Storm clouds gather across Europe

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Today’s top stories

  • Florida governor Ron DeSantis dropped out of the race for the White House and endorsed Donald Trump, moving the former US president closer to a Republican coronation. The Swamp Notes newsletter (for Premium subscribers) discusses Trump’s options for his No. 2.

  • The US aviation regulator recommended that airlines check an older version of Boeing’s 737 jet that has the same kind of door plug as that which blew out on an Alaska Airlines aircraft earlier this month.

  • The world’s most successful hedge funds made their biggest profits on record last year as punchy bets on stock markets paid off when share prices surged. The pattern looks set to continue with strong gains in tech stocks in January.

For up-to-the-minute news updates, visit our live blog


Good evening.

It may only be mid-January but the optimism associated with a new year already seems a distant memory as disappointing economic news and political discontent revs up on both sides of the Channel.

In the UK, a new report from the Centre for Cities says urban economies in all parts of the country have stagnated since 2010, highlighting the failure of successive Conservative governments to narrow regional divides or “level up”, their favoured parlance. “Everywhere has done poorly,” said Paul Swinney, the think-tank’s director of policy and research.

Today also brought another reminder of the cost of living crisis facing households. Clare Moriarty, head of the Citizens Advice charity, writes in the Financial Times that energy costs are driving people into debt and will still be a central issue for voters in a general election that is only months away.

At the macro level, the damage from Brexit continues to mount, as FT chief economics commentator Martin Wolf details in his latest column and as public FT policy editor Peter Foster lays out in his new book, which Wolf says, “shows how a classic populist alliance of fanatics and opportunists mixed simplistic analysis with heated rhetoric and outright lies to weaken the UK’s most important economic relationship and threaten its domestic stability”.  

Brexit was certain to go wrong because it was based on false premises, Wolf argues: “Countries cannot be fully sovereign in trade, since it involves at least one counterpart.”

Business indicators offer few scraps of comfort. A new survey today shows that the number of UK companies in “critical financial distress” has jumped for the second consecutive quarter as high inflation and interest rates lift costs and weaken consumer sentiment. The government meanwhile appears to be pinning its hopes on a package of pre-election tax cuts.

Brexit alone cannot of course be blamed for all Britain’s woes, as the current mood in Germany, the bloc’s biggest economy, well illustrates. New data this morning showing a sharp drop in exports to the US and China has added to signs that the country suffered a sharp downturn at the end of last year.

Column chart of German GDP (annual % change) showing the post-pandemic recovery of the German economy has stalled

Berlin is also experiencing a bout of political instability with its fractious coalition mired in a series of crises, prompting a growing number to flock to the far-right Alternative for Germany (AfD) party, whose popularity has risen as the country’s economic malaise has deepened, fuelled by the loss of cheap Russian gas and falling global demand for its cars, machines and chemicals.

The rise of the AfD (which as a side note, has hailed Brexit as a “model for Germany”, albeit in terms of sovereignty rather than economics) in turn has driven hundreds of thousands of people on to the streets in protest.

France, the EU’s second-largest economy, is also experiencing a bumpy start to the new year, with an early crisis for new prime minister Gabriel Attal. Farmers are blocking motorways and targeting government buildings in protests over rising costs and what they call suffocating national and EU red tape.

Need to know: UK and Europe economy

Widespread travel disruption continued in the UK and thousands were left without power in the aftermath of Storm Isha.

The FT editorial board said the UK’s reputation as a world leader in academia was under threat after FT analysis showed one-third of the country’s universities experienced a decline in applications from overseas non-EU students last year.

Gas pipeline companies fear a big hit to their businesses as the UK sets course for net zero, including recommendations to drop methane for home heating.

Poland’s new government has won a concession from the EU in its fight to limit cheap Ukrainian food exports, which have been blamed for a domestic grain glut. Poland and Hungary introduced unilateral import bans on Ukrainian produce in April 2023, following widespread protests from farmers.

Need to know: global economy

Ivory Coast, the world’s biggest cocoa producer, is preparing to sell the first US dollar bond issue by a sub-Saharan African state in almost two years. The move is seen as a test of whether countries at the riskier end of the developing world will be able to return to debt markets.

China is shifting its investments in Latin America towards strategic sectors such as critical minerals, technology and renewable energy. Brazil has won the lion’s share of investment in the past 20 years, followed by Peru, Mexico, Argentina and Chile.

Russia’s invasion of Ukraine exposed many vulnerabilities in US and European energy supplies, not least in the nuclear sector where more than a fifth of the enriched uranium fuel required to power both regions’ nuclear fleets comes from Russia. Our Big Read explains how the US plans to break Russia’s grip.

Guyana is hoping for big benefits from the sale of millions of carbon credits linked to forest conservation. The South American nation is at present under threat from Venezuela, which threatens to annex more than half of its territory.

Map showing that most of Guyana’s forest cover is in the disputed territory of Essequibo

Japan is having to rethink its business models as the world’s fastest-ageing society runs out of workers. Solutions include deploying avatars, robots and artificial intelligence to the workforce in key sectors such as construction, trucking, farming and retail.

Guayaquil, home to Ecuador’s largest port and an important hub for the export of bananas and shrimp — as well as illicit cocaine — is being ravaged by violence. Cartels fighting to control trafficking routes are in open rebellion against a government crackdown.

Need to know: business

US agricultural giant Archer Daniels Midland put its chief financial officer on leave and delayed its earnings announcement as it looked into accounting practices in its nutrition business.

Sony called off its merger with Zee Entertainment, ending its agreement with the Indian media group two years after striking a deal to create a $10bn entertainment powerhouse. The talks collapsed at the weekend over the Japanese group’s refusal to allow Zee’s chief executive to stay on after the merger.

Investors are looking for AI-powered gains as Big Tech’s reporting season gets under way. The “Magnificent Seven” (Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla) were the main drivers of US stock prices in 2023.

Logistics experts are warning of a “chaotic” period for Europe’s manufacturers and retailers as supply chains are disrupted by attacks on shipping in the Red Sea.

Map showing a typical journey by ship from Shanghai to European ports via the Cape of Good Hope takes up to two weeks longer than using the Suez Canal

Europe is relying too much on Chinese electric vehicle batteries, according to an executive of South Korean battery maker SK On. One projection shows the market share of Chinese battery companies rising from 30 per cent to 50 per cent by 2027. German car suppliers are struggling to adapt to the shift towards EVs.

The world of work

A big factor in UK labour shortages is a shift towards shorter working hours for men, according to official data. Typical working hours have been in decline for decades, but the fall caused by Covid-19 lockdowns has accelerated the trend.

The FT’s Jobs of the future series continues with a look at the sweeping changes on the horizon from technology, sustainability and shifting demographics.

If there is one thing most people seem to hate more than politics, it’s office politics, writes Miranda Green. Learn to play the game, she advises, or you’ll be its victim.

The Financial Times is asking readers to share their 2024 bonus expectations, and whether you intend to invest, save or spend the cash. Tell us via a confidential short survey.

Some good news

Global tobacco use has dropped from one in three adults in 2000 to one in five in 2022 despite rearguard action from the industry, according to a World Health Organization report.

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