Good morning. We have several exclusive stories today, including on an elite US Navy unit planning for a potential Chinese invasion of Taiwan and Spain blocking the Hungarian takeover of a Madrid-based train group over Ukraine-related concerns. More details below.
But first, we turn to Brussels, where EU officials are examining ways to roll over hundreds of billions of euros of Covid-era bonds in order to avoid the bloc’s common budget being overwhelmed by repayment costs.
Such a move, backed as an option by former Italian premier Mario Draghi, would extend as much as €350bn of unprecedented pandemic-era EU borrowing, according to people familiar with the issue. Discussions are at an early stage over how to design a solution that would overcome staunch opposition from capitals such as Berlin and significant legal constraints, as well as win over investors.
But officials in Brussels fear the repayment costs, if unaddressed, could hobble the EU’s spending power in coming years. Draghi warned in a report this week that the looming obligations — and the unwillingness of EU states to give Brussels revenue-raising powers or more money — left the EU facing a debilitating budget crunch. We have more on the option to roll over debt, presented by Draghi in his 400-page report this week.
Here’s what else I’m keeping tabs on today:
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ECB rate decision: Investors expect the European Central Bank to lower borrowing costs today and will be looking for hints of another cut in October.
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Oil prices: The International Energy Agency publishes its oil market report. Brent crude tumbled out of its year-long trading range on Tuesday as investors grew increasingly nervous about slowing demand.
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UK politics: Prime Minister Sir Keir Starmer responds to an official review finding the NHS in “critical condition”. His chancellor Rachel Reeves and Bank of England governor Andrew Bailey meet top bank bosses, who fear she is planning a tax raid on the sector in the Budget.
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Results: John Lewis and Adobe report.
Know of a European company that has made a clever shift in strategy or business model? Nominate them for the FT Reinvention Champions 2024 — make sure to submit your entries by tomorrow.
Five more top stories
1. Donald Trump’s campaign is reeling after his poor performance in the debate against Kamala Harris yesterday. Exasperated allies thought the former president was outplayed by the vice-president and appeared unprepared, with Republican strategists and donors calling the face-off a “missed opportunity”.
FT experts will dissect the debate and its impact on the White House race in an exclusive webinar today. Join us at 5pm BST.
2. Exclusive: Spain blocked a €619mn Hungarian takeover of Madrid-based trainmaker Talgo on the grounds that Viktor Orbán’s Russia-friendly government should not acquire technology that could be useful to Ukraine, according to people familiar with the matter. Read the full story.
3. Exclusive: The US Navy Seal unit that killed Osama bin Laden has been training for missions to help Taiwan if it is invaded by China, according to people familiar with the preparations. Seal Team 6, tasked with some of the military’s most sensitive and difficult missions, has been planning and training for more than a year.
4. Exclusive: 7-Eleven’s owner has tapped Nomura to advise on a potential takeover battle with Alimentation Couche-Tard, according to three people with knowledge of the situation. The Canadian parent of rival chain Circle K said it remained “highly focused” on the takeover, despite Seven & i’s rejection of its preliminary $39bn bid. More details here.
5. OpenAI is aiming to raise at least $5bn from investors including Apple, Nvidia, Microsoft and Thrive Capital. The San Francisco-based group is seeking more investment to fund its ambitious plans to develop AI models capable of outperforming human intelligence, in a deal that could nearly double the start-up’s valuation to $150bn.
The Big Read
Amid political and economic pressures, venture capital finance has dried up in China, prompting a dramatic fall in new company formation. Founders and investors harbour few hopes of a return to the glory years before the Covid-19 pandemic, when the likes of Alibaba and Tencent took advantage of rapid economic growth and the rise of mobile internet to become globally significant tech companies. One Chinese executive said: “The whole industry has just died before our eyes.”
We’re also reading . . .
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Gary Stevenson: For many fans, his self-proclaimed success as a trader is what makes him such a compelling critic of inequality. His former Citigroup colleagues have a different story.
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UniCredit: The Italian lender’s announcement that it had built a 9 per cent stake in rival Commerzbank has stoked takeover rumours and caught the German establishment by surprise.
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Tata’s UK plant: Both the government and the Indian group have hailed the recent £1.25bn deal, but the future of British steelmaking remains in question.
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US Steel deal: Nippon Steel’s doomed bid during the election season offers lessons on the limits of American friendship, writes Leo Lewis.
Chart of the day
The UK Treasury has refused to provide key details of the £22bn fiscal “black hole” that chancellor Rachel Reeves claims to have discovered, fuelling doubts about the government’s transparency. A freedom of information request by the Financial Times for an exact breakdown was declined, with officials insisting they need more time to ensure the figures are accurate.
Take a break from the news
The men’s grooming sector is booming. In recent years, dedicated brands including Harry Styles’ Pleasing, Dwayne Johnson’s Papatui and Jake Paul’s W have entered the market. Do men really need so many specialised grooming products? Teo van den Broeke investigates.
Additional contributions from Benjamin Wilhelm and Gordon Smith
Read the full article here