China has imposed duties on imports of European brandy in a move that France has said is retaliation for recent big tariffs the EU announced on Chinese electric vehicles.

The European Commission said it would challenge China’s tax at the World Trade Organization (WTO), calling it an “abuse” of trade defence measures.

French brandy producers said the duties would be “catastrophic” for the industry.

The Chinese move will hit big brands including Hennessy and Remy Martin.

Shares in brandy companies dropped after the announcement.

China announced new restrictions on European brandy just days after EU countries approved steep tariffs on Chinese-made electric vehicles.

China’s commerce ministry said the brandy imports threaten “substantial damage” to its own producers.

It also said it was considering a hike in tariffs on imports of large-engine vehicles, which would hit German producers hardest, and pork and dairy products.

French Trade Minister Sophie Primas said the brandy move “seems to be a retaliatory measure” after the European Union decision to raise tariffs on Chinese electric cars.

She said that kind of retaliation would be “unacceptable”, and a “total contradiction” of international trade rules, adding that France would work with the European Union to take action at the WTO.

France accounts for 99% of brandy exported to China, and French cognac lobby group BNIC said the move would be “catastrophic” for the industry.

“The French authorities cannot abandon us and leave us alone to deal with Chinese retaliation that has nothing to do with us,” BNIC said, adding that the taxes “must be suspended before it’s too late”.

Shares in companies that sell spirits took a battering after the Chinese announcement.

Luxury firm LVMH, which produces Hennessy, fell more than 3%, while Remy Cointreau, which makes Remy Martin, fell more than 8%.

Analysts at Jefferies estimate that the tariffs could translate into a 20% price increase for consumers, which would probably lead to volumes and supplier sales falling by a fifth.

Shares in German carmakers, which could also be hit by retaliatory moves from China, also slid.

Volkswagen, Porsche, Mercedes-Benz and BMW were all down after the announcement.

THE Wetherspoons 12-day beer festival will be back with a bang tomorrow with some ales selling for less than £2 a pint.

The famous pub chain will be selling a range of 30 different real ales including five from overseas brewers from October 9 to October 20.

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The festival will offer punters the chance to sample beers from Canada, New Zealand, Japan and the USA.

The event will take place across 809 UK Wetherspoons pubs.

Pints will be available for £2.29 on average, and as cheap as £1.79.

Spoon fans can try three beers for the price of one, with the chance to buy 3 third-of-a-pint tasters for the cost of a single pint.

The menu includes a range of unusual flavoured ales such as mango, chocolate and banoffee pie.

And the festival range is extended to include vegan and vegetarian options, as well as gluten-free options which can be found using the allergen information screen in pubs or via the app or website.

The deal includes beers which have never been available in Wetherspoons before so you are guaranteed to try something new.

Marketing manager Jen Swindells said: “The festival is a great celebration of real ale.

“It will allow us to showcase a selection of superb beers, including those from brewers as far afield as Japan and New Zealand, as well as those closer to home, over a 12-day period.

“All of the beers will be available at great value-for-money prices.”

While the pints could be selling for as cheap as £1.79 in some pubs, keep in mind that menu prices vary based on location.

Below is a full list of real ales which will be available at the festival:

• Siren Mesmerist (Siren Craft Brew) 3.4% ABV
• Conwy Born to be Mild (Conwy Brewery) 3.8% ABV
• Hogs Back Notorious P.I.G (Hogs Back Brewery) 3.8% ABV
• Adnams T Drop (Adnams Brewery) 4.0% ABV
• Red Racer Session (Central City Brewery, British Colombia, Canada) 4.0% ABV
• Windsor and Eton Canberra (Windsor and Eton Brewery) 4.0% ABV
• Batemans Salem Session IPA (Batemans Brewery) 4.1% ABV
• Hook Norton Tower Ale (Hook Norton Brewery) 4.2% ABV
• Townshend Dinner Ale (Townshend Brewery, Tasman, New Zealand) 4.2% ABV
• Ishii Orihime Pale Ale (Ishii Brewing, Tochigi, Japan) 4.3% ABV
• Evan Evans Wild Coast (Evan Evans Brewery) 4.4% ABV
• Fyne Ales Sun Lounger (Fyne Ales) 4.4% ABV
• Greene King Blood Hound (Greene King Brewery) 4.4% ABV
• Loch Lomond The Gloaming (Loch Lomond Brewery) 4.4% ABV
• Brewster’s Sailing By (Brewster’s Brewery) 4.5% ABV
• Rudgate Mango in the Night (Rudgate Brewery) 4.5% ABV
• Maxim Banoffee Pie Golden Ale (Maxim Brewery) 4.6% ABV
• Titanic Sapphire Spoon (Titanic Brewery) 4.7% ABV
• Lancaster Hop Storm (Lancaster Brewery) 4.8% ABV
• St Austell Fresh Pot (St Austell Brewery) 4.8% ABV
• Elgood’s North Brink Porter (Elgood’s Brewery) 5.0% ABV
• Exmoor Phoenix (Exmoor Ales) 5.0% ABV
• Shepherd Neame Cold Snap (Shepherd Neame Brewery) 5.0% ABV
• Thornbridge Coltrane (Thornbridge Brewery) 5.0% ABV
• Urban South Who Dat (Urban South Brewery, Louisiana, USA) 5.0% ABV
• Salopian Disintegration (Salopian Brewery) 5.1% ABV
• Oakham Sunset (Oakham Ales) 5.3% ABV
• Yazoo All Dog Alert (Yazoo Brewing, Tennessee, USA) 5.5% ABV
• Burning Sky Aurora (Burning Sky Brewery) 5.6% ABV
• Innis and Gunn Caribbean Rum Cask (Innis and Gunn Brewery) 6.8% ABV

Order your pint of choosing either at the bar or via the mobile app, which is available to download via the App Store.

We recommend you browse the festival magazine before your arrival via the app or website to check your local prices.

The magazine also details the origins of the beers and their flavour profiles.

For example, the Japanese Ishii “Orihime” Pale Ale is from Tochigi, and has a “citrusy, fruity hop character”.

And the Canadian Central City “Red Racer” Amber Ale is from British Colombia and has “a good balance of bitterness and malt flavours”.

While the mysterious Maxim “Banoffee Pie” Golden Ale is from Durham, and is described as “dessert in a glass”.

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IF you think the only place to find a pink castle is inside a Disney theme park, you’d be wrong.

Craigievar Castle in Aberdeenshire, Scotland was thought to be the inspiration for Cinderella’s Castle in Florida’s Walt Disney World, and anyone can visit for a picture-perfect princess moment.

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The 17^th century structure is located near the town of Alford and is less than an hour away from Aberdeen.  

Although the pink shade seems modern, the castle has been that colour since 1826 after a makeover matching the colour of the granite moldings, resulted in the famous ‘Craigievar pink’.  

The castle has recently reopened after the ‘Pink Again Project’ that brought the colour back to life and visitors are flocking to get that perfect shot.

Even Britney Spears is a fan as she posted a photo of the castle to her millions of Instagram followers earlier this month.

Being Disney – and Britney – buffs, my daughter and I had to check this one out, dressing up in tulle skirts for the occasion.

Of course, Sabrina wore a Cinderella style dress, and we had fun letting her run across the grounds and got some fantastic snaps of her in front of the striking castle.

Visiting the grounds to get your iconic Instagram snap is free but you might have to wait to avoid the other guests with the same idea.

Visiting early can ensure you get the best spots or the early evening when you get the magical evening glow.

If you want to venture inside, you can also pay for a guided tour.

The iconic tower house is really fun to explore and is among the best preserved and the most loved in Scotland.

It was a family home up until the 1960s so the rooms have a cosy feel to them.

The guided tours take you into all the rooms in the castle’s five floors so you can imagine you’re a real-life Princess locked in a tower.

However, like most castles and fairy tales, it has its darker moments and visitors have reported hearing ghostly moments from some bedrooms so it’s maybe not a bad thing that the tours are guided.

There is also an on-site shop to check out and a woodland trail around the grounds where you might even spot some incredible wildlife.

The castle is owned by the National Trust for Scotland and members go free.  

It’s not the only Disney-like castle in the UK.

Strawberry Hill House, in Twickenham, has been compared to a castle from the Disney films by tourists.

The Sun’s Richard Moriarty, recently visited Balmoral Castle and nearly bumped into royalty.

And our Travel Reporter Hope Brotherton went to the UK’s ‘best’ castle – here’s what she thought.

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Vistry shares plunged more than 30 per cent on Tuesday morning after the housebuilder warned its full-year profits would be almost a fifth lower than expected because of underestimated building costs.

The FTSE 100 group, one of the UK’s largest housebuilders, said the error would reduce its 2024 adjusted pre-tax profit by £80mn to £350mn, and cost a further £35mn over the next two years.

It said the issue with understated costs stemmed from nine developments in its southern division, out of 300 sites in total. 

“We believe the issues are confined to the South Division and changes to the management team in the division are under way,” Vistry said. 

Shares were down 31 per cent to 896.5p early on Tuesday morning in London. Although some of the losses were pared back by lunchtime, they were still 22 per cent lower at 988.5p.

The profit warning marks a setback for one of the UK’s most buoyant housebuilders, which operates the Bovis Homes brand, following its takeover of Countryside in late 2022.  

Vistry builds the majority of its homes for “partners” such as rental or social housing providers, making it less reliant on open-market sales than other large housebuilders. Rivals have been hit hard by the downturn in the housing market over the past two years. 

Unlike other large developers, which have slashed their output as sales declined, Vistry increased completions by 9 per cent to 7,792 in the first six months of 2024. It struck two huge deals to build homes for US private equity group Blackstone’s UK housing businesses in the past year, totalling £1.4bn. 

On Tuesday, Vistry said it still expected to complete at least 18,000 homes by the end of the year. 

The hit to profits and the possibility of further bad news surfacing at the group will rattle investors, although the company said it was confident the problem was isolated in one of its six divisions. 

It could also raise questions over the pace of growth being pursued at Vistry under chief executive Greg Fitzgerald, who recently also became executive chair. He has set a “medium-term target” of roughly doubling adjusted profits to £800mn. 

“The key issue is whether these are isolated and ‘one-off’ in nature, with the worry being that they are more systemic, and reflective of inherent risk within the group’s partnership model that could recur in the future,” said Investec analyst Aynsley Lammin.

Vistry said the “total full-life cost projections” for the cost of nine of the 46 developments in the southern region, which covers Kent, Sussex, Hampshire and the Thames Valley west of London, had been underestimated by 10 per cent, including for some “large-scale schemes”. 

“We are commencing an independent review to fully ascertain the causes,” Vistry said. 

The group added that it “continues to target a net cash position” at the end of the year, and will maintain a £130mn share buyback announced in September.

Consumption matters. Ultimately economic success is determined by how much people consume, however much Germany and China might measure their economic prowess by exports or the UK might fret about low investment. The purpose of investing or exporting is ultimately to enable people to consume more goods and services, whether these are private, such as a restaurant meal, or public, such as national defence.

Post-pandemic, the trends in real private consumption are remarkable. US spending has recovered to its previous trend levels, which were themselves a lot more dynamic than those in the Eurozone or Japan and a little faster than the UK.

In contrast, as the chart below shows, real levels of consumption in the Eurozone, Japan and the UK have been flat. On past trends, that is not much of a surprise for Japan with low growth and a declining population, but it shows much more lasting damage from the pandemic in Europe and something of a catastrophe in the UK relative to past trends.

The chart requires some explanation and some thought about monetary policy among central banks. First of all, it is important to note that growth in real household incomes does not explain the differences — these have been weaker in the US than the OECD average over the past two years and real wage growth has risen unambiguously only for lower income US workers.

Instead, the big difference between the US and most other economies has been a drop in savings compared with the pre-pandemic period. Europeans got spooked by Covid-19 and its aftermath, while this appears to have been a minor inconvenience for US households.

My colleagues Valentina Romei and Sam Fleming explored this issue in detail over the weekend. In all parts of the world, savings rates surged when coronavirus was rife because households were unable to spend, especially on consumer-facing services, but dropped below long-term trends in the US, while staying much higher in the Eurozone and the UK.

Part of the reason for these massive differences in savings trends is likely to be related to greater pandemic and post-pandemic fiscal largesse in the US leaving American households with less of a repair job to do on their own finances. Part of the explanation clearly reflects the fact that Europe had a much worse external shock post pandemic, with the Ukraine war on its doorstep and a natural gas price energy hit that dwarfed what was experienced in the US. European consumers are still suffering from wholesale gas prices roughly twice the pre-2022 rate, so it is natural that they have made some adjustments.

Important as these two issues are, they were factored in to European Central Bank forecasts by June 2023, when the central bank expected 1.9 per cent consumption growth in 2024. By September this year, it expects only 0.8 per cent growth, demonstrating that real income gains across Europe are simply not translating into spending as expected. As long as inflation is under control, this must be dovish for Eurozone and UK interest rates.

Added to this is the fact that while Europe has a huge range of mortgage structures in different countries and vastly different household balance sheets, the transmission of high interest rates to spending is likely to be a little larger than in the US. (See last week’s speech by ECB executive board member Isabel Schnabel for more on these differences).

The caveat to this prescription of looser monetary policy in Europe is that the natural gas price shock suffered across the continent not only made consumers more cautious but also made them more determined to protect their real wages at a time of low productivity growth, which has probably generated more persistence in inflation. The conundrum is that Europe needs to loosen monetary policy more than the US but also must worry more about its inflation trends. It is a nasty combination.

If that is the big picture, data revisions in the US and UK have added some additional insights over the past few weeks.

The US story has become brighter still. When the Bureau of Economic Analysis revised its national accounts at the end of last month, it raised the measured US savings ratio to around 5 per cent during 2024 from about 3 per cent in the previous releases. The chart below shows the extremely benign reasons for the upward revisions in savings. Compared with the pre-pandemic level, US disposable incomes have been revised sharply higher — almost 4 per cent up this year, while spending was also revised up but not as much.

In contrast, revisions to the UK national accounts depressed the savings ratio by roughly 2 percentage points because spending was revised higher while incomes and GDP were broadly unrevised. Where did that increased private consumption come from? Lower business investment.

In an economy where people already worry that investment is not sufficient to maintain future consumption, the chart below showing these revisions is not exactly encouraging.

Apart from the fact that the US immediate economic environment is healthier than in Europe (we know), there is one important conclusion you should take from this analysis — Europe should be cutting interest rates and stimulating private consumption more than the US.

But Europe struggles to do this because the same shock that has undermined consumer spending has also made inflation a little more persistent.

A threat to central bank independence

Imagine the scene in early November if Donald Trump wins the 2024 US presidential election. He meets Federal Reserve chair Jay Powell and says afterwards: “I don’t believe the environment is ready for interest rates to stay at this level.” Everyone would shout: “Trump threatens central bank independence.”

This happened in Japan last Wednesday when new Prime Minister Shigeru Ishiba told reporters, following a meeting with Bank of Japan governor Kazuo Ueda, that “I do not believe we are in an environment that would require us to raise interest rates further”.

Cue a Japanese stock market rally, a drop in the yen and the inevitable revision from Ishiba of what he meant a day later. It was all a misunderstanding, he told reporters, and he was merely reflecting Ueda’s own view that the BoJ could take its time to assess the impact of its two rate hikes before deciding on another one.

It was a rapid lesson in the simple politics of talking about interest rates. Don’t.

What I’ve been reading and watching

• In a hawkish dissent from current fashions, Andréa Maechler, deputy general manager at the Bank for International Settlements, warned last week that central banks should “exercise care” when assuming supply shocks are transitory. Raising interest rates to prevent a transition to persistently higher inflation regimes is safer, she suggested. Full speech here

• Hurrah — Turkey’s inflation rate has fallen below 50 per cent. Anecdotes are awful, but having spent two weeks in the country I did not see any signs of rampant inflation which, for an economist, was mildly disappointing

• Europe will get a little more inflationary after imposing tariffs on Chinese electric vehicles; the US a little less so after dockworkers suspended their strike action

• On the anniversary of the October 7 Hamas attacks, rising tensions in the Middle East have pushed oil prices up again

A chart that matters

There is little doubt that last week’s US jobs numbers were excellent. The unemployment rate dropped to 4.1 per cent in September from July’s peak of 4.3 per cent. Payrolls beat expectations to rise by 254,000 in the month, with upward revisions to July and August too. No wonder the New York Fed president told the FT this week that the data was “very good”.

What was good for the US economy — low inflation and low unemployment — was not so great for the Federal Reserve’s analytical capabilities, however. As the chart shows, the Fed is pretty clueless about trends in US unemployment.

The chart shows the Fed’s forecast for end-2024 unemployment at the time the forecasts were made against the actual rate. In 2022, it expected monetary tightening to raise unemployment. That did not happen and the Federal Open Market Committee threw in the towel in September 2023, expecting unemployment to stay low. Then, the actual rate crept up and just at the moment FOMC members raised their forecasts to reflect this, the data immediately fell back again.

The chart below shows the perils of data dependency. Of course, no one should be complaining that the summer rise in unemployment was a bit of a blip. But the Fed did not see this coming.