Weekend Summary

We start with some lightly encouraging news from the British Retail Consortium, whose price survey has shown that shop price inflation has fallen to its slowest pace in ten months. The August number came in at 6.9%, which is a 1.5% fall from July’s number. They added to the number that the falls would have been even more significant had the government had not increased alcohol duties earlier this month. Of course, this does not mean that prices are falling, just that they are going up less quickly than previously and if you break down the number, fresh food inflation is still in double digits at 11.6% whereas non-food items have stayed pretty constant at 4.7%.

Staying in the UK (which is pretty much the only option for the next few days, whilst the National Air Traffic System gets back in order after yesterday’s chaos) Michael Gove is to announce plans to scrap environmental protections around waterways in order to boost house building. Currently, new housing developments have to abide by ‘nutrient neutrality’ rules which were implemented in 2017, whilst we were still EU members, which stopped any building if the building works, or the finished development would have disrupted phosphate and nitrate levels in local waterways. Developers claim as many as 120,000 new homes haven’t been able to be built because of this rule and that the UK is on course to build the lowest amount of new housing since the Second World War, so this is welcome news form their point of view. On the other side of the table, environmentalists argue that this is a terrible rollback and that with the already sorry state of the UK water network, this is going to add fuel to a very large fire and cause irreversible damage. The government is hoping it can appease this by offering about £400m in grants to farmers and water companies to improve slurry infrastructure, whilst giving another £300m to developers to help mitigate the impacts of new developments – I’m not entirely sure why water companies should be getting any more tax payer money at this point!

In Europe: There’s dispute among member states over the amount of continued funding being budgeted to support Ukraine. Brussels is requesting €86bn in additional monies to support Ukraine, but is bundling this extra cash request together with further top-up demands to cover rising interest costs and staff salaries, which is complicating issues somewhat, as most member states agree that Ukraine funding is reasonable, but other elements of the package are not. Europe get back to the negotiating table on this today, following their summer break, and a quick resolution would be very welcome from Kyiv, not least for the money but also to help them keep the US on side, as they will face a similar issue across the Pond when Washington starts to debate their next round of financial support for the country. The FT has the story here.

Europe want full EU membership for Ukraine by 2030, according to Charles Michel, president of the European Council. The integration would also include other countries in the Western Balkans, but would be far from simple: It would take a massive overhaul in all EU departments and involve redrawing policies, priorities and budgets – the latter would likely be the most difficult, as Ukraine would be by far the poorest member of the EU with the 4^th largest population, meaning a potentially significant increase in economic contributions from other member states, without much in the way of immediate financial upside. The first round of debates on this subject within the EU is scheduled for October. The last time this happened was in 2004 with the central and Eastern expansion, and it was a painful process, but they did eventually get it over the line. The Times has more here.