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Germany's Merz proposes Ukraine as EU ‘associate member’ without voting rights
German Chancellor Friedrich Merz has proposed making Ukraine an "associate member" of the EU without voting rights, while Kyiv goes through the lengthy process of joining fully, a letter seen by AFP on Thursday said. The plan - first floated by Merz with EU counterparts last month - would see Ukraine's leader attend the bloc's summit but not be able to cast a vote. Kyiv would have a representative at the top table of the EU's executive, the European Commission, and non-voting members of the European parliament. Under the proposal, outlined by Merz in a letter to EU chiefs Ursula von der Leyen and Antonio Costa, the bloc's mutual assistance clause would apply to Ukraine, and it could benefit from parts of the EU's budget. "It is obvious that we will not be able to complete the accession process shortly, given the countless hurdles as well as the political complexities of ratification processes," Merz wrote. France 24, May 21

Justice Department charges former Cuban president in fatal downing of planes
The Justice Department announced charges on Wednesday against Raúl Castro, the 94-year-old former president of Cuba, accusing him of murder and a conspiracy to kill American citizens stemming from the fatal downing 30 years ago of two planes over waters off the coast of his country. The indictment, issued in Federal District Court in Miami, was an extraordinary escalation of the Trump administration’s multifaceted pressure campaign against Cuba’s Communist government at a moment when President Trump has been seeking to topple it. The charges brought to bear on Mr Castro, the brother of Fidel Castro, the vast powers of the US criminal justice system, saddling him with a possible maximum penalty of life in prison. They also raised the possibility that the United States could be paving the way for its military to remove him from the country through a means similar to how US Special Operations forces used an indictment against Nicolás Maduro, the former leader of Venezuela, to swoop into Caracas in a brazen operation in January and capture him. The indictment, which also accused five fighter pilots involved in the attack on the planes, was secretly returned last month by a federal grand jury and built on earlier charges, first filed in 2003, against one of them. New York Times, May 20

Elon Musk’s SpaceX sets out plans for biggest IPO in history
SpaceX has revealed plans for the largest initial public offering in history as the Elon Musk company that spans rockets, satellites and artificial intelligence kicks off a series of market debuts that could reshape Wall Street. The company filed its highly anticipated prospectus with US securities regulators on Wednesday evening, giving investors their first glimpse at its financials, Musk’s sway over the group and sweeping risk factors. SpaceX said that it would list on the Nasdaq under the ticker SPCX in an offering underwritten by Wall Street’s biggest banks. Goldman Sachs secured the coveted “lead-left” position heading the offering in a blow to its uptown rival Morgan Stanley. While the size of the offering and the proposed valuation were not disclosed, the FT has previously reported that the rocket maker has discussed raising about $75bn at a $1.75tn valuation. SpaceX’s filing fires the starting gun on what US bankers hope will be a blockbuster year, with OpenAI expected to file its IPO paperwork as soon as this week and Anthropic also planning to float its shares. Financial Times, May 21

UK agrees £3.7bn trade deal with six Gulf states
The UK has struck a trade deal with a group of six Gulf states which it says will be worth £3.7bn to the economy. The government said the deal with Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates would remove an estimated £580m a year in tariffs from British exports to the region once fully implemented. It also said it would make it easier for British firms to expand and partner in the Gulf, which will support jobs. Activist groups have criticised the lack of detail on human rights and labour protections in the deal. But the deal was welcomed by Chris Southworth, secretary general of the International Chamber of Commerce UK, as a "boost to business confidence". The Conservatives, who began the negotiations for the deal when in government, said it was "another major Brexit opportunity" which Labour risked "throwing away" because of what it saw as Labour's pro-EU stance. British products that will have tariffs removed include cheddar cheese, butter and chocolate. The trade deal between the UK and the Gulf Co-operation Council is the third struck by Prime Minister Sir Keir Starmer's government, after those with India and South Korea. It is also the first deal between a G7 country and the GCC. BBC news, May 20

Social care providers may face caps on ‘excessive’ profits
Private providers of social care may face caps on their profits following concerns that “profiteering” is driving councils into bankruptcy. Steve Reed, the local government secretary, will promise to bear down on “excessive or unjustified profits” and ask for examples of “unreasonable cost escalation or particularly egregious ­behaviour”. Reed will write to councils on Thursday to say that costs “continue to rise, particularly in services for vulnerable people, squeezing neighbourhood and preventative services”. A law passed last month includes powers to cap profits on providers of children’s care and foster homes, but it has not yet taken effect. Reed will say he “will not flinch from capping the profits of private providers placing vulnerable children in care”. The Times, May 21

UK business activity fell for first time in more than a year in May
UK business activity fell for the first time in more than a year in May, according to a closely watched survey, as domestic political uncertainty adds to the fallout from the Middle East war. The S&P Global Flash UK PMI composite output index, a measure of activity in the private manufacturing and services sector, fell to a 13-month low of 48.5 in May, down from 52.6 in April. The reading was lower than the 51.6 forecast by economists polled by Reuters and below the threshold of 50 that indicates a majority of businesses reporting expanding activity. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The UK economy is facing a perfect storm, as rising political uncertainty adds to the growing impact from the war in the Middle East.” He added: “Businesses are reporting falling output, surging inflation, supply shortages and job cuts in May.” Companies in the services sector signalled the sharpest decline in business activity since January 2021. Financial Times, May 21

Saudis willing to sell 25% of their Newcastle FC stake
Saudi Arabia’s Public Investment Fund is prepared to dilute its stake in Newcastle United by selling up to 25 per cent of its shareholding in the club. The PIF, which recently pulled the plug on its funding for LIV Golf, intends to remain the majority shareholder. However, the move is seen as key in an attempt to get equity into the Premier League club before the announcement this summer of a proposed £200million training ground at Woolsington, a village near Newcastle, and further talks on a possible new stadium that could cost more than £1billion. The club’s value, according to sources, is thought to have increased to about £1.5billion. A sale of a quarter of the PIF’s stake would give the buyer a shareholding of 21.25 per cent of Newcastle and could bring in more than £300million, a sum that would be put towards the two substantial projects. The PIF owns 85 per cent of Newcastle at present, a stake it purchased from the former owner Mike Ashley in a £305million takeover in September 2021. The Reuben brothers, through RB Sports & Media, own the other 15 per cent. It is thought that the PIF is prepared to dilute its present holding in the club to about 63.75 per cent after being told at a club meeting last month that equity was needed to progress the plans for a new ground and training facility. The Times, May 21

Xi welcomes Putin in Beijing, hails China’s ‘unyielding’ ties with Russia
Chinese President Xi Jinping on Wednesday welcomed Russian President Vladimir Putin in Beijing at the start of a visit focused on energy security. While Xi hailed his country's "unyielding" ties with Russia, Putin praised the "unprecedentedly high level" of bilateral cooperation despite "unfavourable external factors", without naming any third country. France 24, May 20

EU mulls Angela Merkel or Mario Draghi as possible Vladimir Putin whisperer
EU governments are discussing whether former European Central Bank president Mario Draghi or ex-chancellor of Germany Angela Merkel could represent the bloc in potential negotiations with Vladimir Putin, as momentum gathers to reopen formal channels with Russia. Foreign ministers will discuss the merits of possible candidates at an EU meeting in Cyprus next week after Washington and Kyiv expressed support for Europe to engage with Russia’s president over the war in Ukraine, said people briefed on the discussions. Donald Trump’s administration, currently distracted by its own war in the Middle East, has informed EU counterparts that it is not opposed to Europe talking to Putin in parallel to US-led peace talks, three of the people said. “They know it’s not working,” said one, referring to existing efforts to end the conflict. Brussels shut off formal communication channels with Moscow following Putin’s invasion of Ukraine in 2022, aside from sporadic outreach attempts by some EU leaders. Financial Times, May 20

UK loosens Russian oil sanctions as fuel prices rise
The UK government has loosened strict sanctions on Russian oil refined into diesel and jet fuel in third countries as prices rise. The waiver begins on Wednesday and reflects growing supply concerns over certain fuels due to the effective blockade of the key Strait of Hormuz waterway since the start of the US-Israel war with Iran. Some sanctions on the transport of Russian liquefied natural gas were also lifted. The government said that overall sanctions had got tougher but extra flexibilities were required. A similar move by the US was widely criticised. European jet fuel prices more than doubled after the war started but are now around half higher while UK pump prices continue to rise. According to motoring firm the RAC, the average price of unleaded petrol reached 158.52p a litre on Monday, the highest since the start of the war. Several airlines operating in the UK and around the world have cancelled flights and raised prices in response to sky-high jet fuel prices. BBC news, May 20

Deal on compensation fund blocks IRS claims against Trump and his family
The Justice Department has granted President Trump, his family and businesses immunity from ongoing inquiries into their taxes, a potentially lucrative arrangement that could shield the president from significant financial liability. The provision, quietly inserted on Tuesday as a supplement to a remarkable deal that also created a $1.8 billion compensation fund aimed at benefiting Mr. Trump’s allies, protects the president, his relatives and his businesses from pending audits and tax prosecutions. The one-page document, signed by the acting attorney general, Todd Blanche, said that the government would be “FOREVER BARRED and PRECLUDED from prosecuting or pursuing” pending tax claims against Mr. Trump, his family members and businesses. The provision invited immediate criticism as tax experts raised the possibility that it was illegal. That the addendum to the deal was posted, without fanfare, on the department’s website belied its bare-knuckled audacity. It revealed the determination of Mr Trump and his appointees to ram through maximalist measures with minimum outside scrutiny at a moment when they still have uncontested control of government. New York Times, May 19

UK inflation fell to 2.8% in April despite Middle East energy shock
UK inflation fell more than expected to 2.8 per cent in April, in what economists said would be a temporary reprieve from the energy shock triggered by the Middle East war. April’s reading was pushed down in part by a reduction in the government’s cap on household energy bills introduced last month, which reflected prices before the outbreak of the conflict. Wednesday’s figure from the Office for National Statistics was below both March’s 3.3 per cent reading and the 3 per cent forecast by analysts polled by Reuters. The resurgence in inflation is expected to resume in coming months as the closure of the Strait of Hormuz, a key waterway for global oil and gas supplies, keeps upward pressure on energy prices. The Bank of England is grappling with how aggressively to respond to the repercussions from the war, which as well as pushing up energy prices has also had a chilling effect on economic activity. Financial Times, May 20

Sick notes ‘scrapped’ under plans to reduce benefit claimants
GPs will no longer issue “sick notes” under a government trial that aims to reduce the number of benefits claimants who are signed off work because of poor health, The Times understands. The pilot programme is set to refer workers struggling with their health to “social prescribers” based in their doctors’ surgery, who will recommend patients take up alternatives such as exercise regimes and job coaching to help them stay in work. More than 11 million people were given a “fit note”, formerly called a sick note, last year, according to official statistics. Almost all of them declared the recipient “not fit for work”, meaning they received no further support on re-entering employment. A rise in “sick-note culture” over the past decade has been blamed for stifling Britain’s economic growth. They enable people to stay off work, claim sick pay and in some cases qualify for welfare payments. They are usually issued by a GP but some other health professionals, including nurses and pharmacists, are able to issue them. The Times, May 20