalogue throughout the FT website as we speak, the conflict has not solely introduced devastation to the Ukrainian folks however profound adjustments to the worldwide financial system.

Let’s begin with the power disaster. The conflict brutally uncovered Europe’s dependence on fuel from Russia, whereas report oil and fuel revenues helped Moscow initially climate the price of its marketing campaign, with a hit of just 2.1 per cent to Russian GDP in 2022.

However as Europe efficiently pivots to different sources equivalent to seaborne liquefied pure fuel and oil revenues are affected by a western embargo and a value cap, the impression on Russian authorities income — 40 per cent of which comes from power — is likely to be substantial. The worth of Brent crude in the meantime has fallen back to prewar levels.

Falling costs and a gentle winter have fuelled a brand new sense of optimism that the disaster is ending, however Fatih Birol, head of the Worldwide Vitality Company, added a observe of warning in an interview with the FT yesterday: “Russia performed the power card and it didn’t win . . . However it might be too sturdy to say that Europe has gained the power battle already.”

Western sanctions in the meantime proceed to ratchet up, with a new raft of measures as we speak timed to coincide with the anniversary. The US and the UK are concentrating on lots of of teams and people together with Russian banks and defence corporations, whereas the EU and Japan are methods of additional damaging Moscow’s conflict financial system.

However how efficient are the sanctions? Western allies are investigating sanctions dodging and specifically the surge of exports to Russia’s neighbours. An FT investigation discovered that Yevgeny Prigozhin, chief of the Wagner mercenary group that has performed a key position within the invasion, managed to generate greater than 1 / 4 of a billion {dollars} from his pure sources empire regardless of being sanctioned manner earlier than the conflict. He was even capable of get spherical UK money-laundering checks by submitting a utility invoice within the title of his 81-year-old mom.

In the meantime, as as we speak’s Ethical Cash publication (for premium subscribers) factors out, most of the world’s largest corporations are still doing business in Russia, arguing hearth gross sales would hurt shareholder worth. Tobacco group Philip Morris advised the FT this week it might “quite maintain” its operations in Russia than promote on robust Kremlin phrases.

One other key consequence of the conflict has been the injury to produce chains, and specifically on food supplies, inflicting world starvation to leap by nearly 1 / 4 final yr, in response to the UN. Meals and fertiliser costs have come down from final yr’s peaks however are nonetheless excessive.

As our Behind the Money podcast explains, Ukraine’s position as one of many world’s main sources of grain, corn (a significant supply of feed for livestock) and sunflower oil instantly stopped with the invasion and Russia’s blockade of Ukraine’s ports. Though the UN and Turkey ultimately brokered a deal to get grain shifting once more, poorer nations that depend on Ukrainian and Russian grain have been hit onerous.

As for Ukraine itself, the financial injury has been devastating, with GDP falling 30 per cent final yr and plenty of of its core industries badly affected. The conflict effort is costing it 35 per cent of GDP, threatening to show the nation into an inflationary catastrophe, heavily dependent on foreign aid. And regardless of repeated gives of help from the west, lower than half the financial aid pledged has really reached Kyiv, in response to new evaluation.

The FT editorial board nonetheless detects grounds for hope after a yr of conflict and praises the choice to make Ukraine an official candidate for EU membership.

“Dialogue is rightly beginning concerning the postwar safety ensures Ukraine will want,” it says. “Hundreds of its residents have paid in blood to make sure independence and a ‘European future’ for his or her nation. Ukraine deserves assurances that that is certainly the longer term that awaits.”

Have to know: UK and Europe financial system

UK opposition chief Keir Starmer outlined 5 long-term missions for the Labour get together if he wins the following election, together with a pledge to make the nation the fastest-growing G7 economy. Ought to he grow to be prime minister, he’ll inherit a severely damaged public sector, in response to a brand new report.

The European Central Financial institution scrapped its dividend and mentioned it made no earnings in 2022 for the primary time in 15 years. Analysts mentioned the ECB risked losses within the coming years because it unwinds its quantitative easing insurance policies.

Turkey cut interest rates in an try and help the financial system following the current earthquakes, the most recent in a sequence of massive reductions forward of its common election.

Have to know: International financial system

US clear power tsar John Podesta advised the FT there can be “no apologies” for prioritising American jobs within the race for clean energy.

The US nominated former Mastercard chief and Wall Avenue veteran Ajay Banga as World Financial institution president to supervise the establishment’s upheaval and a brand new concentrate on world warming. The FT editorial board outlines the challenges ahead.

South Africa and Nigeria, Africa’s two largest economies, have been placed on warning by the Monetary Motion Process Power, an anti-money laundering watchdog, over failures to battle illicit finance and organised crime.

The US could also be making an attempt a pivot in direction of clear power however it first should overcome its obsession with massive automobiles. Chief information reporter John Burn-Murdoch particulars how they lead to excessive ranges of air air pollution and much higher road death rates than in different developed nations.

Have to know: enterprise

BASF, the world’s largest chemical substances group, is cutting 2,600 jobs and winding down a number of crops, blaming excessive power prices in Europe.

The most recent indicators of a rebound in journey demand got here with British Airways proprietor International Airline Group returning to revenue for the primary time for the reason that begin of the pandemic and an analogous announcement from Australian flag provider Qantas. In China the revival means the wealthy are struggling to seek out private jets. London’s Heathrow airport mentioned it had misplaced £684mn final yr despite passenger numbers trebling.

Job cuts at McKinsey and KPMG are the primary concrete indicators that the pandemic-fuelled increase in spending on consultants is over, due to hovering prices, the top of low-cost cash and a slump in deal activity.

A hacking outfit often called the Nevada Group has tried to paralyse laptop networks of just about 5,000 victims throughout the US and Europe in one of the widespread ransomware attacks on record.

Science spherical up

Google mentioned it had made a breakthrough in correcting for the errors which are inherent in quantum computers, a probably vital step in overcoming the most important technical barrier to a revolutionary new type of computing.

Can robotic studying be used to generate novel concepts in onerous areas equivalent to arithmetic and science? Innovation editor John Thornhill is optimistic.

The collision of two neutron stars in 2017 might provide us some insights into the age of the universe and unlock different astrophysical mysteries, writes science commentator Anjana Ahuja.

The worst-ever outbreak of hen flu has led to the illness turning into endemic in some birds, with enormous prices for the poultry trade. However how seemingly is a human hen flu pandemic? Read our new explainer.

Some excellent news

Ynys Enlli, an island off the coast of Wales, has grow to be Europe’s first dark-sky sanctuary and among the best locations on this planet to see the celebrities

One thing for the weekend

The FT Weekend interactive crossword can be revealed here on Saturday, however within the meantime why not strive as we speak’s cryptic crossword?

Interactive crosswords on the FT app

Subscribers can now clear up the FT’s Every day Cryptic, Polymath and FT Weekend crosswords on the iOS and Android apps