finance

FirstFT: UK unveils post-Brexit state aid scheme to support industry


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The UK will today set out plans for a simpler, more “nimble” post-Brexit system of state subsidies, which the government will use to turbo-charge or prop up selected industries.

The government said the system would “start from the basis that subsidies are permitted if they follow UK-wide principles — delivering good value for the British taxpayer while being awarded in a timely and effective way”.

The UK will set up a “subsidy advice unit” within the Competition and Markets Authority, which can only offer advice on whether a subsidy is fair.

Rows over state aid were a source of friction during the negotiations on the UK-EU trade deal last year, with Brussels pushing for Britain’s rules to remain aligned with the bloc in order to ensure a “level-playing field”.

  • More on Brexit: although Britain’s decision to leave the EU is seldom mentioned on doorsteps nowadays, campaigners said UK politics had become less about the left-right split and more about tribal identity.

Five stories in the news

1. Brussels: EU could be destroyed by national legal challenges In an interview with the Financial Times, Didier Reynders, the EU’s justice commissioner, has vowed to fight back against a proliferation of legal challenges and rulings by member states that have attacked the supremacy of EU law, warning that they could destroy the union itself.

“What is the risk if we don’t take care of this? It is that we will destroy the union itself.”

2. Global tax deal backers’ battle Negotiators in Paris are battling to persuade holdouts to sign up to the G7’s global deal on corporate taxation this week amid concerns that the compromises needed will water down the final agreement. China, India, eastern European countries and developing nations have raised objections to the deal — but talks at the OECD are seeking to find carve-outs to bring them on board.

3. Declan Kelly resigns as Teneo chief The influential adviser to many Fortune 500 chief executives has resigned as head of the communication firm Teneo. His exit comes five days after the FT revealed that Kelly had inappropriately touched a number of women without their consent at a charity concert in California in May.

4. Microsoft and Google end truce on legal battles The end to an almost six-year truce to prevent open warfare between the rival Big Tech companies clears the way for direct conflict as regulators take aim at barriers to competition among the leading US technology groups.

5. Jacob Zuma sentenced to jail South Africa’s top court has sentenced the former president to 15 months in prison for contempt of court after he defied an order to attend an inquiry into allegations of corruption under his presidency. Zuma must turn himself in to police within five days.

If Jacob Zuma fails to turn himself in, the police must ‘take all steps necessary’ to ensure that he goes to jail, the court said
If Jacob Zuma fails to turn himself in, the police must ‘take all steps necessary’ to ensure that he goes to jail, the court said © Bloomberg

Coronavirus digest

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The day ahead

Didi’s New York IPO China’s ride-hailing app Didi will begin trading on the NYSE today after raising at least $4bn in one of the largest foreign listings since Alibaba’s in 2014. The group defeated Uber to become dominant in its home country’s cities, but issues of growth and regulation loom.

Column chart of Sector’s contribution to group’s total sales (%) showing Didi's revenues breakdown

US-Taiwan trade talks Taiwan and the US will discuss supply chain security and digital trade in their first such talks in five years, which kick off today, as the countries seek to deepen economic ties in the face of tensions with China. For the latest developments in global trade, sign up for our Trade Secrets newsletter.

Eurozone inflation data Figures due today are expected to show a modest dip from 2 per cent in May to 1.9 per cent in June. The ECB’s inflation target is just below 2 per cent. The UK’s stamp duty holiday is also due to end.

What else we’re reading

Amazon’s changing of the guard As founder Jeff Bezos prepares to step down, whether Amazon can survive without him remains a pressing concern. But news of his departure did little to move the company’s stock price or dent its $1.7tn market value. The market’s shrug was testament, perhaps, to investors’ trust in the corporate machine Bezos built over the past 27 years — and in his replacement, Andy Jassy.

Bitcoin’s limits What’s the point of making a killing if you can’t spend the loot? Customers of Binance, one of the world’s largest cryptocurrency exchanges, are confronting that question after their accounts were cut off from one of the UK’s main payments systems. Brooke Masters explores.

Reflation trade unwind wrongfoots hedge funds Betting against the price of US government bonds was a winning play earlier this year. But recent gyrations and the spectre of a policy pivot from the Federal Reserve have heaped significant doubt on whether investors should remain in the reflation trade that has captivated Wall Street.

  • Opinion: Should central banks do something about inequality and, if so, what? This has become a hot topic, writes Martin Wolf. But the necessary structural reforms will be harder than many economists imagine.

George Osborne’s horrible histories The former chancellor has been installed as the centrepiece of a new exhibition at the British Museum, among other fossilised remains of David Cameron’s government. He is now chair of the museum, a ceremonial role that mostly involves raising money and refusing to give the Greeks back the Elgin Marbles, writes Robert Shrimsley.

Robert Shrimsley: Visitors will be able to feast on the former chancellor’s mummified political legacy
Robert Shrimsley: Visitors will be able to feast on the former chancellor’s mummified political legacy © Lucas Varela

What’s fuelling China’s online nationalists? Chinese nationalist sentiment is mounting online, especially on Weibo, the country’s biggest social media platform. It used to be outsiders, such as a US politician criticising Beijing, who received the worst of bloggers’ attacks. Now, insiders bear the brunt, writes Yuan Yang.

Wellbeing and fitness

FT Globetrotter has launched a series helping readers explore great cities by bicycle. Columnist Simon Kuper shares tips for getting around the French capital, while Asia tech reporter Mercedes Ruehl reveals four of Singapore’s most scenic cycle routes.

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