And finally.... the Labour party has urged the UK government to step in to ensure a potential private equity takeover of supermarket chain Morrisons does not affect Britain’s food security, damage farming, or lead to job losses, my colleague Rob Davies reports.

Opposition MPs said ministers must be ready to prevent the Bradford-based company falling victim to the kind of asset-stripping often associated with private equity buyers, who typically look to make their targets more efficient, before selling at a profit.

They raised concerns about the effect a deal would have on jobs, as well as the future of its nationwide network of meat, poultry, and fruit and vegetable facilities, which play a significant role in getting food to UK tables.

Morrisons’ food processing operations include a fish supplier in the Camborne and Redruth constituency of George Eustice, who has responsibility for food security as the secretary of state at the Department for Environment, Food and Rural Affairs.

Luke Pollard, the shadow Defra minister, said:

“Morrisons isn’t just a big supermarket, it is also an important food producer.

“Government must ensure in the event of a takeover that jobs are protected, the business isn’t broken apart and that our nation’s food security is protected.”

Here’s the full story:

British factories enjoyed the strongest growth in output on record in June but warned they expected to raise their prices at the fastest pace in nearly 40 years in response to a shortage of key components and materials.

The Confederation of British Industry said its quarterly survey of manufacturing showed that the rebound across the sector was gaining momentum going into the autumn.

The business lobby group said that with Europe, the US, China and much of Asia lifting coronavirus restrictions, its monthly index of industrial output growth over the past three months had set a blistering pace – to reach the highest since the survey began in 1975.

Travel industry leaders have hit out at the government for “looking away during its darkest hour”, accusing ministers of inflicting additional damage on businesses left on the brink by the pandemic.

Organisations throughout tourism and aviation will join a “travel day of action” on Wednesday to call for the safe reopening of travel, highlighting the impact of Covid restrictions and appealing for more financial help.

Events are planned outside the parliaments in London and Edinburgh, and in cities and airports around the UK.

The chief executive of the travel association Abta, Mark Tanzer, said while other countries had singled out the sectors for help, UK firms’ hopes had been dashed at the beginning of the “most crucial summer season in living memory”.

Speaking at a virtual conference, Tanzer said the green list destinations, where travel was permitted under the “traffic light” system, accounted for less than 0.5% of UK outbound tourism.

He criticised the government for describing closed borders as an opportunity for domestic stays, saying:

“The language of ‘embracing an opportunity’ will be as a dagger to the heart of many travel agents and tour operators who are fighting for their very survival.”

The global wealth gap widened during the Covid pandemic, swelling the ranks of the world’s millionaires by 5.2 million as the rich cashed in on surging stock and house prices.

The figures, detailed in the annual Credit Suisse Global Wealth Report, capture how emergency interest rate cuts and government stimulus measures often benefited those least in need of state support, helping their assets grow in value despite the economic downturn.

Dollar millionaires now account for more than 1% of the global population for the first time in history. The figures show that 56.1 million individuals had assets worth more than $1m (£720m) in 2020.

Here’s the full story:

Russia-focused gold miner Nordgold has postponed plans to float on the London Stock Exchange.

Nikolai Zelenski, chief executive officer of Nordgold, said it wasn’t sensible to press on, given recent volatility in the resources sector caused by the prospect of earlier interest rate rises.

“Recent central bank comments indicating an acceleration in expected interest rate rises have created significant uncertainty and volatility in the resources sector, in particular impacting gold and gold equities. Nordgold has determined that it would therefore not be sensible to pursue an IPO at this particular juncture.

I would like to thank the many prospective shareholders for their interest and support over the last four weeks.

The company operates nine gold mines -- four in Russia, three in Burkina Faso and one each in Guinea and Kazakhstan

Nordgold announced on 10th June that it planned an initial public offering (IPO) of its shares on the London stock market, which reportedly could have targeted a value of $5bn.

But the gold price has fallen sharply since, from around $1,890 per ounce to $1,775 today.

The selloff was driven by last week’s Federal Reserve meeting, where officials predicted US rates might rise in 2023, a year earlier than previously. That sent the US dollar surging, and hit commodity and precious metal prices, with gold hitting a six-week low.

Bitcoin has fallen through the $30,000 mark for the first time since January, as the cryptocurrency selloff deepens.

A fresh wave of selling has driven Bitcoin down by 11% today to as low as $28,857 on Coindesk, wiping out all this year’s gains.

Bitcoin has now fallen by over 50% from its record high of nearly $65,000 in April:

Other crypto coins are also slumping, with ether currently down 14% over the last 24 hours at $1,703.

The selloff has been attributed to China’s crackdown on bitcoin, which intensified in the last few days.

On Friday, authorities in the southwest province of Sichuan ordered bitcoin mining projects to close, as part of policymaker’s attempts to curb cryptocurrency mining.

Global Times, the state-controlled tabloid, reported that the ban meant that more than 90 percent of China’s Bitcoin mining capacity is estimated to be shut down, at least for the short term, as regulators in other key mining hubs in China’s north and southwest regions have taken similar steps.

Global Times: China to shut down over 90% of its Bitcoin mining capacity after local bans

Yesterday, China’s central bank, the People’s Bank of China, also renewed its pressure on bitcoin.

It said it had ordered banks to intensify their efforts to block transactions to cryptocurrency exchanges, to prevent cryptocurrency speculation.

Reuters has the details:

China’s central bank said on Monday it had recently summoned some banks and payment firms, including China Construction Bank and Alipay, urging them to crack down harder on cryptocurrency trading.

The People’s Bank of China’s meeting came after China’s State Council, or cabinet, last month said it would tighten restrictions on bitcoin trading and mining. Beijing has sharply ratcheted up its campaign in the last few weeks.

The PBOC urged institutions at the meeting to launch thorough checks on clients’ accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels. It did not mention when the meeting was held.

“Speculative trading in virtual currencies roils economic and financial order, spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people’s wealth,” the PBOC said in a statement.

Reuters: China urges banks, Alipay to crack down harder on cryptocurrencies

Catherine Mann, the former global chief economist of Citibank, has been appointed to the Bank of England’s Monetary Policy Committee.

Mann, also formerly chief economist of the OECD, will join the MPC, which sets UK interest rates and its QE stimulus programme, on 1 September. She replaces Gertjan Vlieghe whose term is expiring at the end of August.

Mann has wide experience across international organisations and the private sector. She was global chief economist at Citibank from February 2018 until May 2021, and previously served as the OECD’s chief economist from 2014 to 2017.

Earlier in her career, she worked at the World Bank, the White House (as senior international economist on the President’s Council of Economic Advisors), and at the Federal Reserve’s Board of Governors.

The Chancellor of the Exchequer Rishi Sunak said:

“I would like to thank Gertjan Vlieghe for his crucial contribution to monetary policy making over the last 6 years.

I am very happy to announce the appointment of Dr. Catherine L. Mann - her breadth of experience across policy, research and the private sector will be immensely useful to the MPC.

Jonathan Haskel had been reappointed to the MPC, for another three years.

Mann’s appointment comes as the MPC, like other central banks, weighs up the inflationary pressures as the economy reopens, and the economic damage caused by the pandemic.

Mann’s LinkedIn page says her research and policy focus is:

(1) Relationships between financial markets and real economies with international emphasis, particularly climate issues. (2) Structural policies and outcomes, particularly inequality and productivity. 3) US trade deficit, international capital flows and the dollar;, particularly evolving supply chains; (4) Globalization of information technology and business services. Methodological and analytical approach: Investigate macro outcomes using micro data (sectoral, regional, income deciles, firm and individual data, big data).

Back in March 2016 [before the June Brexit referendum], as the OECD’s chief economist, Mann warned that a vote to leave the EU would be bad for the UK, Europe and the global economy, and wasn’t convinced that the long-term benefits of leaving would outweigh short-term costs.

Back in the UK, factories have reported their fastest growth since at least the 1970s.

Manufacturing activity improved considerably as the UK economy has reopened, with output volumes in the three months to June growing at the fastest pace on record.

That’s according to the CBI’s latest healthcheck on manufacturing.

The balance of firms reporting higher output volumes surged to +37 this month, with around 52% seeing an increase and just 16% a decrease. That shows the fastest growth since the survey began in July 1975, and is up from +18 in May.

The recovery looks broad-based, with output increasing in 15 out of 17 subsectors, driven by ‘motor vehicles & transport equipment’, and ‘food, drink & tobacco’.

Encouragingly, manufacturers expect output to continue to grow at a decent pace in next quarter (with a balance of +33 predicting higher output volumes).

Companies reported that total order books in June were at their strongest since 1988.

However, 27% of firms reported that export order books were below normal, while only 19% were above normal. That gives a balance of -8, which is the best reading since April 2019.

But the survey also shows that supply chain disruption is causing problems.

More firms warned that their stocks of finished goods are below “adequate” levels, with stock adequacy deteriorating to its weakest on record (since 1977).

Having been hit by rising raw material prices, and other costs, firms also expect to hike their own prices in the next few months.

Around 48% of firms surveyed expected to raise output prices over the next quarter, while just 2% predicted a cut. That gives a balance of +46, the strongest expectations since January 1982.

Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said firms are also struggling to hire staff:

“It is hugely reassuring to see the manufacturing sector performing well after a particularly difficult start to the year. There is a real sense of optimism from many in the sector that there are good times ahead.

“However, the picture is not all rosy, with firms continuing to face difficulties arising from supply chain disruption and cost pressures. Staff shortages are also causing issues for many manufacturing businesses across the country. It will be critical for the government to continue to work with manufacturers to address these issues if the sector’s robust performance is to last over the long-term.”

The European Union has opened an antitrust probe into whether Google’s online advertising technology operations have violated EU competition rules.

The European Commission says the formal antitrust investigation will examine whether Google has hurt rival advertising technology firms, advertisers and online publishers by favouring its own online display advertising technology services, in what’s known as the “ad tech” supply chain.

It will “notably examine” whether Google is distorting competition by restricting third parties from accessing user data for advertising purposes on websites and apps, while reserving such data for its own use, the EC adds.

Brussels’ competition chief, executive vice-president Margrethe Vestager, says the EU is concerned that Google has made it harder for rivals in the online ad services sector to compete.

“Online advertising services are at the heart of how Google and publishers monetise their online services. Google collects data to be used for targeted advertising purposes, it sells advertising space and also acts as an online advertising intermediary. So Google is present at almost all levels of the supply chain for online display advertising. We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.

A level playing field is of the essence for everyone in the supply chain. Fair competition is important - both for advertisers to reach consumers on publishers’ sites and for publishers to sell their space to advertisers, to generate revenues and funding for content.

We will also be looking at Google’s policies on user tracking to make sure they are in line with fair competition.“

The Wall Street Journal has more details:

Some of the EU’s investigation will cover similar ground to a case filed last year against Google by a group of U.S. states led by Texas. Similar areas include Google’s allegedly favoring its own ad-buying tools in the advertising auctions it runs.

But the EU probe will also cover complaints that haven’t yet been the subject of formal inquiries anywhere, including Google’s alleged exclusion of competitors from brokering ad buys on Google-owned video site YouTube.

The EU investigation is also examining Google’s plans to block certain kinds of user-tracking technologies on its platforms, such as the Chrome browser and Android mobile operating system. Curtailing such tracking responds, at least in part, to pressure from privacy regulators and activists, but has led to antitrust complaints from competitors in the advertising-technology industry.

The EC says display advertising spending in the EU was estimated at €20bn in 2019, with many publishers relying on online display advertising to fund free online content for consumers.

The antitrust investigation will examine:

• The obligation to use Google’s services Display & Video 360 (‘DV360’) and/or Google Ads to purchase online display advertisements on YouTube.
• The obligation to use Google Ad Manager to serve online display advertisements on YouTube, and potential restrictions placed by Google on the way in which services competing with Google Ad Manager are able to serve online display advertisements on YouTube.
• The apparent favouring of Google’s ad exchange “AdX” by DV360 and/or Google Ads and the potential favouring of DV360 and/or Google Ads by AdX.
• The restrictions placed by Google on the ability of third parties, such as advertisers, publishers or competing online display advertising intermediaries, to access data about user identity or user behaviour which is available to Google’s own advertising intermediation services, including the Doubleclick ID.
• Google’s announced plans to prohibit the placement of third party ‘cookies’ on Chrome and replace them with the “Privacy Sandbox” set of tools, including the effects on online display advertising and online display advertising intermediation markets.
• Google’s announced plans to stop making the advertising identifier available to third parties on Android smart mobile devices when a user opts out of personalised advertising, and the effects on online display advertising and online display advertising intermediation markets.

In the City, the UK’s blue-chip stock index has risen around 0.3% this morning, lifted by property firms and oil producers.

The FTSE 100 has gained 25 points to 7087, with commercial property developers Land Securities (+4.8%) and British Land (+4.7%) leading the risers after JP Morgan raised its price targets and said the sector could be turning the corner.

Joshua Mahony, senior market analyst at IG, says:

Landlords are at the top of the pile in the UK this morning, with the likes of Land Securities, British Land, and Hammerson all gaining ground as we push towards a full economic reopening next month.

Despite doubts over international travel, there is a great deal of confidence over the ability to reopen the economy next month, with landlords finally able to breathe a sigh of relief as a result.

Royal Dutch Shell (+2.2%) and BP (+1.5%) are also higher, after Brent crude rose above $75 a barrel for the first time since April 2019 (although it’s dipped back since).

But the pound has lost some ground this morning, despite the improvement in the public finances.

Sterling has dropped by half a cent to $1.388 against the US dollar (which has been lifted in recent sessions by the possibility of earlier US interest rate rises). It’s also a little weaker against the euro at €1.167 (-0.15%).

The UK is beginning negotiations to join a free trade alliance with Asia-Pacific countries, a key part of its attempts to pivot trade away from Europe after Brexit.

Britain will hold virtual talks to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), strengthening trade links with the 11 countries in the group, which represent a market of 500 million people.

The existing members of the trade alliance are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The UK government has said a deal with the group would open new markets for Britain’s service industries, while lowering tariffs on exports of goods such as cars and whisky.

British exports to the 11 members of the CPTPP will increase by 65% to £37bn by 2030, according to government estimates. It said UK trade with CPTPP member countries grew by 8% annually between 2016 and 2019.

“This part of the world is where Britain’s greatest opportunities lie. We left the EU with the promise of deepening links with old allies and fast-growing consumer markets beyond Europe,” the trade minister, Liz Truss, said.

“It is a glittering post-Brexit prize that I want us to seize.”

Here’s the full story:

Life after Brexit hasn’t been very glittering for British food and drink manufacturers so far, though -- exports the EU tumbled in the first quarter of the year....

Most tax receipt categories rose in May compared with the same month a year ago, as the reopening of the economy helped to improve the public finances.

VAT receipts were up 23% year-on-year, from nearly £10bn to £12.2bn, as consumers returned to the shops as they reopened.

Fuel duty receipts more than doubled (from £1bn to £2.3bn) as more people hit the roads again - for work, or to see family and friends again.

Stamp duty receipts on land and property sales was almost 90% higher, although the stamp duty holiday extension means buyers in England, Wales and Northern Ireland avoided paying tax on at least some of their purchase.

But alcohol duty receipts were down 20% year-on-year (from £1.3bn to £1bn).

Income tax revenues were higher too, as this chart shows, reflecting the improvements in the jobs market.

The UK’s strong economic recovery is starting to feed through into lower government borrowing, says Thomas Pugh of Capital Economics.

He explains:

Total tax receipts of £56.9bn in May were slightly lower than April’s £58.1bn, but well above last May’s £49.3bn. The trend in tax receipts should continue to improve over the rest of the year as stronger GDP growth than anticipated by the OBR boosts the public coffers.

And current expenditure dropped sharply from £84.7bn in April to £75.6bn in May. That was mainly driven by a reduction in transfers to local governments. As a result, total public borrowing in May was £24.3bn, down from £29.1bn in April (revised down from £31.7bn).

That means the Chancellor may be spared having to implement his proposed tax hikes and spending cuts before the 2024 general election, Pugh adds, as a rapid economic growth would quickly improve the outlook for the public finances.

March’s budget outlined plans to lift Britain’s tax burden to its highest since the 1960s by the middle of the decade, partly due to freezing income tax thresholds and raising the corporation tax rate in 2023.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

UK government borrowing dropped last month, as the reopening of the economy helped to improve the public finances, with more firms reopening and people returning to work.

The Office for National Statistics reports that public sector net borrowing came in at £24.3bn in May (this is excluding public sector banks).

That’s £19.4bn less than a year ago, when the government had to borrow around £43.8bn as it ramped up spending to fight the pandemic, and the economy was in lockdown.

It indicates that the easing of lockdown restrictions, and the reopening of hospitality venues and non-essential shops this spring, is now feeding through to the public finances.

It’s also the second-highest borrowing figures for the month of May on record.

The ONS reports that tax receipts rose compared to a year ago, while government spending dipped:

• Provisional May 2021 estimates of central government receipts were £56.9 billion, £7.5 billion more than in May 2020, while central government bodies spent £81.8 billion, £10.9 billion less than in May 2020.
  

In the first two months of this financial year, the UK has borrowed £53.4bn. That’s the second borrowing for April-May on record (after last year), but still 41.4% less (or £37.7bn) than a year ago.

Encouragingly for the chancellor, this is below the official forecasts for borrowing this year from the Office for Budget Responsibility, as this chart shows:

Michal Stelmach, senior economist at KPMG UK, says:

The reduction in spending from its peak at the start of the Covid-19 pandemic meant that government borrowing was down by £38bn in the first two months compared to last year, amounting to over a half of the improvement forecast by the OBR for the whole year.

“It should come as no surprise that borrowing has fared better than expected this year considering the improved economic outlook. We expect the deficit to fall to £211bn this fiscal year, undershooting the OBR’s forecast by around £23bn.

“Spending should continue to recover in the coming months as the economy absorbs more furloughed workers during the reopening phase. The furlough scheme, which the OBR expected to cost nearly £50bn less this financial year, is likely to undershoot that forecast thanks to stronger demand for staff and some companies returning unused cash to the Exchequer.”

The national debt is at its highest level since the early 1960s.

Public sector net debt has now risen to £2,195.8 billion at the end of May 2021 or around 99.2% of GDP -- that’s the highest ratio since the 99.5% recorded in March 1962.

Reaction to follow...

European markets are set for a higher open, after rising yesterday.

The agenda

• 7am BST: Public Sector Net Borrowing for May
• 11am BST: CBI Industrial Trends survey for June
• 3pm BST: Eurozone consumer confidence flash survey for June
• 3pm BST: US existing home sales for May