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Our scoop today is on EY, which has told its UK staff to expect less generous pay rises than last year and a round of job cuts as it faces rising costs and cooling demand.
Leaders at the firm’s British business, which employs about 18,500 people, also informed staff this week that bonus pools would be smaller than last year and would be split among a more limited group, according to people familiar with the matter.
Bonus pools for some teams would be slashed by more than half this year, the people said.
The firm will axe more than 5 per cent of its roughly 2,300-strong financial services consulting practice — less severe than cuts at EY’s US business — with 150 jobs set to be trimmed in teams that advise on business transformation and risk management. Here’s more on the Big Four firm’s slowing growth.
Here’s what else I’m keeping tabs on today:
UK: The Office for National Statistics has data on the profitability of companies in the first quarter, while many students in Britain receive their A-level and other results this morning.
Spanish politics: Lawmakers resume bargaining over forming a government to end a post-electoral limbo as parliament reconvenes after a summer lull.
Norway interest rates: Norges Bank is expected to raise its policy rate.
Five more top stories
1. Global investors are dumping Chinese stocks and bonds, almost completely reversing Rmb54bn ($7.4bn) in net purchases of Chinese equities that followed a July 24 pledge by the country’s leaders to shore up China’s wobbling economy. Here’s why confidence in Beijing’s promises is crumbling.
2. The US, Japan and South Korea will create a leader-level hotline and hold annual military exercises to boost deterrence against North Korea and China. In a significant victory for Washington, President Joe Biden is set to announce the move with his two Asian counterparts at Camp David tomorrow. Read more about the landmark trilateral agreement.
3. US homebuilder stocks have rallied furiously and attracted an $814mn bet from Berkshire Hathaway, defying conventional wisdom about the effects of rising mortgage rates. Warren Buffett’s group has disclosed it owns shares in DR Horton, Lennar and NVR, which have each risen about a third this year and far outpaced the S&P 500.
4. The first vessel since Russia threatened to attack civilian ships in the Black Sea left Odesa for Istanbul yesterday, carrying more than 30,000 tonnes of cargo including foodstuffs. It embarked shortly after Moscow attacked one of Ukraine’s two Danube ports for the third time since last month. Here’s why the container ship’s passage is being closely watched.
5. Nigeria’s president Bola Tinubu announced a new cabinet yesterday comprising close advisers and political loyalists, including longtime ally and investment banker Wale Edun in the sweeping role of finance minister and co-ordinating minister overseeing the African nation’s faltering economy. Here are the challenges facing Tinubu’s 45-member cabinet.
The Big Read
Devastating floods have ravaged northern China. Wildfires have ripped through Canada, southern Europe and, in recent days, the Hawaiian island of Maui. The disastrous effects of climate change can first be measured in the thousands of lives lost — but also economic value. What will happen when businesses and investors realise they have vastly underpriced climate risks?
We’re also reading . . .
Chart of the day
As western governments struggle to keep a lid on fuel prices, the leadership of Iran faces a very different problem: its petrol is just too cheap. But a widening gap between supply and rising demand has forced Iranian authorities to tap the country’s strategic reserves and import petrol for the first time in a decade.
From the Magazine
“Millionaires on strike” is how some describe the standstill that has gripped Los Angeles. But the historic calls for action aren’t for the stars, they’re for jobbing writers and actors struggling to stay afloat, say organisers. Christopher Grimes spends an afternoon on the Hollywood picket line.
Additional contributions by Benjamin Wilhelm and Gordon Smith