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Today’s agenda: US-UK trade deal; Trump offers to mediate India-Pakistan clash; BoE rate decision; a history of papal conclaves; Emma Jacobs on polygamous working
Good morning. This just in: Donald Trump is set to announce a new trade deal with the UK later today — we have more on this developing story below.
But first, we start with a look at Europe’s plans to boost its own defence ahead of next month’s Nato summit as the continent marks 80 years since the end of the second world war.
What’s happening: Defence has become the top priority across the EU. France and Germany yesterday agreed to set up a joint security council on top of co-operation on “tanks, combat aircraft and long-range missiles”, French President Emmanuel Macron said. Meanwhile, diplomats and officials told the Financial Times that EU capitals are urging the bloc to hold fire on any potential retaliation against Donald Trump’s tariffs until the Nato summit.
Why it’s happening: An unreliable US under Trump and the increased threat from Russia. European governments are worried about what the unpredictable US president will do at the Nato summit, and want to minimise the potential for clashes. A senior Pentagon official also recently said it was “key” for Europe to increase defence spending to 5 per cent of GDP, and told the UK military to focus more on Europe and less on Asia. Germany’s new Chancellor Friedrich Merz yesterday called on European nations to spend more to fill gaps in military capability and to ensure Ukraine receives continued support.
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VE Day: Four of the last surviving British veterans spoke to the FT, recalling what they were doing the day the war in Europe ended.
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Mittelstand: Small and medium-sized businesses driving Germany’s economy have jumped at the chance to tap into the country’s soaring arms expenditure.
Here’s what else we’re keeping tabs on today:
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UK interest rates: The Bank of England is expected to cut rates and signal further reductions today.
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Russia: Vladimir Putin meets his Chinese counterpart Xi Jinping ahead of Moscow’s Victory Day celebrations, as a ceasefire with Ukraine kicks in.
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Companies: Maria Ramos takes over as chair of Standard Chartered. Anheuser-Busch InBev, ConocoPhillips, Puma and Warner Bros Discovery issue results.
Five more top stories
1. Trump is planning to announce a new trade pact with the UK today, people familiar with the talks said, in what could make Britain the first in a series of countries to ease commercial tensions with Washington. The pact could help cushion the impact from the president’s “liberation day” tariffs. More on this developing story.
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‘He believes in tariffs’: Investors are underestimating Trump’s resolve to restore the steep import levies that shook markets, Pimco’s investment chief warned.
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US economy: Federal Reserve officials cautioned that Trump’s tariffs risked a fresh burst of inflation and higher unemployment, as they held rates.
2. Trump has offered to mediate in the conflict between India and Pakistan, as his administration scrambles to prevent it from spiralling into a nuclear stand-off. Pakistan has vowed retaliation for India’s missile strikes this week. The US president said: “I get along with both, I know both very well and I want to see them work it out.”
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Go deeper: India’s assault, in response to last month’s deadly attack on tourists in Kashmir, has sparked a groundswell of support in Pakistan for retaliation.
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Military briefing: The tit-for-tat strikes represent the most extensive exchange between the countries in decades. Here’s how their militaries compare.
3. Exclusive: The UK and the EU are deeply split over the terms of a youth mobility scheme that is a key part of a post-Brexit “reset” agreement, negotiating documents showed, with just two weeks to go until a crucial London summit kicks off formal negotiations. Here’s why they remain far apart on a deal.
4. An investor has accused Swatch Group of “only being run for one shareholder” in a veiled criticism of the Hayek family, which controls the struggling group behind Omega and Longines. Steven Wood’s comments to the FT come as he steps up his campaign to be elected to the board. Mercedes Ruehl has more from Zurich.
5. The Israeli embassy in London was the target of a suspected terror plot by Iranian nationals who were arrested by British counterterrorism police on Saturday, according to people familiar with the investigation. The suspects may have been just hours away from executing their plans when police intervened.
News in-depth
Black smoke billowed from a chimney over the Sistine Chapel last night, signalling that Catholic cardinals did not agree on a new pope on the first day of their secretive conclave. They will be cut off from the outside world until they choose a leader — a practice originating in the 13th century. But what appears a solemn rite is a carefully choreographed strategy long used to put a veneer of sacrality over grubby earthly politics.
We’re also reading . . .
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Cat videos or arms? From TikTok versus defence companies, to oil groups against reindeer herders, a competition for electricity has sparked unlikely conflicts across Europe.
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Japanese anime: The distinctive cartoons are attracting global audiences, Hollywood studios and private equity groups alike. Who will reap the rewards?
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Joseph Nye: The international relations expert, who served in the administrations of former US presidents Jimmy Carter and Bill Clinton and coined the term “soft power”, has died. He was 88.
Chart of the day
It will look pretty bad in the medium term, but the evidence of recent years suggests that both international trade and the US economy are entirely capable of dealing with big shocks without incurring long-lasting damage, writes Alan Beattie.
Take a break from the news
Today’s workplace anxiety is all about polygamous workers: someone who takes on more than one full-time job without disclosing it to their employer(s). While it may be disloyal, Emma Jacobs makes a case for cheating on the boss.
