Tuesday 29/07/25

China launches $500 annual baby subsidy in effort to boost births (Financial Times, Cheng Leng and Thomas Hale) heralds its first nationwide programme of childcare subsidies as part of a concerted effort to encourage its citizens to have more kids. Families will get a $503 subsidy per year from the government for each child under the age of three, which will apply from January 2025, although families with kids born between 2022 and 2024 will also be able to apply for partial subsidies. * SO WHAT? * This is happening because there is a massive demographic timebomb waiting to explode in China as a result of decades of the one-child policy that only came to an end in 2016, falling fertility rates and fewer people getting married. As well as helping families, the handout should also help to stimulate consumer spending at least a bit. The question is whether the government will take further measures to address sluggish consumption, because these measures aren’t enough to move the needle on their own.

Germany and France hit out at EU-US deal (Financial Times, FT reporters) highlights the reaction to the newly-announced US-EU trade deal – the two countries voiced their frustration

and said it would damage the bloc’s economy – and How Trump humiliated Europe (Daily Telegraph, Szu Ping Chan and Hans van Leeuwen) shows that Trump managed to steamroller Europe by using the size of his economy. Fun fact: 15 years ago, the EU’s economy was slightly bigger than that of the US – now it’s about 25% smaller than the US! European stocks fall in backlash to US trade deal (The Times, Tom Saunders) reflects what investors thought of it – not much! The Euro weakened, as did European stocks. It looks like a win for the US, as it secured a lot of commitments from the EU to buy American stuff!

Then in Trump tells Starmer to cut taxes and curb immigration in order to beat Farage (Financial Times, George Parker) we see that Trump was giving leadership advice to Starmer, called London mayor Sadiq Khan a “nasty person” and criticised wind turbines in talks held in Scotland yesterday. There were no real announcements on trade.

Tax and turbulence push 50,000 British companies to the brink (The Times, Emma Powell) cites a report from Begbies Traynor, the corporate restructuring specialist, which suggests that 50,000 British companies are on the verge of collapse thanks to the cumulative effect of higher taxes and global economic turmoil. Bars and restaurants were the worst hit sectors, followed by travel and tourism. * SO WHAT? * This is the latest bit of gloomy news for the UK’s economy – and I don’t think it’s going to get any better given that everyone’s worried about the upcoming autumn Budget. All 22 sectors in the survey reported an increase in “critical” financial distress over the last 12 months.

If businesses are finding things tough at the moment, they’re not alone! Rising cost of food pushes up shop price inflation (The Times, Guy Taylor) cites the latest data from the BRC and

NielsenIQ which shows that shop prices jumped again over the last month, with food price inflation being the main driver. Food price inflation was up again for the sixth month in a row to 4%, which is above the three-month average of 3.5%. Discounts for fashion and furniture had offered some relief but it wasn’t enough to take the edge of the broader rise in shop prices as retailers continued to pass on higher costs. * SO WHAT?  * I think that the chancellor needs to start dropping some big hints as to what’s going to happen in the autumn Budget or everyone is just going to fear the worst and just stop spending. At the moment, there’s not much to go on apart from rumoured wealth taxes, and even that’s on shaky ground because the data on the apparent millionaire exodus isn’t very reliable!

In China lays out its AI vision in foil to Donald Trump’s ‘America First’ plan (Financial Times, Eleanor Olcott and Ryan McMorrow) we see that China articulated its AI ambitions to a global audience at its World Artificial Intelligence Conference in Shanghai. Premier Li Qiang announced plans to launch a Shanghai-based organisation for AI co-operation in addition to two new UN dialogue mechanisms for regulating AI. Basically, China appears to be espousing a more collaborative approach to AI whereas the US is all about promoting itself ahead of everyone else, which aligns with Trump’s “America First” narrative. * SO WHAT? * I think that this is a really interesting contrast in approach but ultimately I’d be surprised if Western countries went along with what China is trying to achieve if for no other reason than not to offend Trump’s sensibilities. Given the way things are going in the US right now, it is debatable as to whether your data is safer in American or Chinese hands.

Then in Germany’s n8n eyes $1.5bn valuation as Europe’s AI start-ups draw investors (Financial Times, Ivan Levingston) we see the latest example of an AI start-up getting a big valuation as Germany’s n8n is in the middle of securing new funds at a valuation equivalent to over $1.5bn as it tries to tap into growing investor interest in European AI prospects. n8n

automates workflows using AI. * SO WHAT? * This is an impressive uplift because it attracted investment at its last funding round four months ago at a valuation of around €300m! While the US and China are way ahead in AI capability at the moment with their frontier models, Europe’s start-ups are forging ahead with AI apps and business-focused services. Other European start-ups making waves in the AI space include France’s Mistral AI and Swedish “vibe-coding” start-up Lovable. It is worth noting that a third of all VC funding in Europe has gone to AI companies so far this year…

Samsung to supply Tesla with AI chips in $16.5bn deal (Financial Times, Christian Davies and Song Jung-a) heralds some rare good news for Samsung at the moment – that it’s won a $16.5bn order to make Tesla’s next generation of custom AI chips over the course of an eight-year contract. This is the biggest deal Samsung’s chip business has ever had from a single customer. Given how Samsung is getting spanked at the moment by arch rival SK Hynix, this news will be very welcome but Tesla’s $16.5bn contract won’t be enough to drive a revival at Samsung (Financial Times, Lex) says that it’s not going to be enough to drive the deep-seated revival that Samsung needs. It has to push for more!

In a quick scoot around some of today’s other interesting stories, Baker Hughes nears $13.6bn deal to buy Chart Industries over the head of rival suitor (Financial Times, Oliver Barnes and James Fontanella-Khan) highlights what would be an impressive deal if the all-cash deal went ahead to buy Chart Industries, that had been in talks to merge with Flowserve. The proposed acquisition would give oilfield services company Baker Hughes improved capabilities in LNG, nuclear energy and data centres in addition to boosting its rapidly-growing industrial and energy tech division. Chart specialises in handling gas and liquids at very low temperatures, mainly for industrial clients. Flowserve is one of Chart’s rivals and that merger would have been an all-paper deal. A final agreement has not been made yet, but you can see how cash is usually preferable in a deal! This also highlights further M&A activity, which seems to be picking up at the moment…

Elsewhere, Wise shareholders vote to move UK fintech’s main listing to US (The Times, James Hurley) shows that shareholders of the fintech voted to move the company’s primary listing from London to New York and extend its dual class share structure, going against Wise’s former chairman and co-founder who still has a 5.1% stake. The CEO and other co-founder controls 55% of the voting shares despite only having an 18% stake. This is because dual share structures like

this have “ordinary” shares for plebs like us and then there are “voters” shares which have outsized voting rights (so it’s not one-share equals one vote, it can be one share has the equivalent of ten votes, for instance). This is another blow to the LSE…

Then in Heineken open to moving production to US despite trade deal (The Times, Jessica Newman) we see that although the brewer’s profits beat forecasts, it’s looking at moving manufacturing to America to mitigate the hit it’ll get from the new US-EU trade deal. Heineken welcomed the certainty of the deal, but it’s still quite a lot!

Back home, A million sausage rolls a day: has Britain hit peak Greggs? (Financial Times, Mari Novik) considers whether the UK’s had its fill of Greggs! Earlier this month, we saw the company warning on full-year profits thanks to the early summer heatwave, but the bakery chain has already allocated a ton of cash to expansion plans. Some have suggested that Greggs should focus more on improving its “ageing estate” and streamlining its menu as opposed to rolling out new outlets. * SO WHAT? * I think that Greggs is trying too hard to be all things to all people and is losing its way a bit as a result. I think that improving existing outlets and cutting down its menu would be a good idea to stop its slide for now.

This is so simple and yet so clever! Who knew that rice art was an actual thing??