Consumer anger over excessive costs piles strain on politicians | Invesloan.com

Today’s agenda: COP29 begins; Deutsche Bank axes 111 managers; UK companies set for £700mn windfall; Sudan’s lone caretaker of ancient treasures; and the music executive who signed Billie Eilish and Olivia Rodrigo

Good morning. We start the week with a report on how lingering consumer anger over high prices is hurting governments in advanced economies even though inflation is subsiding to normal levels.

How is it affecting politics? Discontent over the economy was a key motivator for Republican voters in this week’s US election, according to exit polling, and incumbents in countries including the UK and Japan have also suffered in elections this year, partly because of anger at high living costs. Polling suggests the legacy of inflation will also play a role in national elections next year, including in Germany and Canada.

What does the data say? The average inflation rate across the OECD group of rich countries fell to its lowest level since the summer of 2021 in September and is now hovering around central banks’ 2 per cent target in more than half of OECD members, including the UK, Italy, France and Canada. Despite this, consumer confidence remains 1.7 per cent below pre-pandemic levels across the group, reflecting discontent over high living costs. While wages are now growing at a faster pace than prices, real incomes in many large economies have only just surpassed pre-Covid levels.

Read more on why the post-Covid inflation spike has left a toxic legacy for governments across rich economies.

Here’s what else we’re keeping tabs on today:

• COP29: The UN climate summit begins in Baku, Azerbaijan, just as the host nation’s state oil and gas company is planning to increase new production of fossil fuels. Sign up for FT Sessions at COP29 for key debates and discussions on the negotiations happening during the event. Register for free here.

• UK politics: Kemi Badenoch, the Conservative party’s new leader, is due to give evidence relating to her time as business and trade secretary to the Post Office-Horizon IT inquiry.

• Companies: Updates are expected from Continental, Direct Line and IAC.

• Armistice Day: Countries commemorate the end of the first world war in 1918.

Experts led by Financial Times editor Roula Khalaf will discuss their predictions for the world in 2025 in a virtual event on December 11. Register today.

Five more top stories

1. Donald Trump’s US election victory has dealt a blow to the renewable energy industry, prompting at least half a dozen developers to put projects on hold and investors to dump shares. Trump’s election and the likelihood of a Republican-controlled Congress have also sent renewables stocks tumbling as investors fear a slowdown in the country’s pace of decarbonisation.

• Crypto surge: Bitcoin has hit $80,000 for the first time as Republicans edge closer to full control of Congress.

• US Senate: Trump’s allies have backed Rick Scott of Florida to be the party’s leader in the upper chamber, aiming to ensure the president-elect can push his agenda through Congress.

Sign up for our White House Watch newsletter for more updates from Washington as it braces itself for Trump’s second term.

2. Exclusive: Deutsche Bank has fired 111 senior managers in its retail and private wealth unit as the division implements deep cost cuts to meet stretching 2025 targets. The Frankfurt-based bank is seeking to reduce the unit’s cost-to-income ratio from 80 per cent this time last year to between 60 and 65 per cent next year. Read the full report.

Join banking leaders including Deutsche Bank CEO Christian Sewing for the Global Banking Summit from December 3 to 4. Register here.

3. Israeli Prime Minister Benjamin Netanyahu claimed yesterday that his office was the target of an “organised witch hunt” amid brewing scandals related to leaks of classified documents and an alleged attempt to blackmail a military official. He said attacks from the media were designed to harm his leadership and “weaken us in the middle of war”.

• Ceasefire talks: Qatar has suspended its efforts to mediate a ceasefire and hostage deal between Israel and Hamas in a sign of the Gulf state’s mounting frustration with the warring parties.

• Amsterdam violence: The European city is on edge after what authorities called an outbreak of antisemitic “hit and run” violence against Israeli football fans.

4. Thefts of butter have highlighted the impact of skyrocketing inflation on Russia’s war economy as President Vladimir Putin’s splurge on arms and ammunition increasingly comes at the cost of soaring prices for everyday essentials. Russia’s central bank has estimated inflation could reach as much as 8.5 per cent this year.

5. Exclusive: Big British companies from the London Stock Exchange Group to broadcaster ITV are set for an unexpected £700mn windfall after the UK won an appeal against a Brussels state aid clampdown that had forced London to collect tax against its wishes. HM Revenue & Customs is refunding the companies after a September ruling reversed a 2019 decision by the European Commission.

The Big Read

A decision not to administer treatment or to end treatment for a disease is lawful in the UK. But to help someone die is not, and carries a maximum prison sentence of 14 years. Now, MPs in Westminster will be given a chance to rewrite the law on whether the terminally ill can end their lives, a delicate legislative task fraught with logistical and ethical questions.

We’re also reading and listening to . . . 

• Elon Musk’s ‘A-team’: The world’s richest man has a unique chance to shape the US presidency by placing his acolytes and allies inside the incoming administration.

• Sudan’s ancient treasures: Since civil war broke out in April 2023, Fozia Khalid, the sole caretaker of the pyramids at Meroë, has been braced for its destruction.

• New titans of Wall Street: From cleaning up after Lehman Brothers to early bets on bitcoin, Chicago trading firm DRW has become an industry colossus.

• Economics Show 🎧: Soumaya Keynes talks to Michael Clemens of George Mason University about what a US economy without illegal immigrants might look like.

Chart of the day

Though now an outsider, the UK remains heavily reliant on the EU, which provided 55 per cent of all UK imports and absorbed 47 per cent of its exports in 2023. The EU and US also dominate foreign direct investment in the UK, raising questions about British ties with both, especially in the context of Donald Trump’s re-election. Martin Wolf asks: given all these and the fragile state of its own economy, what should the UK seek to do?

Take a break from the news

During a tense time for music labels, with music-streaming growth stalling and artists able to build their own fanbases on TikTok, how has a forty-something man become the go-to for a generation of women artists? The FT’s media editor Anna Nicolaou explores how Interscope Records under chief executive John Janick signed Billie Eilish and Olivia Rodrigo, putting it at the forefront of the “sad girl” sub-genre.