Every central bank facing a weakening currency faces a tough dilemma: raising interest rates (or otherwise tightening monetary policy) may support the currency, but it will damage economic growth. For Russia, that tension is all the more acute when it is funding a war on its neighbour.

The Russian rouble has weakened further against the US dollar over the course of Monday: Refinitiv data shows one dollar bought 102.37 roubles – after rising above the 100 mark for the first time in 16 months this morning.

It is almost half as valuable agains the dollar as it was just over a year ago, in June 2022. At that point soaring prices for oil and gas – prompted by the invasion of Ukraine – had the perverse effect of raising Russia’s energy export earnings dramatically. That effect has since diminished, however, as customers in Europe in particular have raced to secure alternatives.

Putting your head above the parapet is a rare act in the Kremlin under President Vladimir Putin, but the tension over the currency resulted in an unusual public disagreement.

Russia’s central bank said on Monday that the decline in the value of the rouble did not threaten the country’s financial stability, and blamed rising imports (which essentially require buyers to sell local currency) for the weakening currency. In a statement reported by Interfax news agency, it said:

As well as a significant reduction in the value of exports, there is increased demand for imports related to active growth in domestic demand, partly against the backdrop of high lending rates while government demand remains elevated.

Further monetary tightening is needed to stabilize inflation at 4%. The Bank of Russia holds open the possibility of key rate increase at its next meetings.

The rise in government spending to fund the war has led to steep deficits, which tend to prompt currencies selloffs as well.

Yet Putin’s economic adviser, Maxim Oreshkin, said the main reason for the weak rouble was the central bank’s “soft monetary policy”, in an article for Tass, another news agency.

In other business and economics news today:

• The Bank of England suffered a glitch that prevented two key payment systems from opening for several hours. The unspecified “technical issues” were resolved around midday.

• UK employers said they plan to raise pay by 5% in the coming year, amid continued competition for workers even as the economy is expected to stutter.

• Bidders interested in buying the collapsed budget retailer Wilko have two days to submit their offers as the future of its more than 12,000 employees remains in doubt.

• Italy’s prime minister, Giorgia Meloni, has doubled down on a shock decision to introduce a 40% windfall tax on banks, saying she would “do it again” despite having sent lenders’ shares plunging last week.

• Fears over China’s economy mounted on Monday as a trust linked to one of the country’s biggest wealth managers failed to meet some payments and a property company suspended trading in its bonds.

You can continue to follow our live coverage around the world:

In the UK, the government has no timetable for returning asylum seekers to the Bibby Stockholm barge

In the US, former president Donald Trump is braced for fourth criminal indictment

In our coverage of the Russia-Ukraine war, strikes on Odesa leave three injured; the rouble falls to 16-month low against dollar

Thank you for reading, and please do join us tomorrow bright and early for more live coverage. JJ

Bidders interested in buying the collapsed budget retailer Wilko have two days to submit their offers as the future of its more than 12,000 employees remains in doubt.

The family-owned household and garden products retailer, which has about 400 outlets, called in administrators last Thursday after it failed to secure a rescue deal.

Administrators at PricewaterhouseCoopers are understood to have moved the deadline for bids forward by several days to the end of the working day on Wednesday, as first reported by Sky News, because Wilko risks running out of money while the sale process takes place.

Other large retailers and some financial groups are understood to be among the parties interested in buying some or all of the business, or the brand.

The Guardian understands that a range of suitors is interested in making an offer, but how much of the business, or its staff and stores, that any winning bidder would want to take on is unclear.

You can read more here:

Fears over China’s shadow banking industry mounted on Monday as a trust linked to one of the country’s biggest wealth managers failed to meet some payments. It comes days after warnings from US president Joe Biden who said that the country was “in trouble” with its economy making it a “ticking time-bomb”.

Zhongzhi, which holds around $140bn in assets, also has a stake in Zhongrong International Trust, which missed key payments last week, according to reports which cited stock market data.

In a move that suggests deeper concerns over contagion in its shadow banking sector, officials at China’s banking regulator have already set up a taskforce to gauge the scale of the potential problems involved, according to reports.

Zhongzhi, like other Chinese wealth managers, combines asset management, banking services and private investment. Trust companies such as Zhongrong International Trust are often major investors in property.

Bloomberg reported that property made up 11% of Zhongrong’s assets-under-management according to its latest annual report.

Its struggles come amid wider troubles in China’s property market and signals of an overall weakening in its economy. It fell into deflation in July.

Last week, Country Garden, the country’s largest property developer, warned that it expected to post a multibillion dollar loss for the first six months of the year. It came days after it missed dollar bond interest payments, stoking fears that it could default on its debts.

It has developments four times the size of China’s second-biggest property builder, Evergrande, which defaulted in 2021.

The Bank of England has said it suffered a technical issue this morning in the systems that allow commercial banks to hold accounts with the central bank, as well as the system for high-value payments such as house purchases.

The issues have been resolved and settlement of payments will resume shortly, the Bank said in a short statement on Monday afternoon.

The two affected systems were real-time gross settlement (RTGS) and Clearing House Automated Payment System (Chaps). They may not be household names, but they are vital: RTGS underpins the settlement of payments for the majority of payments in sterling made in the UK, while Chaps is the system used by companies to make big payments, and individuals for time-sensitive payments like house deposits.

It is easy to see, then, how errors in the system could cause a lot of headaches.

Here is the Bank of England’s statement in full (which probably masks a lot of scrambling behind the scenes):

This morning, we experienced a technical issue which prevented us from opening our real-time gross settlement (RTGS) service and CHAPS high value payments system. The issue has been resolved and settlement will resume shortly.

Italian prime minister Giorgia Meloni has said she takes “full responsibility” for the botched implementation of a tax on the country’s banks.

The government on Tuesday said it would introduce a tax on banks’ net interest income – the difference in the cost of borrowing short-term and the price charged for lending out longer term – but backtracked within 24 hours after bank share prices plunged. It put a cap on the proceeds from the tax.

Meloni, who leads a far-right government, spoke to Italian newspapers Corriere della Sera, la Repubblica and La Stampa to try to repair some of the damage to the government’s credibility. La Repubblica quoted her saying (via Reuters translation):

I would do it again. Because I believe that the right things must be done... This is a decision that I took.

It’s a sensitive issue and I take full responsibility for it.

Russia’s rouble has dropped to its lowest level on record barring the chaos following the full-scale invasion of Ukraine in early 2022.

It takes more than 100 roubles to buy one US dollar, a nearly 2% increase today, according to Refinitiv data.

At the start of 2014 a dollar bought less than 33 roubles, but Russia’s currency dropped sharply after Russia’s “little green men” covertly invaded the eastern parts of Ukraine and annexed Crimea. It surged much higher when Russian troops tried to take Kyiv in February 2022.

The western allies – chiefly the US, EU and UK – responded to the invasion by issuing sanctions, although these were undermined by continued dependence on Russian oil and gas.

That has meant Russia’s economy has not collapsed, but there is little doubt that it has been severely weakened. It has had to turn to other trading partners to import goods, in some cases making it harder to source good quality technology.

Viktor Szabo, portfolio manager at abdrn, an investment firm, said (via Reuters):

We are clearly seeing the weakening of the external balances that has been happening as a result of all the sanctions.

They are still exporting the hydrocarbons but they are not what they used to be and the war in Ukraine is eating up a lot of resources.

The Financial Times reported:

The drop has accelerated in recent weeks, raising economic pressure on Moscow after western sanctions limited capital inflows and European countries weaned themselves off Russia’s energy supplies, reducing the revenues it receives from oil sales.

The domestic economy has been boosted by government spending on defence and social commitments such as the “coffin payments” received by families of soldiers who have died on the battlefield in Ukraine. But this has also raised the budget deficit, pushing the currency lower.

Chinese stock markets are struggling on Monday as a big property company raised concerns over the health of the economy.

Hong Kong’s Hang Seng index is down by 2.1% after China’s biggest private property developer, Country Garden, said it would suspend trading in some bonds. Here is a sign of the turmoil in the company’s debt:

(Yields rise as prices fall, so this chart shows that investors are dumping the debt

Reuters reported:

Chinese property giant Country Garden’s debt problems deepened after its onshore bonds were suspended, sending its shares plunging 16% to a record low on Monday in a fresh blow to policymakers trying to shore up confidence in a stuttering economy.

Markets remain jittery as the trouble in China’s largest private property developer could have a chilling effect on homebuyers and financial institutions, further dampening the prospect of a near-term recovery in the sector and the broader economy.

Shares in Shanghai, China’s other big financial centre, have not responded as dramatically: they dropped 0.3% on Monday. But the property sector is struggling.

Good morning, and welcome to our live coverage of business, economics and financial markets.

UK employers are expecting to continue raising pay for staff as they battle to retain people, even as the economy is expected to stutter, according to a new survey.

Businesses expect to offer pay rises of up to 5% over the coming year, the highest level since 2012 and sustained from the last two quarters, according to the poll of 2,000 human resources executives by the Chartered Institute of Personnel and Development (CIPD), a professional body.

More employers also expect to try to retain staff who have said they want to leave with counteroffers – trying to beat offers from elsewhere with pay increases or other perks. 40% of UK employers have made a counteroffer in the past 12 months, the CIPD said. 38% of employers who made offers matched the salary of the new job offer and 40% offered even higher sums.

The findings suggest the UK labour market remains tight, with unemployment still near record lows at 4% in May, although it did increase more than expected from 3.8% in April.

The Bank of England has been raising interest rates steadily to try to reduce inflation, which has remained stubbornly high. That is expected to cause a slowdown in the UK economy which would likely lead to higher employment. However, there has been little sign of major changes yet.

Wage data on Tuesday is expected to show further increases, according to Reuters:

The BoE said on 3 August that pay growth had failed to slow, creating a risk of persistent high inflation and higher interest rates.

Growth in earnings excluding bonuses – which typically runs slightly higher than pay settlements – was an annual 7.3% in the three months to May. Data on Tuesday is forecast to show a further increase.

Employers make the most counteroffers in London (58% of London-based employers made one in the last 12 months). That makes it the “counteroffer capital” of the UK, the CIPD said.

Jon Boys, senior labour market economist for the CIPD, said:

The fact that counteroffers are so widespread suggests they do have a role in matching people and jobs. Employers need to approach them with caution though and have clear internal processes for when these situations arise. Counteroffers may help to retain key staff and avoid knowledge drains and the cost to hire new people, but this must be weighed up against other considerations. For instance, counteroffers could exacerbate pay gaps, cause equal pay challenges, or result in a drop in employee engagement. They may also only work for the short term.

While pay is often the most typical focus of a counteroffer, there are other things employers should consider in making roles more attractive, such as flexible working, additional paid holiday, opportunities for career development, or better pension contributions.