EU policy could ice out closest trading partners

Key takeaways

Saudi Arabia is actively restructuring its flagship mega projects to improve efficiency and attract private investment as part of its Vision 2030 economic diversification plan.
The issuance of zero-interest convertible bonds has reached record heights globally, especially driven by the tech and AI sectors, highlighting investor enthusiasm for future growth opportunities.
EU protectionist policies aimed at boosting 'Made in Europe' products are impacting neighboring non-EU countries, raising questions about trade relations and potential EU membership debates.
UK’s government is attempting to balance economic recovery and social spending with business-friendly policies, but uncertainty persists regarding future fiscal measures and their impact on investment.

Summary

Saudi Arabia's Mega Projects Under Review

This section discusses the recent leadership change at one of Saudi Arabia's flagship mega projects, New Marava, aimed at modernizing Riyadh and diversifying the economy beyond oil. The project has faced delays and cost overruns, prompting the Public Investment Fund (PIF) to replace its CEO in an effort to accelerate progress. The broader context involves ongoing recalibrations within the PIF's portfolio as part of Saudi Vision 2030, which seeks to attract private sector involvement and generate substantial economic returns, making this a pivotal change in Saudi Arabia's ambitious transformation efforts.

Record Year for Convertible Bonds in the AI Sector

Convertible bonds with zero interest are on track to hit a record year globally, with companies issuing $72 billion since January. AI-linked companies are leading this trend, using these bonds to raise capital for infrastructure projects like data centers. These bonds offer investors the option to convert their debt into shares, providing a way to participate in rapidly growing sectors like AI without receiving interest, reflecting investor appetite for future growth and technological innovation.

EU’s Protectionist Trade Policies Impact Neighboring Countries

The podcast covers increasing protectionist measures by the European Union, which include targets to promote 'Made in Europe' products. These policies have begun to impact non-EU countries like Norway, Switzerland, Iceland, and Liechtenstein, which are economically integrated with the EU through the European Economic Area. Despite their contributions and shared interests, these nations are experiencing less favorable trade terms, prompting debates about potential EU membership and questioning whether the policies will lead to exemptions or further restrictions.

UK Political and Business Climate Amid Economic Uncertainty

UK Prime Minister Andy Burnham addressed the challenges faced by UK businesses amidst fears of increased taxation to fund defense and social costs. While Burnham emphasized efforts to ease pressures and boost investment, uncertainty remains about future fiscal policies, including potential rises in business taxes. This underscores a broader concern about maintaining economic stability and private sector confidence ahead of the upcoming autumn budget.

Show notes

Saudi Arabia’s sovereign wealth fund has replaced the chief executive at one of the country’s flagship real estate mega-projects, and global issuance of zero-interest convertible bonds is on track for a record year. Plus, the EU’s closest economic partners are worried about Brussels’ increasingly protectionist policies, and Britain’s Prime Minister Andy Burnham sought to calm corporate nerves in an interview with the FT.

Mentioned in this podcast:

Saudi Arabia shakes up flagship real estate project

Zero-interest convertible bonds set for record year

EU industrial push strains ties with Switzerland and Norway

Andy Burnham pledges to ‘take pressure off’ business ahead of October Budget

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The FT News Briefing is produced by Victoria Craig, Sonja Hutson, and Saffeya Ahmed. Our show is mixed by Sam Giovinco and Kelly Garry. Additional help from Gavin Kallmann, Michael Lello, Peter Barber and David da Silva. Our executive producer is Topher Forhecz. Flo Phillips is the FT’s global head of audio. The show’s theme music is by Metaphor Music.

Read a transcript of this episode on FT.com

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