Rachel Reeves to boost UK defence spending as public debt surges

Right now’s agenda: Black Sea truce; menace to Nvidia’s gross sales in China; Large Learn on Russia’s Gazprom; FT View on “Signalgate”; and Henry Mance visits Spain’s 20-storey ghost lodge

Good morning. UK chancellor Rachel Reeves unveils her Spring Assertion at present in opposition to a grim financial outlook for the nation. Right here’s what we all know.

What to anticipate: Reeves is about to boost defence spending by £2.2bn, taking it to 2.36 per cent of GDP within the 2025-26 monetary yr. This might be funded by cuts to abroad assist and the Treasury reserve. The chancellor will even publish a forecast by the Workplace for Finances Accountability, which is anticipated to halve its progress projection for 2025. The unbiased watchdog will even reveal a gap within the public funds of about £15bn. Reeves will attempt to patch this up with cuts to welfare and broader authorities spending, however she has been unable to steer the OBR that her reforms can trim a web £5bn from the welfare invoice.

Reeves’ problem: Larger rates of interest and weaker progress have blown the chancellor’s fiscal plans astray, with the UK’s public debt burden surging sooner than that of some other large superior financial system for the reason that eve of the Covid-19 pandemic. Economists warn that the spending cuts in at present’s assertion would supply solely a short lived repair to deeper budgetary issues related to rising age-related outlays and calls for for a rearmament drive.

Head to FT.com for stay updates because the chancellor addresses MPs at present, and sign up for our Newswrap e-newsletter to get a night round-up of the important thing factors from her speech.

Right here’s what else we’re maintaining tabs on at present:

• Financial knowledge: The UK has its February shopper worth index, whereas France experiences shopper confidence knowledge.

• Outcomes: Commerzbank experiences.

Be part of Monetary Occasions specialists tomorrow for a subscriber-only webinar, as they talk about Ukraine’s future with Russia’s full-scale invasion coming into its fourth yr. Register for free.

5 extra prime tales

1. The US mentioned it had reached agreements with Ukraine and Russia for a ceasefire within the Black Sea, following talks with each events in Saudi Arabia. The deal fell properly wanting the Trump administration’s proposed 30-day ceasefire, and it remains unclear when the new agreement will be implemented.

2. Unique: Pirelli’s board is urgent China’s Sinochem, its largest investor, to chop its stake over fears that the Trump administration’s hawkish place on Beijing possession of American property will thwart the Italian tyremaker’s US enlargement. Silvia Sciorilli Borrelli has more from Milan.

3. Indicators that buyers within the US bond market are baking in increased inflation can be a “main crimson flag” that might upend rate-setters’ plans to chop rates of interest, a prime Federal Reserve official advised the FT. The remarks from Austan Goolsbee come after a carefully watched ballot confirmed households’ long-term inflation projections hit the highest level since 1993.

4. Unique: Nvidia’s gross sales in China might be affected by environmental curbs if Beijing enforces them extra strictly. Regulators are advising Chinese language teams to make use of chips that meet stringent vitality effectivity guidelines in knowledge centres, in response to paperwork seen by the FT. Folks with data of the matter mentioned tech giants comparable to Alibaba and Tencent had been quietly discouraged from buying Nvidia chips.

5. Unique: PwC has delayed payouts to just lately retired companions in Hong Kong and mainland China because it navigates the monetary fallout from its position auditing Evergrande. A number of fairness companions who retired in current months have but to be repaid any of the capital they contributed after they joined the partnership, a delay to the normal schedule for repayment that would help the firm conserve cash.

The Large Learn

After years of benefiting from its monopoly on Russian pipeline fuel exports, Gazprom is struggling to get better from file losses following Vladimir Putin’s full-scale invasion of Ukraine. “Your complete enterprise construction was inbuilt an setting of fixed progress,” mentioned an individual near the state-owned vitality big. “But now everything has changed.”

We’re additionally studying . . . 

• ‘Signalgate’: Donald Trump is doing sufficient hurt to US standing on the planet with out including dangerous ineptitude to the record, writes our editorial board.

• Europe’s Starlink: The EU is proposing to fund a homegrown alternative to Elon Musk’s satellite tv for pc system, following US threats to modify off the corporate’s broadband companies in Ukraine.

• mRNA vaccines: Are they the White Home’s subsequent goal? As soon as researchers begin to surprise if the federal government may pull assist, the damage is done, writes Anjana Ahuja.

• Struggle in Gaza: Israel’s siege has created a extreme foreign money scarcity, fuelling a profitable black market for cash and forcing some to fix tattered payments by hand.

Chart of the day

A Trump administration proposal to impose stiff levies on Chinese language-made ships coming into US ports is sowing panic in American agriculture, with farmers saying the added price threatens exports of wheat, corn and soyabeans.

Take a break from the information . . . 

On the south coast of Spain, there’s a four-star lodge that ought to by no means have been constructed and has by no means been occupied. But the 20-storey El Algarrobico is one way or the other resisting all attempts to destroy it, writes Henry Mance.