FirstFT: UK carmakers to face EV targets despite Sunak’s net zero U-turn

Receive free World updates

We’ll send you a myFT Daily Digest email rounding up the latest World news every morning.

Good morning.

Leading the agenda today is the aftermath of Prime Minister Rishi Sunak’s U-turns on the UK’s net zero commitments yesterday. Among the policy moves is the delay of a ban on sales of new petrol and diesel cars from 2030 to 2035.

But just hours after his announcement, ministers contacted industry figures to tell them they would still have to meet mandatory electric vehicle sales targets from January, people familiar with the discussions told the Financial Times.

The UK EV sales scheme, modelled partly on China’s quota system, involves manufacturers being required to sell an increasing proportion of zero emission cars every year this decade or face fines of up to £15,000 a vehicle.

Modest tweaks will be made to the scheme, but an initial target requiring 22 per cent of each carmaker’s sales in 2024 to be zero emission will remain, as will the goal of 80 per cent in 2030, said people briefed on the arrangements. Here’s why sector insiders are worried the goals may now be harder to hit.

We also have a number of reads on the business and political ramifications of Sunak’s move to water down the UK’s green measures:

Here’s what else I’m keeping tabs on today:

• UK interest rates: Falling inflation will put pressure on the Bank of England to pause its tightening campaign when it announces its interest rate decision.

• Zelenskyy in Washington: Ukraine’s president is expected to ask for more military aid during a visit to the US capital.

• Assad in Beijing: Syria’s president visits China for the first time since civil war erupted in his country 12 years ago. He is expected to seek President Xi Jinping’s support in reconstructing his war-devastated country.

• Economic data: The EU has consumer confidence data, while the UK publishes public sector net borrowing figures for last month.

Join Martin Wolf, FT China watchers and UBS China economist Tao Wang for a subscriber-only webinar on China’s economic slowdown today at 11am GMT +1. Register for free here.

Five more top stories

1. Federal Reserve officials signalled support for another interest rate increase this year and fewer cuts in 2024 after the US central bank held its benchmark rate at a 22-year high yesterday. The Federal Open Market Committee said it remained “highly attentive to inflation risks”, noting economic activity had been expanding at a “solid pace” and jobs gains, while slower, were “strong”. Here’s more from the Fed’s latest meeting.

2. Palestinians would be “very important” in any deal normalising Saudi Arabia’s ties with Israel, the kingdom’s de facto ruler has said. Crown Prince Mohammed bin Salman also warned that Riyadh would secure its own nuclear warhead if rival Iran acquired an atomic weapon. Here’s more from his first interview with a US TV channel since 2019.

3. Foreign investors have dumped a further Rmb23bn ($3.15bn) of Chinese equities so far this month following record outflows last month, despite tentative signs of an improvement in the world’s second-largest economy. Here’s why analysts say market sentiment continues to be downbeat.

4. Shares in recently listed Arm and Instacart have fallen more than a fifth from their highs. Shares in the chip designer have fallen by more than 4 per cent for four consecutive days, while the online grocery platform’s stock closed at just 10 cents above its initial public offering price yesterday. Here’s how weak performance could threaten the IPO revival.

5. Exclusive: Europe’s largest cruise company is pushing for changes to emissions rules which it says penalises passenger ships. Pierfrancesco Vago, head of MSC Cruises, said an industry lobby group which he also chairs was speaking to the UN shipping regulator to “revise the formula”. Here’s how the sector wants the rules to be changed.

Deep dive

Politically, the wealth tax appears to be struggling. A US plan to tax wealthy people’s investments is unlikely to pass Congress, the UK Labour party this year scrapped its commitment to the taxes and France ditched its wealth tax in 2018. But with ageing populations shrinking the workforce and limiting tax revenues from pay, economists and campaigners argue the idea — which tends to win broad public support — is due for a resurgence. 

We’re also reading . . . 

• UK policy: Britain’s industrial strategy is “alive and kicking”, says Chancellor Jeremy Hunt. Pity no one knows what it is, writes Nathalie Thomas.

• Sikh spat: If true, India’s involvement in a killing on Canadian soil would mark a radical expansion of its security apparatus, with far greater implications for western allies.

• London’s decline: In an interview with the FT, the head of the London Stock Exchange Group hits back at “clickbait” criticism that the City’s position as a leading financial hub is slipping.

• Spanish politics: To stay in power, Prime Minister Pedro Sánchez needs the votes of Catalan separatist parties, but the price for their support is high.

Chart of the day

Hedge funds are piling into the oil market and betting that prices will soon pass $100 a barrel, adding impetus to a rally sparked by production and export cuts from Saudi Arabia and Russia. Prices have climbed nearly 30 per cent since June.

Take a break from the news

Latin reggaeton superstar J Balvin has teamed up with Australian-born museum director Melissa Chiu to bring art — and mental health awareness — to Gen Z.

Additional contributions from Benjamin Wilhelm and Gordon Smith