Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

“A once-in-a-century pandemic, eruption of geopolitical conflicts and extreme weather events have disrupted supply chains, caused energy and food crises, and prompted governments to take unprecedented actions to protect lives and livelihoods.” Thus does the IMF’s latest World Economic Outlook describe economic events since early 2020.

Yet, overall, the world economy has shown resilience. Unfortunately, however, but unsurprisingly, high-income countries — blessed with more policy space — have shown more of it, while developing countries have shown less. In sum, “[w]hereas the former have caught up with activity and inflation projected before the pandemic, the latter are showing more permanent scars.”

A notable fact, however, is that the largely unexpected upsurge in inflation has subsided at a low cost in terms of output and employment. Yet core inflation has also been showing signs of stickiness, notes the IMF. Crucially, “[a]t 4.2 per cent, core services price inflation is about 50 per cent higher than before the pandemic in major advanced and emerging market economies (excluding the US)”. Pressure to bring wages back in line with prices is the main driver of the robust core inflation in services. But, as output gaps close, the fund hopes, this wage pressure, too, should subside.

Both the spike in inflation and its remarkably painless fall need explanations. These, argues the WEO, include a faster-than-expected decline in energy prices and a strong rebound in labour supply, bolstered by unexpected (and unpopular) surges in immigration.

A more subtle explanation of the behaviour of inflation is that the interaction of surging post-pandemic demand with constraints on supply made the relationship between economic slack and inflation (known as “the Phillips curve”) steeper (or, in economists’ jargon, “less elastic”). Thus, inflation rose more than expected when demand surged, but fell faster than expected as supply and demand came together. Monetary policy played a role in both directions, by stimulating and then restraining demand, but also, when tightened, by reinforcing the credibility of inflation targets.

A noteworthy feature since 2020 has been the changing relationship between monetary and fiscal policy. In the pandemic, both were ultra-loose. But, after 2021 monetary policy tightened, while fiscal policy stayed loose, notably in the US. Higher interest rates then increase fiscal deficits. Yet there is a big divergence between the US and the eurozone on fiscal prospects: on IMF projections, US public debt will rise to almost 134 per cent of GDP by 2029; in the eurozone, on the other hand, the ratio of public debt to GDP is expected to stabilise at about 88 per cent in 2024, albeit with large cross-country differences.

Yet another significant recent feature of the world economy is that since Russia’s assault on Ukraine in February 2022, the rate of growth in trade between “blocs” has fallen more than that within “blocs”, with one centred on the US and Europe and another centred on China and Russia.

The fund has not changed its view much, projecting global growth of close to 3 per cent. This assumes there are no big negative shocks, trade grows in line with output, inflation stabilises, monetary policies loosen and fiscal policies tighten. Its projections show US growth from fourth quarter to fourth quarter falling from 2.5 per cent in 2024 to 1.9 per cent in 2025, while it rises slightly, to 1.3 per cent, in the eurozone. Over the later period, developing Asia’s growth is projected at 5 per cent, China’s at 4.7 per cent and India’s at 6.5 per cent.

Downside risks are, alas, plentiful. Past monetary policy might bite harder than now expected, perhaps generating recessions. If inflation is more robust than expected, monetary policy would be tighter than assumed, which could affect financial stability. The impact of higher interest rates on debt sustainability might turn out to be greater than expected, especially in emerging and developing countries. China’s macroeconomic woes might turn out be greater than now expected, as its property sector retrenches and countervailing policy measures remain too limited. Should Donald Trump become US president and launch his trade measures, the chances of an out-and-out trade war must also be considerable, with unpredictable consequences for the world economy and international relations.

Moreover, will the US election be decided peacefully? The worsening of existing wars or the outbreak of new ones are also possible. Such events could lead to new spikes in commodity prices, possibly (or even probably) aggravated by rapid changes in the global climate.

All this is scary stuff. Yet it is worth noting potential upsides, too. Reform and renewed confidence might lead to an upsurge in investment. Artificial intelligence and the energy revolution might boost investment and growth. It is even possible that humanity will decide that it has better things to do than raise hostility and stupidity to ever higher levels.

The IMF stresses the need to ensure a smooth landing on inflation and monetary policy. It also stresses the more immediate need to stabilise public finances, while promoting growth and reducing inequality. In the medium term, it hopes for stronger structural reform, including improving access to education, reducing labour market rigidities, raising labour force participation, reducing barriers to competition, supporting start-ups and advancing digitalisation. Not least, it desires acceleration of the green transition and enhanced multilateral co-operation.

If only a divinity would compel humanity into being that sensible. In practice, it is, as always, up to us.

martin.wolf@ft.com

Follow Martin Wolf with myFT and on Twitter

The tragic death of Liam Payne at just 31 years old has sent shockwaves through the music industry and his legion of fans. The former One Direction star was found dead in a hotel in Buenos Aires, Argentina, on October 16, 2024, leaving the world grappling with the loss of a beloved artist. However, the circumstances surrounding his untimely demise have raised even more alarming questions. Reports indicate that a partial autopsy revealed the presence of a dangerous substance known as “pink cocaine” in his system. But what exactly is this drug, and what does it mean for those who encounter it?

The Dark Reality of Pink Cocaine

Despite its misleading name, pink cocaine doesn’t actually contain any cocaine. Instead, it’s a potent powdered mix of various drugs, often including ecstasy, ketamine, caffeine, and a psychedelic called 2-CB, as reported by the National Capital Poison Center. Commonly referred to as “Tusi,” this substance is often dyed bright pink, sometimes with a fruity, strawberry flavor added for appeal.

Primarily found in party and club environments, pink cocaine can lead to a range of unsettling effects. Users have reported experiencing hallucinations, anxiety, nausea, increased body temperature, and elevated heart rates. Even more concerning, the National Capital Poison Center warns that pink cocaine can precipitate physical and sexual assaults, as well as severe injuries when individuals are under its influence.

A Dangerous Cocktail of Drugs

What’s particularly alarming about pink cocaine is that it can often be mixed with other substances, resulting in unpredictable and potentially life-threatening effects. Reports indicate that samples of pink cocaine have been found to contain opioids, bath salts, and hallucinogens, intensifying the dangers associated with its use. Although the National Capital Poison Center states that pink cocaine is less addictive than substances like opioids or fentanyl, the risk of developing an addiction still looms.

Moreover, the lack of regulation surrounding the production and distribution of pink cocaine means users have no way of knowing the exact composition of the drug they’re taking. This uncertainty can lead to overdose or severe health complications, as users may not be aware of the dangerous ingredients mixed in with the primary substances.

Related: Liam Payne 911 Call Transcript Released After Hotel Staff Plea

Liam Payne’s Tragic Final Hours

In the wake of Liam’s death, shocking details from his partial autopsy have emerged. On October 21, 2024, it was revealed that he had pink cocaine in his system alongside other substances, including cocaine, benzodiazepines, and crack. Eyewitness accounts have painted a grim picture of the hours leading up to his tragic fall from a third-floor balcony at the hotel.

A hotel staff member made a frantic 911 call just before the incident, expressing concern over an unnamed guest who had “overindulged on drugs and alcohol.” The audio, obtained by Telemundo, highlights the urgency of the situation. “When he is conscious, he breaks, he is breaking the whole room,” the staff member stated, pleading for police assistance due to fears for the guest’s safety. “The guest is in a room that has a balcony, and, well, we are a little afraid that he might do something life-threatening.”

Witnesses reported hearing loud noises and screams from his hotel room hours before the fall, suggesting that Liam was in distress. As investigations continue, friends and family have called for greater awareness of the risks associated with party drugs and the culture of excess that often accompanies fame.

The Aftermath of Liam’s Death

Liam Payne’s shocking passing has reignited discussions around the dangers of recreational drugs and their devastating impact. The rise of substances like pink cocaine poses a significant threat, especially to young people who might underestimate its dangers. As friends, fans, and fellow musicians mourn the loss of a talented star, the conversation about drug use, mental health, and the pressures of fame takes center stage.

The Celebrity Influence on Drug Culture

Liam Payne’s death highlights the broader issue of substance abuse in the entertainment industry, where excessive partying and drug use can become normalized. Many celebrities, including musicians and actors, have openly discussed their struggles with addiction and the pressures they face in the limelight. The allure of fame often comes with hidden dangers, leading to tragic outcomes that can affect not only the individual but also their fans and loved ones.

As the conversation surrounding mental health and substance abuse continues to evolve, it’s vital to recognize the importance of seeking help. Support systems, both professional and personal, play a crucial role in helping individuals navigate these challenges.

Related: Former One Direction star Liam Payne found dead in suspected suicide

Stay Informed and Stay Safe

As more information surfaces about Liam Payne’s tragic end and the role of pink cocaine in his death, it’s crucial for individuals to educate themselves about the dangers of recreational drug use. If you or someone you know is struggling with substance abuse, help is available. Reach out to local support groups or healthcare professionals for assistance.

Raising awareness about drugs like pink cocaine can empower individuals to make informed decisions and prioritize their health and well-being. Engaging in open conversations about substance use and its effects is essential in breaking the stigma surrounding addiction.

For further details on this tragic story and updates on drug awareness, visit National Capital Poison Center for resources and information.

In the summer, I seriously considered replacing my iPhone 14 with an old Nokia 3310 – a phone you can use to text, make calls and play Snake.

But then I remembered how heavily I rely on Google Maps. And how I need email and Microsoft Teams on my phone for work. Also, it’s so much more convenient to keep train and plane tickets on my phone, and use Apple Pay to buy things. And to have a camera to hand at all times. The list goes on and, needless to say, I kept my iPhone.

The (slightly worrying) reality is that technology has become integral to everyday life for most people in the Western world.

And yes, it’s great… when it works.

But last night, I was trying to get an article finished for today and my computer would not play ball.

First, Microsoft Word froze up and wouldn’t let me write anything, then the CMS went down so I couldn’t load anything onto the website.

I regained access to both but my emails wouldn’t open and then the whole laptop shut down without warning (it’s a good thing I’m an obsessive saver).

In the end, it took me about an hour longer than it should have to complete my article.

Obviously, without technology, I wouldn’t have been able to complete the task at all. But that didn’t make it any less irksome when the technology slowed me down.

It’s a frustration shared by advisers.

Currently, only one-fifth are satisfied with their tech stack and not looking to make a change, NextWealth’s latest Financial Advice Business Benchmarks report, published today (22 October), suggests. This is the lowest level since 2020.

A major frustration for advisers is the inefficiency of existing technology in streamlining business processes.

NextWealth managing director Heather Hopkins says innovation in tech can be a “critical driver” of business efficiency. Yet only 21% of respondents are fully confident in technology innovations to make their lives easier.

In the report, respondents express the need for faster systems and better integration capabilities to enhance overall efficiency.

The report suggests that growth firms are those most likely to be looking to make a change. Around 39% of respondents from growth firms are looking to change their tech stack, almost 17% higher than the rest of the market.

NextWealth suggests that, as growth firms are focussed on hiring staff and seeking new clients, it is possible to deduce that these firms are “particularly discerning” of solutions that enable them to streamline activity in meeting growth objectives.

But there is still a long way to go when it comes to using technology to deliver efficient advice.

“In spite of new ways of working and huge advances in tech, there has been no improvement in the time it takes to deliver advice to a new client,” says NextWealth managing director Heather Hopkins.

“It still takes an average of 33 days to deliver the first piece of advice to a new client. This is something I really hope we see change in the near future.”

Many advisers believe that current tech solutions are not effectively addressing these operational challenges​. And almost a third say they will add or cease working with a tech partner in the next year.

This change, says NextWealth, is driven by a desire to improve business efficiency and to adopt artificial intelligence.

AI has been in development for some time now and is undoubtedly on the radar of financial advice firms, the report says. But attitudes remain split, and the benefits and limitations of AI can lack clarity.

For example, the Financial Conduct Authority has made it clear that it wants firms to embrace AI, but it hasn’t yet set out how it can use it.

Speaking at The Verve Group’s Evolution 2024 conference last month, Iress head of relationship management – wealth UK Gareth Williams said firms in the financial services sector now face a “Catch-22 situation” when it comes to adopting artificial intelligence due to the messages from the regulator.

At the end of August, research from the CFA Institute showed that the vast majority (85%) of investment professionals believe there needs to be industry-wide standards and ethical guidelines for AI use. 82% said the lack of such standards hinders faster adoption.

Overall, 47% said their business is not well prepared for potential regulatory changes regarding AI.

But they need to get prepared, because this is something the regulator is pushing for.

Last week, it launched the AI Lab – a new initiative, to help firms “overcome challenges” in building and implementing AI solutions and support the government’s work on safe and responsible AI development.

NextWealth’s FABB report suggests the appetite to engage with AI is strong among financial advice professionals, with over a quarter using or implementing an AI solution.

The increase in appetite among respondents is significant, with 28% saying they are currently using AI, up from 5% year-on-year.

In verbatim feedback, almost a fifth of financial advice professionals (18%) explicitly said they had changed their tech stack to incorporate AI-based solutions.

Meanwhile, almost two-thirds of financial advice professionals are not using AI but do consider it an area to watch (up from 44% in 2023).

The view that AI is not fit for purpose has decreased from 29% in 2023 to just 7% this year, reinforcing the overall picture of an increased perception of relevance.

As demonstrated by my nightmare with my laptop yesterday, there is only so far technology will take you. And there is only so  much advisers can do to make their own businesses efficient before having to rely on others.

One-third of respondents to NextWealth’s survey said that gathering data from providers is the lengthiest step in the process of delivering advice.

There has been no meaningful change in this metric since 2021. Additionally, 8% more respondents say that getting data from the client is the lengthiest step.

“While tech can make advice businesses more efficient, these firms rely on providers to share data,” says Hopkins. “Tech isn’t the only solution.”

We are two weeks from election day — good morning and welcome to US Election Countdown. Today let’s explore:

• Who would run Kamala Harris’s economy?

• The IMF’s tariff warning

• The electoral importance of Omaha, Nebraska

Kamala Harris wants to overhaul the team that runs the US economy. But there’s a lot that needs to happen first.

With a razor-thin polling margin, she is not expected to make any big decisions about potential economic appointments before election day. Donald Trump has all but erased the vice-president’s lead in swing state polls.

Yet Harris has a big fundraising advantage. Her campaign raised close to $1bn in its first three months — more than Trump’s entire haul since January 2023 — and Democrats hope Harris’s war chest can put her over the edge.

If she is victorious, she’ll have to make quick decisions. Harris is set to name an economic team that embodies the centrist, moderate approach to policy that she has touted in her stump speeches.

While Harris would bring less upheaval to the US economy than another Trump administration, she has also tried to distinguish her plans from Joe Biden’s, namely with less ideology and more pragmatism. She’s expected to be more willing to engage with business executives and put in government fewer officials associated with the progressive left compared with her boss [free to read].

The most consequential economic appointment would be the next Treasury secretary, especially since Janet Yellen indicated last month that she would likely step down. Her natural successor is her deputy Wally Adeyemo, who has forged close ties with the vice-president.

Another contender is Lael Brainard, a former Federal Reserve official who heads Biden’s National Economic Council. But, Harris might be eyeing Brainard for Fed chair when Jay Powell’s term ends in 2026. Two other options are commerce secretary Gina Raimondo and White House chief of staff Jeff Zients, both of whom have close ties to corporate America.

With prominent business leaders in Harris’s circle, there’s speculation that some may get important administration roles. Harris’s brother-in-law, Uber executive Tony West, has been one of her top advisers, and billionaire investor Mark Cuban has been stumping for Harris on the campaign trail.

“This election is a battle for entrepreneurs,” he said during a recent Harris rally in Wisconsin.

How will the outcome of the US election impact markets? Join us on October 24 for a discussion on global commodities and the race for the White House. Register here.

Campaign clips: the latest election headlines

Behind the scenes

As Trump touts his plans for sweeping tariffs, the IMF has a stark warning from its annual meeting this week: more protectionist policies would dent already “mediocre” growth prospects globally.

With just two weeks left in the race, the IMF painted a “plausible downside alternative” to its latest set of global forecasts under which tariffs rise around the world in mid-2025, affecting a “sizeable swath” of global trade.

“It’s a policy that is harming basically everyone,” Pierre-Olivier Gourinchas, the IMF’s top economist, told the FT’s Colby Smith and Sam Fleming. “It’s harming the rest of the world. It’s harming the US.”

Trump has vowed to slap tariffs of up to 20 per cent on all imported goods if elected — with even harsher levies on China — which would fundamentally reshape the US economy. Plus, last month he said countries that planned to reduce their dependence on the dollar would get hit with 100 per cent tariffs as a punishment.

The IMF forecasts global output to expand 3.2 per cent this year and next, roughly in line with estimates last released in July. The US is expected to grow slightly faster than previously expected at 2.8 per cent and 2.2 per cent in 2024 and 2025.

Datapoint

Nebraska is reliably Republican, but there’s reason to watch the city of Omaha as closely as the seven swing states on election night.

That’s because rather than awarding its electoral college votes on a winner-take-all basis, like most other states, Nebraska gives two votes to the statewide winner, and one each to the winner of its three congressional districts. Omaha makes up the bulk of Nebraska 2, which is prone to flipping between Democratic and Republican presidential candidates.

With this year’s knife-edge election, it’s possible we’ll end up in a scenario where Nebraska 2 could be decisive in giving Trump or Harris the 270 votes needed to win the White House.

There isn’t much polling from the special district, but the few surveys that exist show Harris up 5.7 per cent over Trump, according to the FT’s poll tracker.

Meanwhile, Omaha locals are duking it out with their lawn signs: Harris supporters put a single blue dot, symbolising a Democratic holdout in an otherwise Republican state, while Trump supporters brandish all-red maps in the shape of Nebraska.

Republican state senator Mike McDonnell told the FT’s Oliver Roeder that the whole country should adopt Nebraska’s system to be “more democratic”. It encourages political engagement, candidate visits, local political spending and debate.

“It does something for American democracy, to think your vote matters,” said Richard Witmer, a political scientist at Omaha’s Creighton University.

Viewpoints

MILLIONS of water customers could see their bills rise by up to 84% as major firms call for bumper hikes.

According to figures released by the watchdog Ofwat on Tuesday, water companies have requested even higher consumer bill increases than initially proposed.

1

The Sun was first to reveal the news on Friday.

The latest requests by water firms would see the average customer bill in England and Wales rise by 40% between now and 2030 to £615 per year.

Earlier this year, companies asked Ofwat for bills averaging £585 by 2030, an increase of about one-third from the current average of £439.

This summer, the regulator pared back those requests to an average of £535, in its draft price review in July.

But now, after a consultation period, 10 of the 11 water companies have hit back with even higher requests than before.

The biggest proposed rise is by Southern Water, which would see bills for its customers in Sussex, Kent and Hampshire rise by 84% between now and 2030.

Thames Water, the UK’s biggest provider, which is in emergency talks over a £15 billion debt pile and a worsening financial situation, has asked for a 53% rise.

The next biggest hikes are by Severn Trent Water, of 46% to £580, and north Wales provider Hafren Dyfrdwy, of 45% to £568.

Only one company, Wessex Water, is not demanding higher bills than first requested.

Many argue that they need to spend more on upgrading their pipes, sewers, and reservoirs than originally planned, and therefore, they need bills to go up, too.

Ofwat wrote in an update on Tuesday that this was “mostly to meet the requirements of other regulators like the Environment Agency and Drinking Water Inspectorate”.

However, some of the increases are designed to meet “changes to the proposed rate of return for investors”.

Ofwat is due to make a final decision on bills increases on December 19, with companies going to the negotiating table with regulators before then.

The regulator said: “We will consider this additional expenditure request as part of our final determinations.”

The latest string of demands comes amid public and political outcry over sewage spills in the privatised water industry, while companies’ investors receive dividends and top executives get bonuses.

A recent performance report by Ofwat showed there has only been a 2% reduction in pollution since 2019 despite firms committing to cutting it by 30%.

Labour has suggested sweeping new laws that could see bosses face up to two years in jail if they obstruct regulators – but nothing has come into force.

At the begining of October, water companies were ordered to return £157.6million to customers after failing to meet pollution targets.

Each year, Ofwat evaluates the performance of England and Wales’s 17 largest water and wastewater companies against key targets, including sewer flooding, supply interruptions, and water leaks.

For the second consecutive year, no company attained the highest rating, although four companies demonstrated improvement compared to the previous year.

As a result, millions of customers at 13 water companies will see their bills slashed next year as the watchdog issues fresh penalties.

The penalties for each water firm are as follows:

• Thames Water £56.8million
• Anglian Water: £38.1million
• Yorkshire Water: £36million
• Southern Water: £31.9million
• Welsh Water: £24.1million
• South West Water: £17.4million
• South East Water: £8million
• Wessex Water: £5.3million
• Affinity Water: £5.2million
• Bristol Water: £1.9million
• Portsmouth Water: £1.1million
• South Staffs Water: £700,000
• Hafren Dyfrdwy: £200,000

The regulator said that the exact amount that will be returned to customers will be finalised in December and applied to bills from April 2025.

Only four water companies have not faced a penalty from the regulator, meaning customers at the following firms won’t receive a rebate next year.

Instead, the amount they will be allowed to add to bills are as follows:

• United Utilities: £33.2million
• Severn Trent Water: £27.9million
• Northumbrian Water: £7.8million
• SES Water: £200,000

Water companies were set stretching targets for 2020-25 to deliver better outcomes, for both customers and the environment.

Where they fall short on these, the regulator imposes performance penalties resulting in customers being charged less than they would be the following billing year.

Performance penalties have totalled more than £430million since 2020.  

Last year, Ofwat forced through bill reductions worth £177.6million.

What water bill support is available?

Advertisement

IT’S always worth checking if you qualify for a discount or extra support to help pay your water bill.

Over two million households who qualify to be on discounted social water tariffs aren’t claiming the savings provided, according to the Consumer Council for Water (CCW).

Only 1.3million households are currently issued with a social water tariff – up 19% from the previous year.

And the average household qualifying for the discounted water rates can slash their bills by £160 a year.

Every water company has a social tariff scheme which can help reduce your bills if you’re on a low income and the CCW is calling on customers to take advantage before bills rise in April.

Advertisement

Who’s eligible for help and the level of support offered varies depending on your water company.

Most suppliers also have a pot of money to dish out to thousands of customers who are under pressure from rising costs – and you don’t have to pay it back.

These grants can be worth hundreds of pounds offering a vital lifeline when faced with daunting water bills.

The exact amount you can get depends on where you live and your supplier, as well as your individual circumstances.

Advertisement

Many billpayers across the country could also get help paying off water debts through a little-known scheme and even get the balance written off.

Companies match the payments eligible customers make against the debt on their account to help clear it sooner.

If you’re on a water meter but find it hard to save water as you have a large family or water-dependent medical condition, you may be able to cap your bills through the WaterSure scheme.

Bills are capped at the average amount for your supplier, so the amount you could save will vary.

Advertisement

The Consumer Council for Water estimates that bills are reduced by £307 on average through the scheme.