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FirstFT: UK chemicals sector hit by £2bn Brexit red tape

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Britain’s chemicals sector faces a £2bn hit from post-Brexit red tape, twice the cost of initial industry estimates, as the government sets up its own regulatory regime, ministers have warned.

Despite Liz Truss and Rishi Sunak promising to “axe EU red tape” during the Tory leadership campaign, the cost of bureaucracy after leaving the bloc is mounting.

A government impact assessment seen by the Financial Times has put the central estimate for the costs of registering chemicals on a new UK database — often duplicating existing registrations with the EU — at £2bn.

The chemicals industry last year warned that the regime, known as UK Reach, would cost about £1bn. But the government now accepts that many more substances will have to be registered than previously thought. UK companies spent £500mn complying with the Brussels regime over the previous decade, winning access to 27 markets.

Have any feedback on the newsletter? Let me know at firstft@ft.com or reply to this email. Thanks for reading FirstFT Europe/Africa — Jennifer

1. Russia cuts gas deliveries to Europe via Nord Stream 1 Moscow’s state-owned energy group Gazprom will slash gas flows through its largest pipeline to Germany to a fifth of capacity from tomorrow, threatening to leave the continent short of critical supplies ahead of winter. Russia had already lowered deliveries to 40 per cent last month.

2. Italy’s access to share of EU Covid fund in question European governments and investors are nervously examining what the collapse of Mario Draghi’s government will mean for Italy’s ability to hit ambitious reform milestones and unlock tranches of the EU’s €800bn Covid recovery fund — of which Rome is the largest recipient.

3. Qatar Airways boss: aviation faces years of disruption Staff shortages in Europe, delays in aircraft deliveries from manufacturers and a lack of spare parts will cause prolonged disruption, Qatar Airways chief executive Akbar Al Baker told the Financial Times. Even as supply bottlenecks ease, demand for air freight is still growing.

Line chart of Rates for big air freight routes measured in dollars per kilogramme showing Air freight prices fall from 2021 peaks

4. Ex-Goldman banker accused of passing inside tips to squash partner US authorities accused New York-based Brijesh Goel of passing sensitive market information to his squash partner, in one of a series of insider trading cases announced by federal prosecutors yesterday.

5. South Africa opens up private power generation The government has enlisted the private sector in an emergency plan to tackle the worst-ever rolling blackouts in Africa’s most industrialised economy, scrapping controls on companies generating their own power outside the broken Eskom monopoly.

The day ahead

Indo-Pacific military chiefs conference Attendees in Sydney today and tomorrow include US military chief Mark Milley and Admiral John Aquilino, head of US Indo-Pacific command, who are expected to discuss Taiwan and what lessons from the Ukraine conflict might apply to the island.

EU energy ministers meet An extraordinary meeting of the bloc’s energy ministers takes place in Brussels with the aim of creating a package of measures to secure fuel supplies. FT premium subscribers can read more in our Europe Express newsletter.

GMB in Scotland votes to strike The union closes a ballot of almost 10,000 council workers for industrial action this summer over a pay dispute.

Corporate earnings It is peak earnings season. Companies reporting include Alphabet, Coca-Cola, Heathrow, LVMH, McDonald’s, Microsoft, UBS, Unilever and Visa. See our Week Ahead email for the full list.

US economic data Residential sales are estimated to have declined in June, as did consumer confidence in July. The S&P CoreLogic Case-Shiller National Home Price Index will reflect home prices in May. (FT, WSJ)

What else we’re reading

Migrants exploited by understaffed care homes Chronic underfunding of the social care sector has led to recruitment problems, with enforcement officials and regulators telling Sarah O’Connor they are finding a rise in instances of migrant worker exploitation. Why is this happening?

Illustration of a care worker shackled to a triangular warning sign of old people crossing the road which she is lugging up a hill
The UK is struggle to recruit enough care workers to look after its ageing population, exacerbated by Brexit and the pandemic © James Ferguson

Total’s Patrick Pouyanné is not backing down The TotalEnergies chief executive is undertaking a series of complex oil and gas developments in challenging parts of the world even as he pushes billions into clean energy and environmental pressure on the industry grows. How long can he have it both ways?

HSBC’s past may not help its future Sharp minds are trying to divine the future of the bank by working out how its returns, regulation and capital base would change if it was broken up, as demanded by shareholder Ping An Insurance. But it is politics, not metrics, that decide how China acts, writes author Michael Sheridan — and history is not on HSBC’s side.

How the Morrisons buyout soured for Goldman Sachs The war in Ukraine set off an economic shock that turned the Morrisons mega-deal from a dream ticket into a nightmare. The supermarket buyout has cost underwriting banks hundreds of millions of pounds and now symbolises the excesses of the cheap-money era.

Is the dollar about to take a turn? The US dollar has risen more than 10 per cent against other major currencies since the start of the year. But if the economy weakens and inflation rises, the Federal Reserve is likely to pull the brakes and the greenback will reverse, writes professor Barry Eichengreen.

Food and drink

Sweat, tears and gasps are all par for the course for the naive consumer of the Bollywood Burner at chef Vivek Singh’s Cinnamon Bazaar in Covent Garden. But there is little room for pride in the world of competitive chilli eating — all you can do is wipe your brow and hope for a sympathetic server.

The Bollywood Burner at Cinnamon Bazaar
Singh created the curry about 15 years ago, blending blended Dorset Nagas — then the world’s second-hottest chilli — with lamb mince, sesame, tamarind and scotch bonnets

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