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Each day FT Leader writers on the Editorial Board meet to discuss the topics to be considered for Leader columns. Here are the issues that dominated this week:

We opened the week with a punchy editorial on the need for decisive reform of the EU if its response to the Ukraine war is to be as effective as its handling of Covid and the eurozone crisis a decade ago.

"Peace, democracy and freedom on the European continent are under attack. The EU is capable of rising to this challenge, but...far-reaching financial and institutional change will be necessary."

The Queen's Speech was stripped of a number of key pieces of legislative change deemed "boring" by government advisers. The shelved reforms on audit and technology regulation, and a delayed employment bill, “would genuinely improve the UK as a place for doing business - unlike ‘red meat’ issues designed to keep backbenchers onside”, our leader concluded.

And on China, we again urged Xi Jingping’s government to moderate its hardline Covid crackdowns. “Xi should recognise that the rigidity he and his officials have displayed in handling Omicron outbreaks is hurting his people and his economy.”

Inflation is a growing global problem.

In the US it is running at 8.3 per cent - more than economists expected and at a four-decade high. That highlights the stresses on households and the scale of the problem for the Biden administration: the US president this week said fighting inflation was his “top economic challenge”. In the UK, the economy contracted in March for the first time this year. 

The main question for investors is whether the US central bank can bring down inflation without causing a recession. John Williams, New York Federal Reserve president, this week said the challenge was “not insurmountable”.

But the FT’s Martin Wolf argues that the chances of the Fed avoiding a significant recession are slim.

In Europe, Amundi, the continent’s largest asset manager, is betting that the value of the euro will fall to parity with the US dollar this year, as the threat of a eurozone recession prevents the European Central Bank from lifting interest rates above zero. In the UK, one think-tank predicts the Bank of England will be forced to raise rates to 2.5 per cent and keep them there until the middle of the decade. 

Rapid inflation is driven by post-pandemic demand combined with supply bottlenecks. In Europe, restricted energy supplies following Russia’s invasion of Ukraine are also part of the problem. That is unlikely to change soon, as EU member states struggle to find consensus on how to punish Russia with sanctions.

Last week, the EU proposed a ban on Russian oil to strip the aggressor of one of its main sources of hard-currency income. The bloc needs to spend almost €200bn in the next five years to become energy independent from Russia and to meet ambitious targets in clean energy and lower consumption.

But landlocked Hungary, reliant on pipelines from Russia, is resisting sanctions - demanding an embargo be restricted to seaborne shipments. Other member states including the Czech Republic and Slovakia, are pushing for a longer timeframe. Italy’s Mario Draghi floated the idea of an oil and gas cartel to cap prices at a meeting with Biden at the White House this week.

You can check how your country compares on rising prices with the FT’s Global Inflation Tracker.

In the corporate world, short-term pressures mean profits - not purpose - are dominating the agenda.

At the FT Future of the Car summit this week, VW CEO Herbert Diess called on European leaders to pursue a negotiated settlement with Russia - comments that drew a sharp rebuke from Ukraine’s foreign minister. Like many businesses, VW has suspended local production and exports to Russia. Diess’s company continues to be hurt by supply chain disruption.

VW’s social and governance progress is mixed. It has worked hard to stay in favour with Beijing, for example.

The FT’s Brooke Masters points out that the CEO was saying out loud what many in German industry are thinking privately. Should Moscow cut off natural gas supplies in retaliation for Berlin’s support for Ukraine, Germany is predicted to lose 12 per cent of output.

In more profits-over-purpose news, Black Rock, the world’s largest money manager with nearly $10tn in assets, warned this week that it will vote against most shareholder resolutions on climate change this year, saying war in Ukraine means short-term investments in traditional fuel production are needed to boost energy supply.

This is a significant volte-face: chief executive Larry Fink threw down the gauntlet in January 2020, warning that “climate risk is investment risk”.

How long this trend will last is moot: Putin is preparing for “prolonged conflict”.

In France, meanwhile, “biblio-diversity” and art is perceived to be under threat with a push by the media group Vivendi to swallow Hachette, France’s biggest publisher, in a deal that would see the new group hold about 70 per cent of the market for schoolbooks and more than 50 per cent of paperbacks.

Antitrust regulators in Brussels will have the final say. But as the FT’s Leila Abboud points out, it is clear that competitors are alarmed, not least because Vivendi is owned by the politically conservative Vincent Bolloré. He has not hesitated to give his television channels a rightward tilt: his CNews launched the political career of far-right presidential candidate Éric Zemmour.

Another rightward tilt came from Elon Musk this week, who told the FT that he would overturn a lifetime Twitter ban on Donald Trump if he is successful in his bid to buy the social media platform.

The Tesla CEO and world’s richest person was talking about his planned $44bn deal, with comments that marked an escalation of his attacks on what he calls Twitter’s “strong left bias”, and attempts to weed out misinformation and hate speech. Until now, Musk has avoided taking political sides in the fight over Twitter’s moderation policies.

Musk persuaded Wall Street to back him with enough debt to win over Twitter’s board just weeks ago with his plan to take the social media platform private. He is relying on billionaire friends - including Oracle co-founder and Tesla board member Larry Ellison - to raise the cash portion of his offer and convince shareholders to make him king of the world’s “digital town square”.

Musk also discussed what lies beyond his ambition to make Tesla the world’s biggest automaker by 2030. Watch his video interview in full here.

Finally, optimism. The FT’s Martin Sandbu argues that cutting carbon emissions rapidly is feasible if politicians change incentives now, in the latest in his Free Lunch on Film video series, in which unorthodox economic ideas are put to the test.
CEO pay, bonuses and targets under fresh scrutiny

This article is brought to you by FT Specialist’s Agenda, a publication that focuses on corporate boards.
Retired four-star General Stan McChrystal has lived a life associated with the deadly risks of combat; he has seen how individuals and organisations fail to mitigate risk. At our next online event, How to master risk, McChrystal joins Andrew Hill, the FT’s senior business writer, to discuss how to build and strengthen your organisation's risk management and what it takes to master risk to your and your business’s advantage. Join the conversation on May 18. Learn more here.

The FT Global Boardroom returns on June 7-9 to debate the most effective strategies for policy-makers, CEOs and investors as the global recovery from the pandemic moves into a new phase. This virtual conference will look closely at the economic, diplomatic and humanitarian impact of the war in Ukraine; explore how business models are adjusting to inflation and the opportunities and challenges from technological innovation. Learn more and register here.
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