Rachel Reeves to boost UK defence spending as public debt surges

In the present day’s agenda: Black Sea truce; risk to Nvidia’s gross sales in China; Huge 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 in the present day 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 may even publish a forecast by the Workplace for Funds Accountability, which is anticipated to halve its development projection for 2025. The impartial watchdog may 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 internet £5bn from the welfare invoice.

Reeves’ problem: Increased rates of interest and weaker development have blown the chancellor’s fiscal plans off beam, with the UK’s public debt burden surging quicker than that of some other large superior economic system for the reason that eve of the Covid-19 pandemic. Economists warn that the spending cuts in in the present day’s assertion would supply solely a brief repair to deeper budgetary issues related to rising age-related outlays and calls for for a rearmament drive.

Head to FT.com for reside updates because the chancellor addresses MPs in the present day, 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 protecting tabs on in the present day:

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

• Outcomes: Commerzbank experiences.

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

5 extra high 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 nicely 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 belongings will thwart the Italian tyremaker’s US growth. Silvia Sciorilli Borrelli has more from Milan.

3. Indicators that buyers within the US bond market are baking in larger inflation can be a “main crimson flag” that might upend rate-setters’ plans to chop rates of interest, a high Federal Reserve official advised the FT. The remarks from Austan Goolsbee come after a intently 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 information centres, in response to paperwork seen by the FT. Folks with information 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 lately retired companions in Hong Kong and mainland China because it navigates the monetary fallout from its function 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 Huge Learn

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

We’re additionally studying . . . 

• ‘Signalgate’: Donald Trump is doing sufficient hurt to US standing on this planet with out including dangerous ineptitude to the checklist, 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 would possibly pull assist, the damage is done, writes Anjana Ahuja.

• Conflict 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 value 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 in some way resisting all attempts to destroy it, writes Henry Mance.