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Today’s agenda: Spanish blackout cyber security probe; BA kept on time by AI; US microcap ‘boom’; EU capital markets union; and Trump’s Middle East doctrine
Good morning. We begin with an exclusive story on EU preparations to use capital controls and tariffs against Russia in case Hungary blocks the extension of the EU’s economic sanctions imposed on Moscow in response to its war in Ukraine.
What we know: The European Commission has told member states’ capitals that a large portion of the sanctions, including €200bn in frozen Russian state assets, could be moved on to a different legal basis to circumvent Budapest’s veto, five officials briefed on the ongoing discussions told the Financial Times.
Why it matters: The EU has vowed to maintain economic pressure on Moscow amid diplomatic efforts to force Russia to agree to a proposed ceasefire and direct peace negotiations with Ukraine. Hungary, whose Prime Minister Viktor Orbán has repeatedly held up EU sanctions against Russia, has threatened to veto the extension of economic restrictions which lapse at the end of July unless all 27 member states agree to extend them for another six months. Our Brussels team has more on the plans.
Here’s what else we’re keeping tabs on today:
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Economic data: The UK releases May labour market statistics. The US publishes inflation data for April.
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Trump visits the Gulf: The US president is scheduled to arrive in Saudi Arabia today for the first official foreign tour since he returned to the White House, with high expectations of securing a raft of multibillion-dollar deals.
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France: The 78th Cannes film festival begins, running until May 24.
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Results: Bayer, Ferrovial, K+S and Marston’s report.
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Five more top stories
1. Exclusive: Spain’s national cyber security agency is demanding information from small electricity generators on their defence strategies as investigators probing last month’s blackout seek to determine whether they were a weak link exploited by bad actors to bring down the country’s power grid. Barney Jopson has more from Madrid.
2. The boss of British Airways has said “game-changing” AI technology has helped significantly cut the number of cancellations and delays at the airline, which is fighting to restore its reputation after years of operational problems. First-quarter data showed 86 per cent of BA’s flights from Heathrow departed on time, its best performance on record.
3. Exclusive: Macquarie-controlled Southern Water asked Ares Management and other lenders to write off about £370mn of debt in an effort to allow new equity to flow directly into the utility’s heavily-indebted operating company as it seeks to strengthen its finances.
4. The volatile market for small US initial public offerings is “booming” thanks to a surge of Chinese listings on New York’s Nasdaq as companies race to beat a rule change that blocks the smallest deals. George Steer has more on the surge of microcap IPOs.
5. Companies have abandoned almost half the projects in a $5bn Texas programme to fund gas power plant construction and prevent more electricity blackouts, as they struggle with ballooning expenses and supply chain delays. Here are the groups walking away from the state-backed scheme.
The Big Read
Hampered by a lack of competitiveness in its economy, the EU is making a new push to deepen integration of its fragmented capital markets to help channel high savings to more productive activities and support homegrown companies. Some investors are optimistic that the greater momentum this time around could yield results, writes Paola Tamma.
We’re also reading and listening to . . .
Chart of the day
Britain’s great minimum wage experiment has proved very successful in raising pay for people at the bottom without destroying jobs. But some side effects are now causing problems of their own. Data shows that minimum wage is fast catching up with the lower rungs of white-collar work, writes Sarah O’Connor.
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Take a break from the news
As a cultural figure, Gertrude Stein has too often been relegated to the margins. A beguiling biography reasserts her legacy as an artistic innovator while filling in once-taboo blanks.
