Record migration creates a challenge for Sunak

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Good evening. With Darren enjoying a well-deserved Friday in the sun, I’m with you today to navigate through these disrupted times.

Net migration to the UK reached a record high last year with an estimated 606,000 migrants arriving. This is according to according to data published by the Office for National Statistics yesterday.

While data suggests that people are arriving mostly to work, study or for humanitarian reasons, the number falls short of estimates from the Centre for Policy Studies putting potential net migration from 700,000 to 997,000.

The figures prompted fresh promises by prime minister Rishi Sunak to reduce the number of migrants — the Conservative party made an election pledge to reduce the numbers of people coming to the UK to live and work — but he acknowledged the difficulty amid the UK’s labour shortages.

On ITV’s This Morning show, Sunak said: “We’ve got to be sensitive to the needs of the NHS, of the economy, but fundamentally the numbers are too high, I’m going to bring them down.”

The 606,000 figure is an increase of 118,000 from a year earlier. However, for the first time, the ONS included asylum seekers, who make up almost a fifth of the total.

This reinvigorates long-established questions over whether the UK’s net migration statistics are fit for purpose. ONS estimates used to be based on the International Passenger Survey (IPS), a tourism and travel questionnaire conducted in airports, which the ONS has long admitted is flawed.

The majority of people arriving in the UK — estimated at 925,000 — are non-EU nationals, many of whom have arrived from Ukraine and Hong Kong through established humanitarian schemes.

Home Secretary Suella Braverman announced on Tuesday that from next January most international students will be banned from bringing family members with them when they come to the UK to study.

In a written statement, she argued that her package of immigration reforms struck “the right balance between acting decisively on tackling net migration and protecting the economic benefits that students can bring to the UK”.

But net migration is not merely an economic issue. Today Reuters reports that a boat carrying 500 migrants, including a newborn baby and pregnant women, disappeared in the central Mediterranean. Alarm Phone, a group that picks up calls from migrant vessels, said it lost contact with the boat on Wednesday morning and Italian NGO Emergency said yesterday that it had unsuccessfully looked for the missing boat for 24 hours.

Meanwhile, in response to rising pressure over Sunak’s failure to reduce migration, Bloomberg reports that the UK government is planning to deport thousands of asylum seekers per month from next year.

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Need to know: UK and Europe economy

UK retail sales grew more than expected in April, rebounding after bad weather hit spending in March. According to data published today by the ONS, the quantity of goods bought in Britain rose 0.5 per cent between March and April. This beat analysts’ expectations, as polled by Reuters, who expected a small rise of 0.3 per cent, following a month-on-month drop of 1 per cent in March.

Line chart of Great Britain, Feb 2020=100 showing British retail sales volumes grew in April

Chancellor Jeremy Hunt has backed higher interest rates to curb soaring inflation even if it tips Britain into recession. He told Sky News: “It is not a trade-off between tackling inflation and recession. In the end, the only path to sustainable growth is to bring down inflation.”

Ministers are also considering reforms to the £39bn Pension Protection Fund that protects company pension plans that could unlock tens of billions of pounds for investment in UK businesses.

British Airways has cancelled more than 140 flights ahead of the bank holiday weekend as it struggles to resolve a computer glitch that affected passengers’ ability to check in remotely. This provides little reassurance to people hoping to book summer holiday flights and who already grappling with rapidly rising costs.

Portugal has become the latest European government to deem Huawei too “high risk”, outlining a potential ban on the Chinese company’s equipment for its 5G network in a policy U-turn that could further damage Huawei’s ambitions on the continent.

The Turkish lira has fallen to 20 to the dollar for the first time as polls predict victory for president Recep Tayyip Erdoğan in this weekend’s election run-off. Investors are increasingly concerned that a victory for Erdoğan, who has led Turkey for two decades, will continue unconventional policies that economists blamed for triggering runaway inflation.

Need to know: Global economy

US debt ceiling talks continue as the deadline approaches with European stocks responding optimistically. Both White House officials and Republicans on Capitol Hill suggested that talks were in a better place, with President Joe Biden saying yesterday: “Speaker McCarthy and I have had several productive conversations and our staff continue to meet as we speak as a matter of fact — and they’re making progress.” However, this doesn’t stop others calling for deep structural reforms.

In a sign of a tightening credit squeeze in the US, more large companies are sheltering in bankruptcy court as interest rates rise. Eight companies with more than $500mn in liabilities have filed for Chapter 11 bankruptcy in May, with five filing in one 24-hour period last week.

Credit Suisse has been ordered by a Singaporean judge to pay $926mn to the former prime minister of Georgia Bidzina Ivanishvili. This comes ahead of UBS completing its takeover of the bank as soon as next week.

EY’s US chair Julie Boland has reshuffled the Big Four firm’s leadership in the US, following a failed plan to spin off its consulting arm codenamed Project Everest.

Swedish buy now, pay later pioneer Klarna has halved its losses in the first quarter of 2023. Chief executive Sebastian Siemiatkowski claims: “We are on track to achieve profitability this year.”

The personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation which measures how much consumers pay for goods and services, increased 0.4 per cent month on month after rising 0.1 per cent in March.

In Hong Kong, financial markets are closed for the Buddha’s birthday holiday, which will also be celebrated in South Korea tomorrow.

Need to know: business

JPMorgan Chase chief executive Jamie Dimon faces questions under oath today about his knowledge of the crimes of Jeffrey Epstein, who was a client of the US bank. The deposition will take place behind closed doors and is set to last up to two days. Dimon is expected to travel to China next week for the first time in four years.

In Paris, climate activists clashed with police outside TotalEnergies’ shareholder meeting today as protesters taking aim at the group’s oil projects attempted to block access to the venue. This follows disruption earlier this week at Shell’s shareholder meeting in London.

Meanwhile in Oslo, Norway’s $1.4tn oil fund sides with climate activists against ExxonMobil and Chevron, introducing targets for cutting greenhouse gas emissions.

Investment bank Lazard has appointed Peter Orszag as its next chief executive. Orszag, who joined Lazard in 2016 and leads its financial advisory business, will take over from Ken Jacobs in October.

Troubled New York law firm Shearman & Sterling is leaning on the long-serving leader of Allen & Overy Wim Dejonghe to hash out a $3.4bn transatlantic merger, which — if voted through — will be one of the biggest the industry has seen.

Netflix is cracking down on its estimated 100mn freeloaders by changing its attitude to password sharing. The streaming company, which experienced blistering growth until 2020, has been knocked by rivals including Disney Plus.

Science round-up

FT science commentator Anjana Ahuja discusses a controversial new surgical procedure dubbed “partial resurrection”, which involves restarting limited blood circulation in organ donors who have just been declared dead.

There is growing concern that one of the sources of antibiotic resistance is run-off waste from pharma factories. The WHO has described antibiotic resistance as a top 10 global public health threat, responsible for 1.27mn deaths in 2019 and contributing to 5mn.

Evidence is also mounting over the harm from toxic chemicals known as PFAS (per- and polyfluoroalkl substances) used in the manufacture of semiconductors. Safe alternatives are however many years away.

A visual explanation of PFAS - a group of synthetic chemicals with molecules mainly made up of a chain of carbon and fluorine atoms

Some good news

Astronauts could be sent to space via suspended animation, scientists say. According to research published in the journal Nature Metabolism, hibernation can be artificially triggered in rodents using ultrasound pulses. Like humans, rats do not naturally hibernate so, if this technology proves feasible, it is possible that human hibernation could be artificially reactivated.

Something for the weekend

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