Opinion

French President Emmanuel Macron shocked his country – and the world – when he called a snap election last month, immediately after his party was trounced by the far-right National Rally (RN) in the vote for the European Parliament. Aside from a small group of advisers, Macron warned no-one, not even his prime minister, Gabriel Attal. Yet the move seemed carefully planned. And for Macron, it worked well enough, because defeat did not become debacle.Since the legislative elections in 2022, Macron had only a plurality in the National Assembly. But by picking up votes on the left or on the right – or legislating by decree – his government enacted significant reforms, not least raising the retirement age from 62 to 64 and tightening immigration.But, as Macron confessed to his father two months ago, to his mind the National Assembly had become “ungovernable,” adding that he was going to dissolve it. He was looking for a way out. Either way, his government was facing a vote of no-confidence after the summer recess and was likely to fall. Better to take the bull by the horns.When Macron was first elected in 2017, he seemed to be a bulwark against the far-right populist wave that was crashing through the West, first knocking the United Kingdom out of Europe and then lifting Donald Trump to power in the United States. Macron beat Marine Le Pen of the National Front (as RN was then known) by a landslide, 66% to 34%, and repeated the feat five years later, winning 59% of the vote.But Macron’s popularity has since waned, while support for RN has surged. The writing was already on the wall in the 2019 European elections, when National Rally pushed Macron’s party into second place, 23% to 22%. Five years later, it wasn’t even close: in June’s European Parliament election, RN won 31%, more than double Renaissance’s 15%.Macron’s apparent rationale for immediately dissolving the National Assembly was that by putting the spotlight on RN during a short election campaign, Le Pen’s party would start to crack. With another three years to go on his presidency, better to face the RN now and try to take the wind out of their sails than to allow their vote to continue to increase and carry Le Pen to the Elysée in 2027.During the first round of voting, chinks started to appear, not least the fact that RN walked back many of its landmark policies. A “national preference” for French citizens over foreigners for jobs, housing, and welfare? Not anymore (only that dual citizens are to be excluded from strategic positions within the French state). The reduction of value-added tax to 5.5%? Only on gas, petrol, and electricity. Retirement at 60? Actually, in some cases, RN will increase the minimum age to 66. Leaving the European electricity market? Maybe yes, maybe no, depending on who you ask. Only on immigration has RN been consistent, although much of what it proposes has already been done.Nonetheless, RN won the election’s first round handily, with 33% of the vote, while Macron’s Ensemble (Together) coalition finished not second but third, behind the hastily cobbled-together left-wing alliance, the New Popular Front, which received 28%. Yet the presidential coalition increased its share of the vote by five percentage points compared to the European election, winning 20%, owing partly to high turnout.In the second round, the chinks became cracks, with the campaign revealing the alarming number of neo-Nazis, racists, and antisemites still within the RN camp, and the seeming incompetence and lack of preparedness of many of their candidates. The Russian question also re-appeared (Le Pen’s 2017 presidential bid received financial support from the Kremlin), with Russia’s foreign ministry publicly declaring support for Jordan Bardella, RN’s new president.In the end, RN never came close to achieving an absolute majority, falling well short of the required 289 deputies. In fact, it finished third, behind the New Popular Front and Ensemble, which did much better than expected. Today the dominant force in the National Assembly is not the far-right but the left, although none of the voting blocs – left, centre, and far right – has an absolute majority.So, now what?Although the possibility of a technocratic government, to see out the Olympic Games, has been mooted, the likelier scenario is an agreement among the “republican” parties, stretching from the Communists through to the Greens, Socialists, centrists, and conservatives, together with a political programme for the next year.This type of grand coalition has been foreign to French politics since the founding, under Charles de Gaulle, of the Fifth Republic, with its strong president. But it was a feature of the Third and Fourth Republics, and is hardly foreign to other European countries. The last couple of years, when Macron’s government has lacked a parliamentary majority, prefigured the potential of such an arrangement.Ironically, it was just such a grand coalition that lifted Macron to the presidency in the first place, back in 2017. Three years is a long time in politics, and the challenge for the next government, whichever form it takes, is to resolve the cost-of-living crisis. If Macron has won this battle, he hasn’t yet won the war. — Project Syndicate• Hugo Drochon, Associate Professor of Political Theory at the University of Nottingham, is the author of Nietzsche’s Great Politics.The dramatic runoff in figuresFrance is bracing for a protracted period of political uncertainty after snap elections won by the left-wing New Popular Front (NFP) over the far-right National Rally (RN).Here is an overview of the election, which has left the country with a hung parliament.Leftist alliance surprise winnerThe NFP stunned the country by winning 193 seats in Sunday’s vote to become the biggest bloc in parliament.The coalition includes 74 lawmakers from the hard-left France Unbowed (France Insoumise), 64 Socialists and 33 ecologists.That is a gain of 42 seats compared to the 2022 elections.President Emmanuel Macron’s centrists and their allies came second with 164 seats.The big loser of the evening was the National Rally (RN) and its allies, which came first in the first round on June 30 but came only third in the run off with 143 seats (125 seats for the RN and 17 for its allies).That is however 36 extra seats compared with its previous record of 89 in the last parliament.Anti-far right pactsWhat sealed the fate of the RN, which was in the lead after the first round of the election in 258 of the 501 voting districts still up for grabs on Sunday, was that the centre and the left withdrew their third-placed candidates in constituencies where the RN looked poised to win, effectively pooling their voters.Some 8.745mn voters still opted for the RN, 700,000 more votes that those cast in the same constituencies in the first round.Cities vote overwhelmingly leftIn France’s 10 biggest cities, including Lyon, Nantes and Strasbourg, the NFP came first with 41 seats out of 58 and got 12 seats out of 18 in Paris.Macron’s party won 10 constituencies, including six in Paris.The RN and its allies only got seven seats in cities, all of them in southeastern France, including all three seats up for grabs in the resort city of Nice and three of the seven seats going in France’s second biggest city Marseille.Voters punish Macron’s MPsOf the 577 National Assembly members elected in the two-round vote, 420 were incumbents.Of the big parties, the one that suffered the biggest losses was Macron’s.Of the ruling party’s 229 outgoing MPs, 78 failed to win re-election.The RN’s lawmakers fared better, with 81 out of 89 getting back in again.Biggest turnout in quarter centuryTurnout in both rounds of the election was very high.Two thirds of registered voters, or 66.71%, cast a ballot in the first round and nearly as many turned out again on Sunday (66.63%) — the highest turnout at the second round since 1997, when Lionel Jospin’s Socialists won.Since 1997 turnout has been steadily dropping, hitting a historic low in 2017 of 42.64%.Fewer womenOf the 577 National Assembly members, 208 (36%) are women, down from 224 in 2017 and 215 in 2022.The New Popular Front has the most women MPs, at 40.4 percent, just ahead of Macron’s centrists on 40.2%.The National Rally has just 32.2%.— AFP

India’s joblessness, especially among young people, was a key concern among voters in the recent elections and was cited as a reason for the drop in support for the ruling Bharatiya Janata Party.Between 2012 and 2019, employment in India grew by a mere 0.01% annually, with most new jobs being low-productivity roles in agriculture and construction, according to the International Labour Organisation (ILO).India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a rapid pace of 7%, Citigroup said last week, suggesting the world’s most-populous nation will need more concerted steps to boost employment and skills.Citi estimates India will need to create about 12mn jobs a year over the next decade to absorb the number of new entrants to the labour market. Based on a growth rate of 7%, India can only generate 8mn-9mn jobs a year.The quality of jobs being created in India is another challenge. An analysis of the official data showed about 46% of the workforce is still employed in agriculture, even though the sector contributes less than 20% to gross domestic product.Manufacturing accounted for 11.4% of total jobs in 2023, a lower share than in 2018, the figures show, a sign that the sector hasn’t bounced back since the pandemic.The Indian government on Monday rejected the Citi report and said in a statement that the authors failed to consider the positive trends and comprehensive data from official sources, asserting that the Asian nation has generated more than 80mn jobs in the five years through 2022.According to the government, India has generated more jobs than the number of people seeking employment. Labour force participation increased from just under 50% in 2018 to nearly 58% in 2023.But India’s official unemployment rate of 3.2% underestimates the scale of the problem, with most economists relying instead on data from the Centre for Monitoring Indian Economy, a private research firm, which put the jobless rate at 9.2% in May, the highest in eight month.With roughly 2.4% of the world’s land mass, India is home to nearly a fifth of humanity — over 1.4bn people, or more than the entire population of the Americas or Africa or Europe.For sure, there are pros and cons for being the most populous nation on the earth. India’s population boom is an opportunity; it can be an economic threat, too.Not only does India have more people, it also has one of the youngest populations, UN data shows. More than half its population is under the age of 30, with a median age of 28. That compares with about 38 in both the US and in China.This youth advantage could play a critical role in unlocking economic growth. With over two-third of its people of working age — between 15 to 64 years old — India could both produce and consume more goods and services, drive innovation and keep pace with the constant technological changes.Here, then, is the flip side.India needs to effectively address core problems of poverty, hunger and malnutrition; provide better health and education; and build infrastructure.Close to a third of the nation’s youth are not in any employment, education or training. Only 5% of the country’s workforce is recognised as formally skilled, according to a 2023 Bloomberg report.Citi’s economists have proposed a series of measures to boost jobs in India, such as strengthening the export potential of manufacturing sectors, extending incentives to attract foreign companies and filling up about 1mn government vacancies. The government also needs to consolidate multiple employment generation programmes for better impact.Looking ahead, the short-term economic thinking should give way to a sustainable, futuristic growth vision to create jobs, lift millions of Indians out of poverty and ensure social inclusion.

The biggest election year in history is unfolding at a time when rising wealth and income inequality are fuelling polarisation and undermining social cohesion in many countries. Average income levels and overall economic performance seem to make little difference; widening gaps between haves and have-nots are becoming a practically universal phenomenon, and they increasingly translate into sharply divergent visions of what constitutes economic and social progress. This makes governance difficult, at best.If formal governance mechanisms are impaired by seemingly intractable political polarisation, how can we address important challenges, like improving equality of opportunity, building sustainable economies, and delivering critical public goods? One answer is philanthropy.Once considered a preserve of the wealthiest few, philanthropy today is a mass phenomenon. Crowdfunding platforms enable small donors to support all kinds of people and projects, and volunteers of all income levels devote their time and energy to charitable organisations. But if wealth is accumulating rapidly at the top of the distribution, it would make sense to tap the wealthiest cohort to fund universally beneficial projects.Microsoft founder Bill Gates offers one model of such philanthropy: the Bill & Melinda Gates Foundation, of which he is co-chair, has had a far-reaching impact in a range of areas, from global health to sustainability. Large investors are also playing an increasingly important role in basic research, which can also be considered a kind of philanthropy, depending on how the results are shared and used.In the 1970s, more than 70% of funding for basic, non-proprietary research came from government. That number has declined steadily as business and philanthropic funding has expanded. But when it comes to research into digital technologies, especially artificial intelligence in the United States, government accounts for just one-third of funding. The rest comes from tech giants like Microsoft and Google (one-third) and philanthropists and philanthropic organisations (the remaining third).In other words, the private sector now accounts for two-thirds of funding for basic research – most of which is open-source and open-access – into transformative technologies like AI. There is precedent for such corporate involvement in basic research. AT&T’s Bell Laboratories was responsible for a range of critical innovations, from transistors to photovoltaic cells, before antitrust action dismembered its parent company. At a time when regulators are attempting to determine how best to regulate Big Tech, the fate of Bell Labs is worth remembering.Philanthropy is often viewed as an expression of individual empathy, but it is more complex than that. In fact, philanthropy is a complex social phenomenon shaped by a range of considerations and incentives, including direct financial incentives. In the US and elsewhere, charitable giving is encouraged by making donations tax-deductible. But other benefits – say, to the philanthropists’ reputations – also carry considerable weight.As Jonathan K Nelson and Richard J Zeckhauser show in their 2008 book The Patron’s Payoff: Conspicuous Commissions in Italian Renaissance Art, this was as true in the fifteenth century as it is today. At the time, Italy’s wealthy wished to advance the arts and, to a lesser extent, science; signal their wealth and the achievements that created it; and demonstrate their piety in a society dominated by the Catholic Church.The Church provided a way for the wealthy to achieve all of these goals: it built cathedrals with numerous chapels around the central nave, and then sold rights to decorate and name the chapels to wealthy families, who would commission great artists to produce paintings, frescoes, and sculptures. With that, the Church was funded, art flourished, and the wealthy advanced their philanthropic agendas, enhanced their reputations, and even gained a degree of immortality.This experience highlights the importance of signalling mechanisms, networks, and recognition not only in encouraging but also in directing philanthropic activity. There is a reason why major donors to top universities, for example, get their names emblazoned on buildings and attached to major research initiatives: like the art patrons of the Renaissance, they want to support human advancement and enhance their personal status, especially in a network they care about. As philosophers from Aristotle to Hegel have argued, recognition – especially for helping others – is a fundamental human desire.Like universities, other elite institutions – such as art galleries, libraries, museums, orchestras, and opera houses – attract philanthropic giving partly by ensuring that donors get the recognition they crave. But many vital causes, including support for those who are struggling to make ends meet and to create opportunities for their children, lack similarly powerful mechanisms for attracting donor funding.While philanthropy is not a substitute for government action in areas like health, education, and the distribution of income and wealth, it can certainly help – if the right incentives are put in place. To this end, we must design institutions that deliver reputational and network benefits to donors supporting causes like poverty reduction and public health. The key missing ingredient appears to be an intermediary that acts as a respected impact investor and forms the core of the signalling mechanism.More fundamentally, we need to stop applauding wealth for its own sake. While wealth can signal certain kinds of achievement, it becomes worth celebrating only when it is deployed in the service of human well-being. — Project Syndicate• Michael Spence, a Nobel laureate in economics, is Emeritus Professor of Economics and a former dean of the Graduate School of Business at Stanford University and a co-author (with Mohamed A El-Erian, Gordon Brown, and Reid Lidow) of Permacrisis: A Plan to Fix a Fractured World.

After years of informal work as a farm labourer, Federico Olivieri, 29, could not believe it when a huge building site appeared next to his home in Sicily with training on offer for the numerous specialised jobs required.The programme by Italy’s largest construction group Webuild is among a growing number of ‘academies’ run and financed by companies frustrated by many job-seekers lacking the know-how.“We are being proactive about the problem. If the skills aren’t there, then we will create them ourselves,” Webuild’s Chief HR, Organiwation & Systems Officer Gianluca Grondona told Reuters of the group’s programme, which it launched in November.Skill mismatches are an international problem but for Italy, with the lowest employment rate in the EU and productivity that has stagnated for more than two decades, it is acute.Despite a large pool of people seeking work or outside the labour market, vacancy rates stood at 2.5% in the first quarter of 2024, in line with the EU average, data from European Union statistics agency Eurostat shows. This compares with 2.8% in France and 0.9% in Spain in the same period.Vocational schools and colleges are fewer and less popular in Italy than in most European countries, think-tank Prometeia highlighted in a June report, and even those that there are fail to produce students with the right expertise.At the same time, too many young people are still studying subjects with lower market demand, such as humanities, it said.The problem has become more severe with the rapid development of new technologies, as Rome invests in European-Union-backed infrastructure projects as part of its post-Covid recovery plan, worth about €200bn ($214bn).Big firms like Webuild, shipbuilder Fincantieri , and state railway group Ferrovie dello Stato (FS) are taking matters into their own hands.On top of its apprenticeships, FS liaises with universities and schools to offer students more targeted courses.“As the company changes, skills change and we need specific capabilities, particularly when it comes to digital and artificial intelligence-based jobs,” said Adriano Mureddu, its Chief Human Resources Officer.Olivieri, who trained as an agronomist, was frustrated by a succession of temporary, underpaid contracts in a Sicilian agricultural sector undercut by cheap imports of citrus fruit.He joined Webuild’s programme this year and now works with tunnel-boring machines at its site on Sicily’s eastern coast.“The courses are an incredible opportunity for those who are willing to learn something new ... you can’t miss a chance like this,” he said.Webuild aims to source from its work academies some 3,000 people out of 10,000 new hires it envisages over the next three years. The academies are close to its infrastructure work sites, mainly in southern regions where unemployment is high.Lorenzo Esposito Corcione, a 19-year-old who studied at nautical school in Genoa, is one of 80 people hired by Fincantieri after being trained under its ‘Masters of the Sea’ programme launched eight months ago. The programme drew 17,000 applicants.“Without the course I wouldn’t be here,” Esposito Corcione told Reuters at the end of his shift as an electrics fitter in the shipyard of the north-eastern port of Monfalcone.“There is a world of difference between what I studied in school and what is actually being done here in the yard.”Italy faces a problem not only of skills but also of numbers. It has one of the world’s oldest populations and lowest fertility rates at 1.2 children per woman and meanwhile, the baby-boomers of the 1960s are now retiring. This means in the next five years Italy will need 3.1m to 3.6mn new workers, business group Unioncamere estimates.By 2050, Italy will have almost 5mn fewer people, and more than a third of them will be over 65, national statistics office ISTAT predicts. Younger blood is badly needed in a host of industries, from construction and tourism to agriculture.Despite its anti-immigration rhetoric, Giorgia Meloni’s right-wing government last year quietly raised quotas for work visas for non-EU citizens to 452,000 for the period 2023-2025, an increase of nearly 150% from the previous three years. Italy has attracted workers from elsewhere in the EU, despite its wages being relatively low, but this has not helped resolve its skills mismatch. For now, the academies and training offered by big firms are alleviating the problem, providing priceless opportunities to people like Pasquale Infante, 28, who has just starting work as a pipe fitter at Fincantieri’s Marghera plant near Venice.“These programmes are good for workers and good for companies...they are teaching people the skills they need,” he said. — Reuters

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On a densely populated island off Pakistan’s megacity of Karachi, a group of pregnant women wait in a punishing heatwave for the only midwife to arrive from the mainland.Each week Neha Mankani comes by boat ambulance to Baba, an old fishing settlement and reportedly one of the world’s most crowded islands with around 6,500 people crammed into 0.15sq km.Climate change is swelling the surrounding seas and baking the land with rising temperatures. Until Mankani’s ambulance launched last year, expectant mothers were marooned at the mercy of the elements.At the gate of her island clinic waits 26-year-old Zainab Bibi, pregnant again after a second-trimester miscarriage last summer.“It was a very hot day, I was not feeling well,” she recalled. It took her husband hours of haggling with boat owners before one agreed to ferry them to the mainland — but it was too late.“By the time I delivered my baby in the hospital, she was already dead,” she said.Heatwaves are becoming hotter, longer and more frequent in Pakistan, one of the countries most vulnerable to extreme weather conditions resulting from climate change.In May and June, a string of heatwaves have seen temperatures top 52C for days.“Climate change doesn’t affect everyone equally,” 38-year-old Mankani told AFP during the 20-minute boat journey.“Pregnant women and newborns, postpartum women are definitely more affected,” she said.“In the summer months, we see a real increase in low-birth weights, preterm births, and in pregnancy losses.”Women are at higher risk of stillbirth when exposed to temperatures above 90 percent of the normal range for their location, according to experts published in the British Journal of Obstetrics and Gynaecology last year.“Before we didn’t have the evidence, a lot of it was anecdotal,” said Mankani. “But we’ve been seeing the impact of climate change for a while.”In Pakistan, 154 women die for every 100,000 live births — a high maternal mortality rate shaped by socioeconomic status, barriers to healthcare access and limited decision-making powers, especially among young women, according to the United Nations.Mankani began her 16-year career as a midwife in a Karachi hospital, where she worked at a high-risk ward, often treating women from the five islands dotted off the coast.She founded the Mama Baby Fund in 2015 and set up the first clinics on the islands for expectant and new mothers. “Everyone opened their homes to us,” she said.The free 24/7 boat ambulance followed last year, crucially equipped to navigate rough seas in a region increasingly prone to flooding.Sabira Rashid, 26, gave birth to a girl she named Eesha two months ago, following one stillbirth and a miscarriage at seven months — painful losses she blames on not reaching the hospital in time.“At the dock, they make us wait because they don’t want to ferry only two or three people. They told us to wait for more passengers, no matter what the emergency,” she said.Girls on the impoverished islands are often wed as young as 16, with marriage considered the source of security for women in an area where polluted water is killing off the fishing trade.“Most of these girls don’t know how to take care of themselves, they get severe infections from the dirty water they are constantly exposed to,” said Shahida Sumaar, an assistant at the clinic, wiping the sweat from her face.The 45-year-old said basic advice is offered to young mothers during heatwaves, such as using dry, clean towels to wrap their newborns in, washing their breasts before feeding and staying hydrated.But with no access to running water and little electricity, warding off heat stress is a challenge for all the islanders.Women are at particular risk, typically responsible for cooking over open flames in small rooms with no fans or proper ventilation.Ayesha Mansoor, 30, has four children and lives on the fringes of Baba, with just four to five hours of electricity a day.The path to her home is covered by a carpet of discarded plastic bags which disappear underwater when the tide is high.“Only those who have solar can deal better with the heat. We can’t afford it,” she said, swatting away flies that settled on her baby.Mariam Abubakr, an 18-year-old assistant at the clinic who has grown up on the island, hopes to become its first full-time midwife.“I used to wonder why we women didn’t have any facilities here, a clinic that could just cater to us,” she said.“When Neha opened her clinic, I saw a way that I could help the women of my community.” — AFP

While the Gulf countries and many other parts of the world are experiencing one of the hottest summers ever, Nasa’s Parker Solar Probe (PSP) completed its 20th close approach to the sun on June 30, matching its own distance record by coming about 7.26mn km from the solar surface. The close approach (known as perihelion) occurred with PSP moving 635,266km per hour around the sun, again matching its own record.On July 2, the spacecraft checked in with mission operators at the Johns Hopkins Applied Physics Laboratory in Laurel, Maryland, US, (where the spacecraft was also designed and built), with a beacon tone indicating it was in good health and all systems were operating normally. PSP will fly around the sun at the same distance and speed one more time this year — on September 30 — before making the first of its three final planned closest approaches on December 24. At that point, with PSP’s orbit shaped by the mission’s final Venus gravity assist-flyby on November 6, the spacecraft will zoom just 6.1mn km from the solar surface, moving about 692,017km per hour, at its closest approach to the Sun.On a mission to ‘touch the Sun,’ PSP became the first spacecraft to fly through the corona – the Sun’s upper atmosphere – in 2021. With every orbit bringing it closer, the probe faces brutal heat and radiation to provide humanity with unprecedented observations, visiting the only star we can study up close. To perform its unprecedented investigations, the PSP and its instruments are protected from the Sun by a 4.5-inch-thick carbon-composite shield, which can withstand temperatures reaching nearly 1,377 Celsius.PSP will revolutionise our understanding of the Sun. The spacecraft is gradually orbiting closer to the Sun’s surface than any before it – well within the orbit of Mercury. Flying into the outermost part of the Sun’s atmosphere, the corona, for the first time, PSP is collecting measurements and images to expand our knowledge of the origin and evolution of solar wind. It also makes critical contributions to forecasting changes in the space environment that affect life and technology on Earth. PSP will fly more than seven times closer to the Sun than any spacecraft. Over seven years, the spacecraft will complete 24 orbits around the Sun.We live in the Sun’s atmosphere and this mission will help scientists better understand the Sun’s impact on Earth. Data from PSP will be key to understanding and, perhaps, forecasting space weather, which can change the orbits of satellites, shorten their lifetimes, or interfere with onboard electronics. The probe has four instrument suites designed to study magnetic fields, plasma, and energetic particles, and image the solar wind.PSP was instrumental in observing the unusual and massive outburst from the Sun on April 17, 2021 when high-speed protons and electrons – called solar energetic particles (SEPs) – were hurled at velocities nearing the speed of light and striking several spacecraft across the inner solar system. In fact, it was the first time SEPs were observed by spacecraft at five different, well-separated locations between the Sun and Earth as well as by spacecraft orbiting Mars.The mission is named for the late Dr Eugene N Parker, who pioneered our modern understanding of the Sun. As a young professor at the University of Chicago in the mid-1950s, Parker developed a mathematical theory that predicted the solar wind, the constant outflow of solar material from the Sun. Throughout his career, Parker revolutionised the field time and again, advancing ideas that addressed the fundamental questions about the workings of our Sun and stars throughout the universe. In 2018, Parker became the first person to witness the launch of a spacecraft bearing his name. He died March 15, 2022, at age 94.

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The emergence of Covid-pandemic in early 2020 marked the beginning of a period of significant bouts of volatility in commodity markets.For crude oil, in particular, major global events represented substantial shocks to markets, leading to extreme upward and downward swings in relatively short periods of time.Initially, the Covid-pandemic represented a major negative shock to demand, given large-scale global lockdowns.This led to a temporary collapse in market conditions, as inventories were above full capacity whilst demand was at multi-decade lows. The price of Brent crude, the most relevant benchmark for global oil markets, bottomed at $19 per barrel mark in April 2020, QNB said in an earlier report.After the peak, crude prices corrected significantly. On the demand side, given the slowdown in advanced economies, and the relatively moderate strength of the reopening of economic activity in China from ‘Zero-Covid’ policies.On the supply side, Opec+ increased output to counterbalance the expected excess demand, while major economies (US, Europe, and China) managed emergency releases of strategic oil reserves.As a result, there was a correction in oil prices in 2023 to an average of $82 per barrel, QNB noted previously.Importantly, supply and demand balanced, stabilising prices around the annual average, which fluctuated between a low of $71 and a maximum of $94 per barrel. These are milder variations relative to the large swings in 2022, when prices had moved between a low of $75 and the peak of $128 per barrel.Last month, oil prices gained amid challenges mainly due to the prospects of higher Opec+ supplies. Oil prices finished higher in June, lifted by resurfacing geopolitical tensions and the prospect of rate cuts by key central banks in the second half of the year, points out National Bank of Kuwait (NBK).Prices recovered from their sharp post-Opec+ meeting falls of early June when markets grew concerned that the group’s decision to unwind 2024’s voluntary production cuts from October onwards and into 2025 would push the market into surplus territory.NBK maintains its forecast for Brent to average $85/barrel in 2024, helped by projected solid oil demand and tighter market balances in this quarter.From fourth quarter (Q4) onwards, market balances are expected to loosen with the scheduled unwinding of Opec+ supply cuts, but these will only take place, Opec+ says, if market conditions warrant them and at a pace slow enough to make the effect on balances and prices limited and manageable.Downside risks to the price outlook are worth highlighting, however. The most important is global economic growth and the potential for activity to underwhelm in H2-2024, which would likely require non-OECD and especially Chinese economic growth to slow.Partially offsetting this, though, would be the fairly good prospect of an uptick in economic activity in OECD countries, helped by looser monetary policy.Many analysts believe crude oil prices are expected to stabilise near current levels, as physical markets will tighten on the back of decelerating supply growth and still robust global demand.

Industrial policy is back in vogue. After decades of eschewing the use of market-shaping policy tools like tariffs and subsidies, many Western governments have embraced them, spurred by the Covid-19 pandemic, which exposed vulnerabilities in global supply chains, and by broader fears about Chinese technological and commercial dominance, which could cost the West countless well-paying jobs. If these efforts are to succeed, however, an emphasis on knowledge is crucial.Industrial policy has a poor track record in the West. When postwar governments tried it, they usually failed to achieve their goals, because they supported industries with no viable path to profitability. By the 1970s and 1980s, they abandoned industrial policy altogether. But if we view industrial policy as knowledge policy, its comeback can succeed.An effective knowledge policy would focus less on creation of knowledge than on its diffusion. While innovation is clearly valuable, it is also expensive and challenging, requiring a particular combination of conditions that is often difficult to ensure. Not every country can realistically aspire to be a technological frontier. But a country does not have to produce cutting-edge innovations of its own to be able to reap the benefits (including higher productive capacity, greater wealth, and stronger military capabilities) of new processes, methods, and ideas produced elsewhere.Knowledge diffusion – which depends on both access to knowledge and the ability to absorb it – is the key to a prosperous society. The German and Japanese economies recovered rapidly after World War II largely because, while their physical infrastructure was in ruins, their stock of knowledge was intact. Both countries had a cohort of engineers, doctors, scientists, and managers capable of absorbing, spreading, applying, and building upon the advanced knowledge brought by occupying American forces.Recognising the value of such knowledge transfers, one might ask why the state needs to get involved. The answer is that knowledge diffusion is the quintessential externality. When an individual or a firm invests in knowledge, it typically captures only a fraction of the returns: knowledge acquisition often brings far higher social returns than private gains. This explains why the state has long supported and incentivised knowledge production, such as by creating a patent system and strengthening education.An effective knowledge policy must include both domestic and international components. On the domestic front, it requires a targeted education policy, subsidies encouraging local actors to import knowledge, and a flexible intellectual property (IP) framework, which strikes the right balance between motivating innovation and encouraging its diffusion. Countries that are far from the technological frontier are better off with lax IP regimes, such as the one that enabled India to build a thriving pharmaceutical industry. (Membership in the World Trade Organisation has since driven India to adhere to stricter rules.)In a geopolitically fragmented world, such domestic measures must be complemented by free-trade zones to facilitate knowledge-sharing among partner countries. These zones would allow for specialisation in some areas, but not in all. Economists’ obsession with comparative advantage notwithstanding, this is not necessarily a bad thing. After all, a country at the technological frontier – or close enough that it can continue to absorb new knowledge – is likely to be a more productive and prosperous economic partner.When it comes to importing technology, countries should erect barriers only in sectors where catch-up is both achievable and desirable (the same sectors where direct subsidies might also be justified). In this sense, the United States and the European Union have much better reason to invest in strengthening their domestic semiconductor industries than India, which is so far behind in this area that any resources spent on catching up are probably wasted. But even the US risks failing to achieve its semiconductor ambitions, unless it also implements an education policy that encourages the study of engineering. Taiwan leads the world in semiconductor production thanks not only to its vast knowhow, but also to its appropriately educated workforce.But even for an economy with the right capabilities, if too many of its peers are trying to catch up in the same area, the costs of the strategy will rise, and the probability of success will drop. This brings us to another reason why free-trade zones are useful: they can facilitate policy co-ordination, at least among allies. India would be far more willing to abandon its semiconductor ambitions if it knew it could rely on a steady supply from a trusted partner.To be sure, that partner might make demands of its own – say, for India to strengthen its IP enforcement, which would be very costly. But, in today’s tense and divided world, such trade-offs are practically inevitable. A sensible knowledge policy must recognise the constraints under which allies operate.Western governments are bringing back industrial policy at a particularly fraught moment. Strategic considerations cannot be ignored, as they were during the decades when globalisation was progressing rapidly, and Pax Americana remained firmly in place. Instead, leaders must rise to the challenge and devise sophisticated industrial-military strategies – including knowledge policies – that account for a wide range of risks, objectives, and pressures. — Project Syndicate• Tano Santos is Professor of Finance at Columbia Business School.•Luigi Zingales, Professor of Finance at the University of Chicago, is Co-Host of the podcast Capitalisn’t.POINTS TO PONDER• Knowledge diffusion is essential: A successful industrial policy should focus on the diffusion of knowledge rather than merely its creation. This involves both access to and the ability to absorb and apply new knowledge, which can significantly contribute to a country’s productivity and prosperity.• State involvement in knowledge policy: State involvement is necessary in knowledge diffusion because it is an externality that brings higher social returns than private gains. Effective knowledge policy should include targeted education policies, subsidies for importing knowledge, and a flexible intellectual property framework that balances innovation and diffusion.• Strategic co-ordination through Free-Trade Zones: The use of free-trade zones to facilitate knowledge-sharing among partner countries is instructive. This co-ordination can help countries specialise in certain areas and avoid redundant efforts in sectors where catch-up is impractical, thereby enhancing overall economic productivity and strategic alignment among allies.

“Everything must change so that everything can stay the same.” This famous aphorism from Giuseppe Tomasi di Lampedusa’s novel Il Gattopardo (The Leopard) about how to survive revolutions, is a perfect description of what happened in the United Kingdom last night. Labour has secured the biggest swing from one party to another in British history, while the Conservatives, once described as the world’s “most successful political party,” have suffered a near-extinction event.This electoral revolution was propelled by the one-word title of Labour’s manifesto: “Change.” But, ironically, everything that matters in the UK will stay much the same after Labour’s landslide victory. That is because the Labour leadership, in sharp contrast to the party’s electoral slogan, holds positions that are indistinguishable from the defeated Conservatives on four key policy issues: government spending and borrowing; restoring relations with the European Union; conflict with China and Russia; and reform of a voting system that can produce an elective dictatorship. These positions will severely restrict the new government’s ability to change the country’s course.As a result, the medium-term outlook for the UK economy remains grim, especially compared to the rest of Europe, and will only improve once the new government reneges on its promises to continue Tory policies. A U-turn on fiscal policy seems likely, but only in a year or two – which is how long it will take the public to realise that Labour cannot deliver on its promises, from housing and health care to education and defence, while following the arbitrary “fiscal rules” that it inherited from the Tories, who only rarely honoured them.The most likely outcome is that a major economic or political crisis – say, a wave of strikes by doctors, nurses, teachers, and police officers, disillusioned by the huge pay gaps between private and public workers that opened during the Covid-19 pandemic – will precipitate the necessary increase in public spending. In the meantime, the new Labour government is likely to tinker with taxes, especially for capital gains, in a way that damages financial and business confidence while raising very little additional revenue.More fundamentally, the structural handicap of Brexit will continue to weigh down UK growth, productivity, and living standards. The charts below contrast the country’s dismal economic record since the 2016 referendum with its world-leading performance in the preceding 25 years. During this pre-Brexit period, the UK enjoyed the benefits of participating in the EU’s single market without suffering the costs inflicted on member states by the euro project and its misbegotten predecessor, the European Exchange Rate Mechanism.The obvious way to accelerate the UK’s dismal post-2016 growth rate, even without increasing public spending or borrowing, is to start restoring the pre-Brexit economic relationship with the EU, while remaining outside the bloc’s political structures. But that would require the new Labour government to commit to the long process of rejoining the EU customs union, preparing for single-market membership, and restoring freedom of movement.A year ago, this closer embrace of the EU might have been a viable Labour policy. But that is no longer the case. To prove that a permanent divergence from Europe is now hardwired into Labour ideology, and not just a temporary expedient to win back working-class Brexit voters, Keir Starmer, the incoming Labour prime minister, went so far as to rule out rejoining the EU customs union or single market in his lifetime. Moreover, he made this statement only two days before the election, when his landslide victory was already secure.If restoring the EU economic relationship is now out of the question, and stimulative fiscal policy only seems likely after some kind of economic or political crisis, is there anything else Starmer could do to boost economic growth? The nostrums proposed by the left and the right during the campaign were unconvincing: land-use reforms, “industrial policies” supposedly designed to accelerate technological progress; efficiency savings in government services; and better public-private partnerships in energy and utilities. These are not exactly revolutionary new ideas; indeed, many have been attempted by previous governments.One economic policy that might have partly compensated for lost trade with the EU would have been a new trade and investment partnership with China (the only persuasive economic argument that the Brexiteers presented during the 2016 referendum). But the new Labour government’s hostile stance toward China, shared by its Tory predecessor, rules out such a deal.The UK will continue to underperform in the medium term, because the new government will fail to boost productivity and economic growth and deliver on its promises without increasing taxes or borrowing. In the short term, however, the temporary upsurge in consumer confidence that seems to occur around every UK general election could create a bullish trading opportunity in cyclical assets, as the chart below demonstrates.There is no clear explanation for this regular pattern. Perhaps it reflects the UK electorate’s optimism about its newly chosen leaders. But many voters eventually come to regret that choice, usually sooner rather than later. – Project SyndicateAnatole Kaletsky, Chief Economist and Co-Chairman of Gavekal Dragonomics, is the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis (PublicAffairs, 2011).

Something has been missing from the flood of commentary following the debate between US President Joe Biden and Donald Trump. While voters’ judgments about a candidate’s personality and personal strengths are important, everyone should remember the famous dictum: “It’s the economy, stupid.” In the firehose of outright lies that Trump spewed throughout the debate, the most dangerous falsehoods concerned his and Biden’s respective economic-policy records.Assessing a president’s management of the economy is always a tricky business, because many developments will have been set in motion by one’s predecessors. Barack Obama had to deal with a deep recession because previous administrations had pursued financial deregulation and failed to head off the crisis that erupted in the fall of 2008. Then, with congressional Republicans tying the Obama administration’s hands and calling for belt tightening, the country was deprived of the kinds of fiscal policies that might have brought the economy out of the Great Recession faster. By the time the economy was finally on the mend, Obama was on his way out, and Trump was on his way in.Trump did not hesitate to claim credit for the growth that ensued. But while he and congressional Republicans slashed taxes for corporations and billionaires, the promised surge of investment never materialised. Instead, there was a wave of stock buybacks, which are on track to exceed $1tn next year.Although Trump cannot be blamed for Covid-19, he certainly bears responsibility for an inadequate response that left the US with a death toll far above that of other advanced economies. While the virus disproportionately claimed the lives of the elderly, it also cut into the workforce, and those losses contributed to the work shortages and inflation that Biden inherited.Biden’s own economic record has been impressive. Immediately after taking office, he secured passage of the American Rescue Plan, which made the country’s recovery from the pandemic stronger than that of any other advanced country. Then came the Bipartisan Infrastructure Law, which provided funding to start repairing crucial elements of the US economy after a half-century of neglect.The next year, Biden signed the CHIPS and Science Act of 2022, which launched a new era of industrial policy that will ensure the economy’s future resilience and competitiveness (a sharp break from the fragility that marked the preceding neoliberal era). And with the Inflation Reduction Act of 2022, the US finally joined the international community in fighting climate change and investing in the technologies of the future.In addition to providing economic insurance against the possibility of a stubborn and ever-evolving virus, the American Rescue Plan nearly halved the rate of childhood poverty in the space of a year. But it also was blamed (including by some Democrats) for the subsequent inflation.This charge simply does not hold water. There was no excessive aggregate demand from the American Rescue Plan, at least not of a magnitude that could account for the level of inflation. Most of the blame lay with pandemic- and war-induced supply-side interruptions and shifts in demand. Insofar as Biden could combat these, he did so: he tapped the Strategic Petroleum Reserve to address oil shortages and worked to relieve bottlenecks at US ports.Even more relevant to this election is what lies in the future. Careful economic modelling has shown that Trump’s proposals would cause higher inflation – in spite of lower growth – and greater inequality.For starters, Trump would raise tariffs, and the costs would mostly be passed on to US consumers. Trump assumes, contrary to basic economics, that China would simply lower its prices to offset the tariffs. But if it did that, no American jobs would be saved (consistency has never been one of Trump’s strengths).Moreover, Trump would curtail immigration, which would make the labour market tighter and increase the risk of labour shortages in some sectors. And he would increase the deficit, the effects of which might induce a worried US Federal Reserve to raise interest rates, thereby decreasing investment in housing, raising rents and housing costs (a major source of today’s inflation) even further. In addition to slowing growth by dampening investment, higher interest rates would also push up the exchange rate, making US exports less competitive. Moreover, US exports would suffer from higher-cost inputs owing to higher tariffs, and the retaliation they would provoke.e already know that the 2017 corporate tax cuts did not stimulate much investment, and that most of the benefits went to the very rich and to foreigners (who own large shares of US corporations). The additional tax cuts that Trump is promising aren’t likely to do any better, but they will almost certainly increase deficits and inequality.Of course, there is considerable complexity in modelling these effects. It is unclear how fast or forcefully the Fed would respond to tariff-induced inflation, but its economists obviously would see the problem coming. Would they be tempted to nip it in the bud by hiking interest rates early? Would Trump then violate institutional norms by trying to fire the Fed chair? How would the markets (here and abroad) respond to this new era of uncertainty and chaos?The longer-run prognosis is clearer – and worse. America owes much of its economic success in recent years to its technological prowess, which rests on solid scientific foundations. Yet Trump would continue attacking our universities and demanding massive cutbacks in research and development expenditures. The only reason these cuts weren’t made during his previous term is that he did not have his party completely in tow. Now, he does.Similarly, even though the US population is ageing, Trump would allow the workforce to shrink by curtailing immigration. And though economists have emphasised the importance of the rule of law for economic growth, Trump, a convicted felon, is not exactly known for his adherence to it.Thus, on the question of who would be better for the economy – Trump or Biden (or any Democrat who might replace him, should he drop out) – there is simply no debate. – Project SyndicateJoseph E Stiglitz, a former chief economist of the World Bank and former chair of the US President’s Council of Economic Advisers, is University Professor at Columbia University, a Nobel laureate in economics, and the author, most recently, of The Road to Freedom: Economics and the Good Society (W. W. Norton & Company, Allen Lane, 2024).

Big investors are warming to Britain after a landslide election win for its new Labour government but remain wary of placing long term bets until Prime Minister Keir Starmer can convince them his economic growth plans are credible. Sterling, the strongest major currency against the dollar this year, nudged higher on Friday when the scale of Labour’s victory became clear. The UK-focused FTSE 250 share index, which has outpaced the more global FTSE 100 year-to-date, rose to its highest since April 2022. But investors said Labour still needed to revive long-term confidence in UK markets that have struggled since 2016’s Brexit vote and the chaos wreaked by Conservative former prime minister Liz Truss’ 2022 mini-Budget. Left-leaning Labour has pledged to upgrade Britain’s creaking infrastructure and solve a housing shortage while keeping spending tight as the UK’s tax burden approaches an all-time high. But credit rating agencies and Britain’s lenders in international bond markets are twitchy about public debt that is expected to exceed 100% of gross domestic product. “They have to walk a tightrope between economic growth and government debt. We have to see if debt issuance is going to rise, and if the economy can expand at a rate where extra borrowing is deemed acceptable,” said Sheldon MacDonald, chief investment officer at UK asset manager Marlborough. MacDonald said he had a neutral outlook on UK stocks but was slightly positive on gilts because of expected Bank of England rate cuts. After years of relentless outflows, the combined market value of companies in the broad FTSE-All stock index, at £2.4tn ($3.07tn), is below that of individual US tech stocks like Apple and chipmaker Nvidia. After Rishi Sunak conceded defeat to Labour early on Friday and resigned as party leader, the Conservatives were set to choose their sixth leader since 2016 following years of infighting over Britain’s post-Brexit future. Investors hope Starmer and his incoming finance minister, former Bank of England economist Rachel Reeves, will provide more stable leadership as well as predictable tax and trade policies. “Investors in New York or Hong Kong would have read the headlines and found it easy to say why bother, it’s a basket case,” said Toby Gibb, head of investment solutions at fund manager Artemis. “What (the election) does is relieve that uncertainty, it allows overseas investors to invest with more security.” In one positive sign, sterling on a trade-weighted basis is back at levels last seen before the Brexit vote. Gibb said he expected the pound to stay strong and was bullish on UK stocks. Other investors were staying cautious. “We know that a general incremental improvement can come from political stability but we don’t know what changes are going to happen,” said Janus Henderson European equities portfolio manager Tom O’Hara, whose UK exposure is below Britain’s share of MSCI’s broad European index. “You need something more tangible,” he explained, “such as which companies are going to benefit from which policies.” Britain has not grown faster than 2% a year on a regular basis since before the 2008 global financial crisis. Ben Mackie, fund manager at UK-based Hawksmoor Investment Management, said he was also not buying into a UK growth theme. “The UK stock market and economy face big structural issues,” he said, adding that outflows from UK equity funds had been “horrendously negative.” UK business investment is ranked 28th among 31 OECD economies, foreign direct investment has faltered and workplace productivity is weak. British pension funds and insurers have slashed the share of UK stocks in their portfolios to about 4% from 50% in 2000 according to advisory group Ondra.

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The AI revolution is upon us with companies around the world looking to jump headfirst into the technology made famous by ChatGPT.To satisfy their generative AI urge, firms need to secure state-of-the-art software and ramp up computing power, which quickly brings them knocking on the doors of the globe’s cloud computing giants, of which Amazon’s AWS is the biggest.Amazon’s computing arsenal is housed in data centres scattered across the globe, and Prasad Kalyanaraman, Vice-President for AWS Infrastructure, is the man in charge of keeping them running.Amazon’s AWS data centres are spread across dozens of regions, serving as a kind of engine room to the online world, with Microsoft and Google as the company’s closest rivals.And with the generative AI revolution entering hyperdrive, it is up to Kalyanaraman to make sure the data centre battalions are ready for the challenge.“It takes a significant amount of grit and innovation” to meet the need for computing right now, Kalyanaraman told AFP during an interview at Amazon’s second headquarters near Washington.“Building the right technology, both in terms of consuming the least amount of power needed, and optimising all the way from the chip level to the data centre level... requires a lot of innovation,” he said.Kalyanaraman, a graduate of the prestigious Indian Institute of Technology and Queen’s University in Canada, has been at Amazon for almost two decades where he worked on software before holding the keys to the data centres.“Most users, unbeknownst to them, are using cloud computing today. If you go to a website, or you stream video, or you go to your financial institution and look at your transactions, you’re actually using some form of cloud computing,” he said.Amazon’s decision to make a side business out of the cloud dates to 2006, when the company realised that its partners and sellers didn’t want to build – or buy – expensive computing pipework.“We saw that it’s so hard for our customers to... go through all the muck of building this infrastructure. So why not bring this to them,” much like utilities bring power to your home, he said.Nearly two decades later, AWS is nearing 20% of the giant’s total revenue and bringing in about two-thirds of total profit.“It’s a pretty significant undertaking to actually construct a data centre from scratch,” Kalyanaraman said.“First, obviously, we have to find enough land to be able to deploy these data centres. Typically, we deploy further away from metropolitan locations” for both cost and environmental reasons, he said.Connectivity is also key since most clients want the high computing speeds that come by being closer to their data.Then there has to be a power source and the power lines to get the electricity.With success comes scrutiny, or in the case of some communities across the globe, some exasperation with the proliferation of data centres.Data centres can creep into an area’s bucolic scenery, and put a massive burden on the local power supply, straining already fragile electricity grids.And with the emergence of generative AI, Amazon has announced new projects around the globe.Kalyanaraman acknowledged that “power will be a constrained resource in the world today, especially with generative AI and some of the other things that are required to run this amount of compute.”But even though “it’s not something that you can actually change overnight,” Kalyanaraman said that AWS has worked with power companies to manage the flow, notably through renewable energy.AWS “is the largest purchaser of renewable energy in the world today. And that’s for four years in a row,” he said, with AWS committed to being a net-zero carbon company by 2040.Ever the techno-optimist, Kalyanaraman remained confident that innovation could find a way to meet the generative AI challenge, with the industry looking to nuclear energy to help.“Every time we’ve actually had a constraint, we’ve all figured out a way of innovating.”“I see (AI) as an opportunity,” he said.

After 14 long years of Tory rule, the United Kingdom’s general election on July 4 could determine the political fate of the Conservative Party. While Prime Minister Rishi Sunak may have hoped to capitalise on declining inflation and improved economic performance, polls show the Conservatives trailing far behind Keir Starmer’s Labour Party, with Sunak poised to lose his own parliamentary seat.A more ominous development is that prominent Brexiteer Nigel Farage, the former leader of the UK Independence Party, is running for a seat as the leader of Reform UK. Declaring this “the immigration election,” Farage – the country’s most popular politician, according to YouGov – launched his campaign by calling for a freeze on “non-essential” immigration.Britain’s political discourse in recent years has placed immigration at the top of voters’ minds. British tabloids warn of an “intensifying immigration crisis” without explaining that long-term net migration reaching an all-time high in 2022 was largely driven by healthcare workers and asylum seekers from Ukraine and Hong Kong. While Farage aims to further fan the flames of anti-immigrant sentiment and exploit divisions within the Conservative Party over this issue, Sunak, too, has pledged to tighten immigration rules and “stop the boats.”Sunak has also staked his political capital on a highly controversial and possibly illegal immigration policy that seeks to deport asylum seekers to Rwanda. According to Conservatives, the so-called “Rwanda Bill” will ultimately save lives by deterring migrants from making the perilous journey across the English Channel. But international observers, including the Council of Europe’s Commissioner for Human Rights, have warned that the bill could run afoul of human-rights legislation.Sunak’s policies highlight a core inconsistency in Conservative thinking. Since the days of the late prime minister Margaret Thatcher, deference to the free market’s superior wisdom has been the central tenet of British conservatism. Thatcher, a disciple of Austrian economist Friedrich von Hayek and a lifelong admirer of his 1944 book The Road to Serfdom, believed that government interference in markets would inevitably lead to inefficiency, if not societal collapse.This was the basis of Thatcher’s attacks on trade unions – the “enemy within” – and her suppression of the 1984-85 miners’ strike. Despite it accelerating the deindustrialisation of northern England, to this day, the Tories admire the Iron Lady’s ruthlessness and disregard for “soft,” supposedly “emotional” considerations like social impact – reflected in the miners’ slogan, “Close a pit, kill a community” – in favour of “hard” economic reasoning.So, why do Sunak and other Thatcherite Conservatives suffer a sudden loss of faith in market competition when it comes to economic migration? In nearly every other context, Conservatives view lower prices as an economic cure-all and omit no opportunity to weaken worker protections at home and advise developing countries to make their labour markets more “flexible,” arguing that labour should be treated as a “commodity” like any other. Yet, when immigrants increase the labour supply, in theory exerting downward pressure on wages by outcompeting native-born workers, the otherwise unassailable logic of markets is deemed to fail, and the free marketeers’ “night-watchman state” starts acting like a nanny.The explanation cannot be found in economic reasoning. Contrary to Conservative fearmongering, empirical evidence shows that the economic effects of immigration are overwhelmingly positive. Studies show that instead of substituting native workers, who typically retain preferential access to higher-paying jobs, immigrants complement the existing workforce, with lower-skill migrant workers helping to mitigate the effects of demographic shifts. They also boost demand, thereby creating more jobs and increasing wages, and fuel GDP growth by stimulating innovation among high-skill workers – all outcomes that Conservatives normally champion.Like the free trade Conservatives advocate, immigration is not zero sum. A recent analysis by the Migration Observatory at the University of Oxford notes that, contrary to the “lump of labour” fallacy, the number of jobs in the UK is not fixed. New migration waves, the authors note, are most likely to affect migrants already employed in the UK. In fact, migration has had only a small impact on native-born workers’ wages and employment prospects.The UK’s obsession with immigration is driven more by emotional and cultural anxieties than economic realities. In hindsight, it is clear that the anti-immigration sentiment that drove the 2016 Brexit vote was an act of “economic self-harm,” as former Prime Minister David Cameron put it. But it helped Conservatives evade accountability for the impact of their disastrous austerity policies by vilifying immigrants as opportunistic “welfare shoppers” overburdening public services and causing housing shortages.This collective desire to externalise blame for the UK’s problems helps explain the Tories’ newfound interest in sociocultural issues. It turns out that when it suits their political needs, Conservatives are willing to admit that, pace Thatcher, there is such a thing as society.The UK’s migration fixation is either a genuine lapse of reason for Conservatives as they indulge a deep, if dark, psychological need, or it exposes their economic policies as fundamentally disingenuous, whether in northern England or the Global South. By scapegoating migrants, Conservative politicians are trying to postpone the UK’s long-overdue reckoning with its post-imperial decline.Ironically, British fears about diminished global standing have become a self-fulfilling prophecy under Tory rule. Eight years after the vote to leave the European Union, which polls suggest most Britons now regret, the UK economy is smaller than that of India, its former colony.Consequently, the real question facing the UK on July 4 is not whether Sunak, the child of African-born Indian immigrants, should be allowed to inflict needless cruelty on asylum seekers. Instead, what native-born Britons must confront this week is their post-imperial identity crisis, which Conservatives have exacerbated. They do not need to be protected from migrants but rather from something far more dangerous: the Tories’ economic policies. To paraphrase Thatcher, the enemy is indeed coming from within. — Project Syndicate• Antara Haldar, Associate Professor of Empirical Legal Studies at the University of Cambridge, is a visiting faculty member at Harvard University and the principal investigator on a European Research Council grant on law and cognition.

Following his party’s decisive loss to the far-right National Rally in the European Parliament election, French President Emmanuel Macron shocked everyone by dissolving the National Assembly and calling a snap election. He has justified his decision by claiming that an election will “clarify” the political situation, but his compatriots do not share this view.Even those who do not fear that Macron’s gamble will bring the far-right to power are anxious about the chaos that might ensue. As Édouard Philippe, Macron’s prime minister from 2017 to 2020, put it, the president has needlessly “killed the presidential majority”. A hung parliament with National Rally as the largest party is now considered the most likely outcome. Still, Macron’s decision has clarified one thing: his strategy to create a powerful centrism in France has failed. Other European leaders should take note.Legend has it that the first question Napoleon would ask about a military officer was not whether he was talented, but whether he was lucky. When Macron triumphed in the 2017 presidential election, he was extraordinarily lucky. The incumbent was so unpopular that he did not even bother to run for a second term, and the likely conservative winner was felled by a scandal. Macron seized the moment to offer what one might call a Second Coming of the “Third Way”. Just like Tony Blair, the British Labour Party leader who came to power in 1997, Macron held that the old ideological cleavage of left and right was dépassé, and that centrists should simply pick the policies that “worked best”.Macron appealed to both socialists and conservative Gaullists, on the assumption that all reasonable people could unite happily in the moderate middle. Anyone who rejected the invitation was, by definition, an unreasonable extremist. For a while, this approach had traction, because Macron’s seemingly ever-expanding centre was flanked by Marine Le Pen’s National Front (now National Rally) on the far-right and by the firebrand Jean-Luc Mélenchon’s France Unbowed on the far-left. But the technocratic approach – “if you’re not with us, you’re unreasonable” – ultimately failed to transform the political landscape.The far-right, far left, centre left, and centre right each still tend to win at least a fifth of the vote in the first round of French presidential elections, on average. But the centre-right Republicans have been haemorrhaging votes to National Rally, prompting the party’s leader, Éric Ciotti, to endorse an alliance with the far-right. This matters, because Macron’s overwhelming support in the second round of the 2017 and 2022 elections – when he was facing off against Le Pen – was largely due to voters’ hostility to the far-right, not burgeoning enthusiasm for Macron-style technocracy.On the contrary, technocracy tends to provoke a backlash, because it creates an opportunity for populists to argue – reasonably – that there are no uniquely rational solutions to complex problems, and that democracy is supposed to be about choice and popular participation, not elites decreeing that there is no alternative.Macron’s haughty style – already in 2017, he let it be known that he wanted to rule like “Jupiter” – certainly did not help. Rightly or wrongly, it has made him an exceptionally hated political figure. But quite apart from the personal failings of a man who fancies himself a philosopher-king, a centrist project aimed at taking the best from the left and the right was always more likely to alienate both than to harmonise their contradictory agendas.Once Macron had lost control of the National Assembly in 2022, his prime minister, Élisabeth Borne, heroically tried to cobble together ad hoc majorities to advance the president’s agenda. But on more than 20 occasions, she resorted to constitutional shortcuts to ram through measures that clearly lacked popular support.Macron’s centrism not only looked increasingly authoritarian; it also acquired a rightward tilt. Hence, his hardline interior minister went so far as to accuse Le Pen of being soft on Islamism, and Borne introduced an immigration law that seemed to legitimise what the far-right had been saying all along. If you are constantly tacking rightward, you eventually will reach a point where you can no longer blackmail voters with the argument that you are the only thing standing in the way of right-wing extremism and the end of the Republic.Some commentators speculate that Macron wants the National Rally to govern until the 2027 presidential election, on the grounds that it will prove itself incompetent and set the stage for a triumphant shift back toward the centre. But this kind of quasi-pedagogical project – with the headmaster showing his pupils that the substitute teacher doesn’t know how to do the job – is misguided for several reasons.For starters, not all far-right populists have overly simplistic policy ideas or are amateur administrators. And even in cases where they do show themselves to be incompetent, their fortunes can recover. When Austria’s Machiavellian Christian Democratic chancellor, Wolfgang Schüssel, brought Jörg Haider’s far-right Freedom Party into government in 2000, the populists did descend into infighting and revealed their incompetence and corruption. But after splitting up and licking its wounds, the Freedom Party sailed to victory in last month’s European elections.Moreover, since the French system allows for “cohabitation” – when the president and the prime minister belong to opposing parties – a governing party that appears incompetent can simply blame the other side for tying its hands. Wielding the extraordinary powers of the French presidency, Macron will doubtless find an outlet on the international stage. But it is sobering to see that his vision has been downgraded from a “revolution” in 2017 to a “renaissance” in 2022 to what it is today. Macron failed to transform the movement he started into a proper political party that is not dependent on a charismatic leader. His charisma gone, the centre’s prospects for 2027 look bleak indeed. — Project SyndicateJan-Werner Mueller, Professor of Politics at Princeton University, is the author, most recently, of Democracy Rules.

French political uncertainty and an EU trade spat with China are casting a shadow over European corporate earnings, investors say, despite forecasts that companies are set to deliver better results.Second-quarter earnings for companies in the pan-European STOXX 600 are seen rising 2% and revenues increasing by 1.7%, LSEG I/B/E/S data shows, in what would be the first quarter of growth since the first three months of 2023.Investors had been warming to Europe’s equity markets as the European Central Bank embarked on looser policy and the economic outlook improved, but French President Emmanuel Macron’s shock decision to call parliamentary elections has sparked doubts.Concerns about France’s fiscal discipline under new right- or left-wing governments have shaken confidence, as have fears of tax and minimum wage rises under the left. Analysts have responded by trimming earnings expectations for French blue-chip firms and reining in expectations for European shares in the last two weeks.The STOXX 600 index, which touched a record high on June 7, the last trading day before Macron dissolved parliament, is down 2.5% from that peak. France’s CAC 40, at its lowest since January, has borne the brunt of the selling.“It could be the typical seasonal pattern where you get some downgrades going into earnings season, but you’re not getting as positive a signal as you got last quarter,” said Citigroup European equity strategist David Groman.“You have all these political risks coming to the fore, even as the fundamental story had been looking pretty strong,” he said.Results season kicks off in earnest from mid-July, with Barry Callebaut releasing results on July 11, Richemont on July 16 and ABB on July 18. Last week, Nike’s worse-than-expected 2024 outlook and H&M’s downbeat trading update knocked confidence in consumer demand.On Sunday, Marine Le Pen’s far-right National Rally (RN) party won the first round of French parliamentary elections, a huge setback for Macron, although analysts noted the party won a smaller share of the vote than some polls had projected.“Up until the European election, we think the European market was getting a bit more interest from global investors,” said Steffen Weyl, euro-area fund head at Union Investment.Redemptions from French equity funds hit a four-week high in the latest week, data from fund flow data provider EPFR showed.Political risks were driving outflows from European funds, Citi’s Groman said, adding: “The French election is a key flashpoint.”“I wouldn’t be surprised if European companies started acknowledging that it’s been a general source of uncertainty and would expect equities to be sensitive to these political risks.”Political risks are a key reason why Citigroup recently downgraded continental European stocks to neutral in its global equity strategy.Markets are likely most fearful of a possible victory for the left-wing New Popular Front (NFP) alliance, Weyl said.“It’s much more unstable because you have so many different parties in there, from Greens to the ultra-left and the centre.”An NFP victory would also likely increase labour costs for French firms, noted Gilles Guibout, head of European equity strategies at AXA Investment Managers. The NFP promises to raise the minimum wage by 14%. As the broader European market trades near all-time highs, investors are looking for reassurance from the companies which were optimistic at the start of 2024.“A lot of the anecdotal evidence...is that companies are clinging to their guidance and still have a positive view towards H2,” said Mark Schumann, head of European large-cap mutual funds at DWS Group.“Now with a lot higher altitude in terms of the index levels, the market is getting increasingly nervous about getting some tangible evidence when it comes to these H2 outlooks.”The euro area’s growth indicators are mixed. While there had been signs that the contraction in the euro zone’s manufacturing activity might have hit a trough, Citi’s economic surprise index, which measures how economic data performs versus expectations, dropped into negative territory for the first time since January.And the closely watched Ifo Institute survey showed German business morale fell unexpectedly in June, underlying concerns about recovery in the euro area’s largest economy.Escalating trade tensions between the European Union and China are also clouding the picture. Brussels proposed hefty duties on imports of Chinese-made electric vehicles to combat excessive subsidies which has unleashed countermeasures from Beijing, which launched a dumping probe into EU pork imports.“Longer term it’s a big problem for Germany as they’re the big exporting economy within Europe,” said Nathan Sweeney, CIO of multiasset at Marlborough.

A resurgent US dollar is exasperating central bankers and governments around the world, forcing them into action to relieve the pressure on their own currencies.The dollar inched higher in Asian trading last week as markets assessed former president Donald Trump was the victor in the first US presidential debate.President Joe Biden stumbled through early exchanges in the debate, a performance that may intensify worries about his ability to defeat Trump in the November election.Trump has reiterated a pledge to impose 10% duties on imports should he win in November, a move that could put upward pressure on inflation, potentially delaying interest-rate cuts that could weigh on the greenback.“Strength in US activity has been a mainstay of our long-dollar bias, and the persistence of US exceptionalism is a major FX theme. But this has always been in the context of high market conviction that the Fed would invariably begin its easing cycle this year. This is now being challenged, and the corresponding de-pricing of Fed cuts has taken the dollar to new year-to-date highs,” says Meera Chandan, Global FX Strategist, JP Morgan.The resurgent dollar is wrecking havoc in Asia this year, putting pressure on central banks to step up the defence of their currencies.Traders are watching for authorities to intervene in Japan while policymakers in India, Vietnam and Indonesia have all stepped into the market.“The high-for-longer US rates environment is undermining recovery hopes for Asia currencies,” said Christopher Wong, FX strategist at Oversea-Chinese Banking Corp in Singapore. “And now woes are piling on following the renewed weakness in the yuan and the yen. Central banks may have to resort to stronger intervention to smooth volatility.”The Bloomberg Dollar Spot Index has climbed almost 5% since end-December as Federal Reserve officials signal that they may hold off on rate cuts until inflation falls sustainably to their target.The yuan’s weakness has also contributed to the Bloomberg Asia Dollar Index’s decline of over 3% this year. The Chinese currency has fallen more than 2% in 2024.The weakness in the yen and the yuan is seen to have spillover effects on regional currencies, especially the won and the Taiwan dollar.Other emerging-market currencies have not been spared either, with the Turkish lira and Brazilian real sliding more than 10% this year.The greenback has gained against virtually every major peer in 2024, defying many on Wall Street who came into the year predicting a dollar selloff. That’s prompted escalating warnings from Japan on its readiness to intervene to buoy the yen from near a 34-year low.China and Indonesia have moved to steady their currencies, while Sweden and India are also under pressure.Those intensifying efforts are reminiscent of 2022 when officials in Switzerland and Canada lamented their weakening exchange rates amid a surge in inflation and the strong dollar ripped through emerging economies, contributing to Sri Lanka’s historic default.“The US dollar keeps turning up the heat on other central banks,” said Helen Given, a foreign-exchange trader at Monex. “Given the current global environment where central banks appear to be looking to end their tightening cycles, there doesn’t seem to be a safe way out from the dollar’s continued dominance.”Exchange rates matter because depreciating currencies increase the cost of imported goods, stoking inflation as those expenses feed through to prices in grocery stores and factories. Meanwhile, there’s a higher likelihood that money will pour out of a nation with a weak currency in search of higher yields elsewhere — so-called capital flight — harming domestic investment and growth.The irony, of course, is that unilaterally intervening in currency markets — where $7.5tn changes hands every day — can only temporarily alter an exchange rate.