Black Friday kicks off crucial shopping period for retailers

Today’s top stories

• EU member states are demanding a rapid response to $369bn in green subsidies in the US Inflation Reduction Act as they seek to head off a transatlantic trade war.

• The German economy grew by a more than expected 0.4 per cent in the third quarter. The outlook has improved thanks to government support, lower gas prices and a mild autumn. Business confidence has also rebounded after fears receded of winter energy shortages.

• The UK has limited use of Chinese-made surveillance systems on government sites, citing security risks. Our latest Big Read examines America’s ban on Chinese semiconductors, the move will hurt China’s chipmakers but add inflationary pressures on many products.

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Good evening,

It’s Black Friday, which means Cyber Monday, Christmas gift buying and the January sales are all around the corner. Today, the US holiday shopping season gets under way at a pivotal time for consumers faced with the steepest rise in prices since the early 1980s.

Big names such as Macy’s and Walmart are hiring far fewer holiday workers than last year, as is FedEx, which expects to handle fewer packages. The National Retail Federation has forecast a spending slowdown, in contrast with 2021 when consumers were flush with savings accumulated during the pandemic lockdowns.

However, most retailers remain cautiously optimistic, even as they face their first real-terms fall in revenues since the global financial crisis, once inflation is stripped from calculations.

Recent earnings statements offered mixed messages. Target cut its holiday forecast after a big drop in third-quarter profits as “spending patterns changed dramatically”. Chief executive Brian Cornell said: “[Customers] are feeling increasing levels of stress, driven by persistently high inflation, rapidly rising interest rates and an elevated sense of uncertainty about their economic prospects.”

Rival Walmart, on the other hand, was much more bullish. The world’s biggest bricks-and-mortar retailer, known for its appeal to cash-strapped families, raised its full-year forecast, citing richer customers trading down as one of the reasons for a successful third quarter.

Bargain hunting is likely to play an even more important role than usual this year, with online discounts forecast to hit a record level. At the other end of the market, New York has now overtaken Hong Kong as home to the most expensive spot for luxury shopping.

Designer label goods are normally a staple fare on China’s Singles Day, the world’s biggest retail event and a bellwether for the consumer market. But this year’s event on November 11 failed to lift the economic gloom from continued pandemic lockdowns and a government crackdown on excess.

In the UK, retail analysts are more focused on how the grocery sector will fare over the holiday period and specifically on whether the Big Four supermarket chains — Tesco, Sainsbury’s, Asda and Wm Morrison — that have dominated food retail for 15 years can fend off the challenge of Germany’s Lidl and Aldi.

FT columnist Cat Rutter Pooley draws a parallel with the airline industry. “Ryanair and easyJet once catered to a no-frills niche. Their budget offer is now the norm around which the likes of British Airways have had to reorient, fundamentally altering their profitability and prospects,” she argues.

The discounters are hoping to pick up market share as the squeeze on consumer budgets tightens. Kantar last month calculated UK grocery inflation had hit almost 14 per cent or an extra £643 a year for shoppers.

UK supermarkets and butchers also face a new seasonal problem: the country’s worst ever bird flu outbreak has wrecked the supply of turkeys.

Need to know: UK and Europe economy

UK prime minister Rishi Sunak is under pressure from business, legal, worker and environmental groups to drop plans to automatically strip EU-derived laws from Britain’s statute book by the end of next year.

France’s energy minister Agnès Pannier-Runacher said the European energy market needed “structural” reform if EU industry was to survive the current crisis. Vitol, the world’s largest independent energy trader, said the energy crisis would linger for years.

Spain is pushing on with its plan for €7bn in windfall taxes on banks and energy companies.

Household net wealth in Ireland is at a record high, thanks to house prices. It’s getting difficult for the next generation to own a home, writes Jude Webber.

Need to know: Global economy

It’s been an interesting few days for central banks. US Federal Reserve officials backed a slowdown in interest rate rises to 0.5 percentage point increases. A Bank of England deputy governor said tax rises and spending cuts were unlikely to persuade the BoE to moderate future rate rises, while a European Central Bank policymaker said it would be difficult to raise rates in smaller increments because government help on energy prices would keep inflation higher for longer.

Brad DeLong from the University of California, Berkeley argues in our latest Economists Exchange that the US is now an “anti-globalisation outlier” and no longer seen as a place where the future is forged.

China’s zero-Covid exit plans unravelled as new infections multiplied across the country, with vaccination rates still low among the elderly and a vulnerable healthcare system. European businesses are urging China to open up, while Foxconn has offered $1,400 payouts to quell protests at its iPhone plant.

Brazil’s president-elect Luiz Inácio Lula da Silva laid out his foreign policy vision, emphasising multilateralism, renewed efforts on Latin American regional integration, deepening ties with developing nations and his desire to reform the UN.

Need to know: business

The appetite among investors to buy into elite sports assets is still strong. US private equity firm Silver Lake has consolidated its position as the second-largest shareholder in Manchester City’s parent company, while David Beckham is reportedly “open to talks” about becoming involved in buying Manchester United.

Twitter has disbanded its entire Brussels office, raising more concerns about its adherence to EU rules on disinformation and hate speech. FT innovation editor John Thornhill says badly moderated social media platforms can have serious real world effects and endanger fragile democracies.

The EU is set to demand that derivatives traders use accounts at clearing houses in the bloc for some of their transactions, as it plans to take a chunk of the €115tn market processed through the City of London. Author Philip Augar says the future for the City looks bleak.

Join the FT’s top journalists in conversation with leaders in business and government, including the president of Argentina, Nato’s secretary-general, the US deputy attorney-general and many more at The Global Boardroom on December 7-9. Register for your free digital pass today.

Science round-up

“Immunity debt” is a misguided and dangerous concept. There is no evidence that individuals are worse off for avoiding earlier infection, writes Anjana Ahuja.

Tighter controls and education on antibiotics could curb drug resistance. Read more in the latest instalment of our special report, Future of Antibiotics.

Our Tech Champions series explores how infrared cameras tracking vital signs have helped nurses prevent unexpected deaths and injuries in the UK.

The real future of the metaverse is not for consumers but for collaboration to revolutionise energy transition, emergency planning and medicine, says Nokia chief executive Pekka Lundmark.

Ahead of Christmas, science editor Clive Cookson picked the five best science books of 2022. The Long Shot: The Inside Story of the Race to Vaccinate Britain kicks off the must-reads.

Get the latest worldwide picture with our vaccine tracker

Some good news

British surgeon and former Paralympian John McFall has been selected to train with the European Space Agency to become the first disabled astronaut. He said: “With my broad scientific background I felt compelled to try and help ESA answer this question: can we get someone with a physical disability to do meaningful work in space?”

Something for the weekend

The FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not have a go with today’s cryptic crossword.