FirstFT: Allies fear support for Ukraine will fade

Leading the news today, Ukraine’s allies fear military support for its battle against Russia is nearing a peak, with senior European officials increasingly concerned about the flow of aid next year as the US enters a divisive presidential campaign.

Washington has been Ukraine’s dominant source of weaponry and US officials say sufficient preapproved funds remain to sustain Kyiv for about five more months, covering a crucial counter-offensive planned for the coming weeks.

But European allies are increasingly uncertain about whether the US will come close to matching its existing $48bn package, adopted in 2022, particularly as it requires a vote in Congress this autumn against the backdrop of more partisan debate on the war.

“No one knows,” said a European official, one of 10 senior figures in countries allied with Ukraine who spoke to the Financial Times about the next phase of the war. “We can’t keep the same level of assistance forever,” the official added, arguing the current rate of support could be sustained for a year or possibly two but not more.

US president Joe Biden, who has cast the war in Ukraine as a strategic defeat for Russia, has given no indication he intends to reduce support. But he is preparing for a re-election campaign with Donald Trump, a critic of open-ended US backing for the war and his most likely Republican rival in the 2024 race.

Here’s what else I’m watching today:

• Bank of England: Governor Andrew Bailey appears before the Treasury select committee to answer questions on the impact of rising rates on the economy and the role of quantitative easing in double-digit inflation.

• Markets closed: Markets in France, Germany and Switzerland are closed for a public holiday.

• Earnings: BT Group, Burberry, easyJet, Investec and Premier Foods report.

Five more top stories

1. Rishi Sunak is failing to prepare the UK for the future with an effective industrial strategy, three former business secretaries from different parties told the Financial Times. Labour party and business leaders said the UK was falling far behind its competition in electric vehicles and battery production.

2. Credit Suisse bondholders have forced the Swiss banking regulator to divulge the decree that wiped out their investments. The decision is an early victory for investors who accuse Finma of acting unconstitutionally when it ordered Credit Suisse to cancel $17bn of AT1 bonds as part of its shotgun marriage to UBS.

3. German carmakers are lobbying to maintain tariff-free access to the UK. Under terms set out in the post-Brexit trading agreement, electric vehicles shipped between the UK and EU will need to have 45 per cent of their parts sourced from within the two regions or face 10 per cent tariffs. Here’s why electric cars are likely to fall foul of the new threshold.

4. Indian tycoon Gautam Adani is seeking to woo bankers five months after short seller Hindenburg attacked his conglomerate. Adani has invited financiers to a three-day tour next month of the airport his group is building outside Mumbai, India’s financial capital, as well as port and energy facilities in the state of Gujarat.

5. Advanced AI systems could destabilise democracy unless governments take quick action to “protect the public”, an AI pioneer has warned. Turing Award winner Yoshua Bengio said he saw a “danger to political systems, to democracy, to the very nature of truth”. Read more from his interview with the FT.

Big Read

A crisis of homelessness, drug abuse and crime threaten San Francisco’s future, with a growing sense that the city’s progressive political class has failed its citizens. As its reputation for severe urban decay gets steadily worse, many are asking: What if the “City by the Bay” never pulls out of its “doom loop”?

We’re also reading . . . 

Graphic of the day

Global temperatures are likely to exceed 1.5C above pre-industrial levels for the first time in human history within the next five years, according to the World Meteorological Organization, which said there was a 66 per cent chance it would happen “at least” one year by 2027.

Take a break from the news

Operation Mincemeat was a celebrated second-world-war ruse through which British intelligence officers planted fake papers on a corpse to send the Nazis scurrying to Sardinia and Greece while the Allies invaded Sicily. A joyous musical currently on in London’s West End brings vaudevillian flair to an irreverent telling of the story.

Additional contributions by Emily Goldberg