Global growth under threat as companies hold back spending, OECD warns

Today’s agenda: An FT investigation on a covert Iranian nuclear experts trip; Deutsche Bank controversy; US defence start-up winners; Britain’s medical exodus; and a trailblazing spy chief

Good morning. We begin with the OECD warning on global growth, which is being threatened by weak business investment as corporate spending in most advanced economies fail to return to historic trends after the financial crisis and pandemic.

Threat to growth: Net investment across 34 advanced economies has dropped from 2.5 per cent of GDP before the 2008 crisis to 1.6 per cent of GDP for the median country, with the pandemic delivering a further blow, according to the Paris-based organisation’s figures.

Average investment among the group is 20 per cent below levels that would have prevailed if pre-financial-crisis trends had continued, according to an OECD working paper. It remains 6.7 per cent below the pre-Covid trend.

What’s the cause: “Pervasive” policy uncertainty is a key cause as businesses get buffeted by repeated shocks, said Álvaro Pereira, the OECD’s outgoing chief economist.

Trump’s chaotic tariff rollout has added a fresh reason for companies to hold back from big spending decisions, the organisation said, adding that business investment had fallen across all major industries.

Businesses become more reluctant to splash out on long-term projects when they are unclear about the outlook for global demand, regulation or trade policy. 

Read the full report and find out the only two countries that managed to be above trend.

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

• Economic data: The Eurozone, France, Germany, Italy, UK and US have services purchasing managers’ indices. The NIESR publishes the outlook for the UK and global economies, while the US releases international trade in goods and services data for June.

• US: Today is the deadline for Ghislaine Maxwell and a lawyer for the deceased sex offender Jeffrey Epstein, along with the alleged victims in their sex trafficking cases, to tell a US judge their position on the justice department’s bid to unseal the grand jury records in her case. Last week Maxwell requested clemency in exchange for congressional testimony.

• Results: A second-quarter earnings report is due from BP, which yesterday announced its biggest oil and gas discovery in 25 years off the coast of Brazil. Also reporting are Advanced Micro Devices, Deutsche Post, Diageo, Infineon, Pfizer, Saudi Aramco and Snap. See our Week Ahead newsletter for the full list.

Five more top stories

1. Exclusive: Deutsche Bank’s chief executive Christian Sewing signed off a €1.5bn deal that was later scrutinised as part of a probe he oversaw that led to the conviction of former colleagues, according to documents seen by the Financial Times. Read the full report.

2. Exclusive: Visa is nearing a deal to move its European headquarters from London’s Paddington to Canary Wharf, in a sign of strength for the Docklands financial district amid a string of company departures. The payments group is in talks to take over the space being vacated by Moody’s at One Canada Square, according to people familiar with the matter. 

3. Exclusive: Drugmaker Sandoz could offer unbranded weight-loss drugs at an up to 70 per cent discount to the branded versions in Canada when patents start to expire there next year. The drugmaker’s chief executive said the drugmaker had not finalised the price for its generic weight-loss and diabetes drug semaglutide but that a reduction of “60 or 70 per cent of the list price” was possible.

4. Germany’s Thyssenkrupp has suffered a setback after Australia picked Mitsubishi Heavy Industries of Japan as the preferred bidder to build a new fleet of Australian frigates. The contract to build up to 11 frigates is worth as much as A$10bn in its first phase and was contested by companies from four countries. Read more on the defence deal.

• More German news: Finance minister Lars Klingbeil has criticised Donald Trump’s move to interfere with the Federal Reserve’s rate policies, saying the US president’s actions were politically “wrong”.

5. US President Donald Trump’s “big, beautiful bill’ has triggered a boom for defence tech start-ups, with roughly $300bn earmarked to modernise the country’s military, defence infrastructure and homeland security. Here are the companies that have benefited from the administration’s embrace of innovative tech.

The Big Read

An FT investigation has found that an Iranian delegation last year visited Russian scientific institutes that produce dual-use technologies — components with civilian applications but which, experts say, have potential relevance to nuclear weapons research.

We’re also reading . . . 

• Dynamic wages: Food-delivery companies’ new pay models use algorithms to decide bespoke fees, but the practice leaves gig workers in the dark, writes Sarah O’Connor.

• Fighting graft: Events in Ukraine and Bulgaria show how easily anti-corruption campaigns can become weaponised, writes Ivan Krastev.

• Britain’s medical exodus: Doctors are increasingly prepared to move overseas in search of better pay and conditions, writes Stephen Bush.

• Trailblazing spy chief: Dame Stella Rimington, the first woman to lead MI5, the UK’s domestic intelligence service, has died. She was 90.

Chart of the day

UK lenders must stop “haggling” over a planned multibillion-pound redress scheme for consumers mis-sold car finance, the chief executive of the Financial Conduct Authority has warned. Nikhil Rathi’s comments come a day after the regulator announced plans to consult on an industry-wide scheme to compensate consumers “treated unfairly” by car financing agreements, which it estimated would cost lenders between £9bn and £18bn.

Take a break from the news . . . 

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