Headache for carmakers as UK backtracks on green agenda

Today’s top stories

• The US Federal Reserve announces its interest rate decision today at 2pm ET/7pm London. Check back on FT.com for details and reaction.

• UK inflation fell unexpectedly in August from 6.8 per cent to 6.7 per cent, with the core measure — excluding food, alcohol and energy prices — dropping from 6.9 per cent to 6.2 per cent. The data put new pressure on the Bank of England to stop raising interest rates tomorrow: markets are now evenly split on the prospect of a 0.25 percentage point increase

• Uber warned that EU plans to designate gig workers as de facto employees would force the ride-hailing service to shut down in hundreds of cities.

For up-to-the-minute news updates, visit our live blog

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Good evening.

“Our business needs three things from the UK government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three.”

That was the instant reaction from the chair of Ford UK after news that prime minister Rishi Sunak might water down green measures, including postponing the ban on new petrol and diesel cars from 2030 to 2035 (although the overarching target to reach net zero carbon emissions by 2050 still stands). Ford is among those leading brands that have already pledged to go fully electric this decade and have made manufacturing decisions with that target in mind.

The initial reports of a backtrack on government policy, confirmed by the prime minister in a speech this afternoon, sparked a new bout of infighting in Sunak’s Tory party.

Chris Skidmore, the government’s former net zero tsar, and Alok Sharma, who was COP26 president, argued the moves would be electoral and ecological disaster, while former prime minister Boris Johnson said business needed certainty. Others, such as home secretary Suella Braverman, were pleased to see the “arbitrary”, “punitive” and “totally unrealistic” targets potentially ditched.

Chancellor Jeremy Hunt said last week that the UK would not be adopting US president Joe Biden’s “subsidy bowl” approach on the green transition, but when it comes to net zero, some commentators, including the FT’s Stephen Bush, argue Sunak is following his heart and that he would ideally not have put the target into law at all.

The prime minister has been emboldened by his party’s narrow win in the recent Uxbridge by-election, where voters’ antipathy to London mayor Sadiq Khan’s Ultra-Low Emission Zone is thought to have swung the result. (Coincidentally, Khan is outlining the positive impact from Ulez, the world’s largest clean-air zone, at the UN Climate Ambition Summit in New York today, held alongside the General Assembly.)

Concerns about the economic damage from climate change and the cost of dealing with it are not limited to the UK.

US Treasury Secretary Janet Yellen yesterday warned of “significant economic costs” while opposition Republicans are aiming to unpick president Joe Biden’s green agenda, touting for support among oil donors with a pledge to end the “far-left assault” on American fossil fuels. Financing the climate transition is also putting pressure on governments everywhere to boost spending, just as higher interest rates push up borrowing costs.

Across the Atlantic, the EU has watered down and delayed its own Green Deal, four years after the plan to decarbonise the economy by 2050 was supposed to be its “man on the Moon moment”. 

Pushback has come from industry, farmers and companies facing high inflation and increased energy costs while the current row with China over subsidies for electric cars has further muddied the agenda. Brussels, which also plans to ban new petrol car sales from 2035, has already surprised the industry by conceding that some carbon-neutral fuels — dubbed “e-fuels” — could be allowed for longer.

The bigger picture however is one of existential crisis.

UN secretary-general António Guterres told world leaders at the UN today that they were “decades behind” in moving away from fossil fuels. “We must make up time lost to foot-dragging, arm-twisting and the naked greed of entrenched interests raking in billions from fossil fuels,” he said, noting that the world was on track for a 2.8C temperature rise since pre-industrial times.

“Humanity has opened the gates to hell,” he warned. 

Need to know: UK and Europe economy

Financial Times calculations show inflation will drive the cost of the UK’s High-Speed Rail 2 project from £70bn to £91bn as the government considers major cuts. Dithering and indecision is the British infrastructure curse, says columnist Helen Thomas.

UK Labour leader Sir Keir Starmer told French president Emmanuel Macron he wanted to strengthen cross-Channel relations during talks that covered issues including trade and security. Starmer also told business leaders in Paris he wanted to rewrite Boris Johnson’s Brexit deal with the EU. Here’s our explainer on how feasible that might be.

A Big Read delves into the growing influence of the UK’s competition watchdog. The CMA has stronger powers since Brexit but some question its decision-making.

UK rental costs last month increased at the fastest annual rate since records began, while house price rises slowed to the lowest rate in a decade, according to official data.

European Central Bank board member Fabio Panetti said European defence spending would be more efficient if the EU could raise its own debt and provide common funding to support investment, echoing calls to make the bloc’s €800bn pandemic recovery fund a permanent facility.

A Ukrainian grain ship left Odesa, despite the Russian blockade, the first to dock in and set sail from the country since Moscow reneged on an international deal to let exports through. Kyiv made an attempt to convince Hungary, Poland and Slovakia to lift their import bans on its grain. Poland’s president Andrzej Duda however escalated the rhetoric, comparing Kyiv to a “drowning” person clinging to its rescuer.

Need to know: Global economy

The US launched the “Partnership for Atlantic Co-operation” to increase economic, environmental and scientific ties with dozens of countries and offer developing economies an alternative to China’s growing global economic clout.

The OECD said central banks needed to keep on tightening monetary policy until inflation was tamed. The club of rich nations also downgraded its forecasts for 2024 and warned that protectionist measures were hurting global trade.

Crude oil hit $95 a barrel but Saudi Arabia’s energy minister said its production cuts were not about “jacking up prices”.

The world economy’s debt pile hit a fresh high of $307tn in the first half of this year, while borrowing as a share of gross domestic product is rising again after nearly two years of declines.

Need to know: business

China’s Huawei has made a processor breakthrough in its latest smartphone, becoming one of the elite Big Tech companies able to design its own chips, reducing its reliance on foreign technology as it confronts US sanctions.

The EU is to crack down on “greenwashing” and terms such as “climate neutral” and “eco” used in consumer products unless companies can prove the claim is accurate.

US car workers threatened to expand their industrial action. Columnist Rana Foroohar says the stakes are high: the battle may determine not only the future of the clean energy transition but also the outcome of next year’s presidential election.

India is attracting global investment banks as business dries up in China.

The World of Work

Columnist Sarah O’Connor delves into why people don’t just leave bad jobs. A market built on insecure jobs and employment rights makes many people stay put for fear that whatever comes next might be worse, she argues.

Isabel Berwick speaks to BBC News veteran and viral internet “explainer” Ros Atkins on how better communication can help achieve your career goals in the new Working It podcast.

Some good news

Google DeepMind has used a new artificial intelligence tool called AlphaMissense to predict whether mutations in human genes are likely to be harmful, in one of the first examples of the technology helping to accelerate the diagnosis of diseases caused by genetic variants.