Failure to approve further US aid could ‘kneecap’ Kyiv

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Good evening.

It’s been a tough start to the week for Ukraine as doubts were raised about further aid from the US and Brussels as well as its possible EU membership, all during a critical period for Kyiv as Russia prepares a fresh offensive and world attention is diverted to events in the Middle East.

White House budget director Shalanda Young said funds for military aid would run out by the end of the year and that a failure by Congress to approve new support would “kneecap” Kyiv in its fight against the Russian invasion. “There is no magical pot of funding available to meet this moment. We are out of money — and nearly out of time,” she said. 

Meanwhile EU member states are embroiled in a huge budget bunfight, including top-up funds of €50bn for Ukraine, ahead of a summit in Brussels on December 14-15. The budget talks have become even more complicated by the far-right’s victory in Dutch elections and a landmark court ruling in Germany restricting government spending. To make matters worse, Hungarian Prime Minister Viktor Orbán is again vowing to veto the start of Ukraine’s EU membership talks.

The uncertainty comes as Ukraine braces for a winter offensive from Russia that could target its energy infrastructure. 

There is also concern from the US and its allies about the role of Turkey in supplying goods vital for Moscow’s war machine. A further blow to Kyiv’s trade and war efforts has come from a blockade by Polish truckers on the border, protesting against competition from Ukrainian drivers.

Meanwhile, Russia has been able to hold on to some of its liquefied natural gas revenues by reshipping through European ports to reach buyers in other parts of the world. The US however still aims to halve Russia’s oil and gas revenues by the end of this decade, with sanctions to be maintained “for years to come” so Russia could never again mount an attack on its neighbours.

The need for economic as well as military support for Kyiv was underlined by Young in her note to Congress. 

“If Ukraine’s economy collapses, they will not be able to keep fighting, full stop,” she wrote. “Putin understands this well, which is why Russia has made destroying Ukraine’s economy central to its strategy — which you can see in its attacks against Ukraine’s grain exports and energy infrastructure.”

Need to know: UK and Europe economy

British chancellor Jeremy Hunt said the UK was suffering from a “sprained ankle” rather than a broken leg as he talked up the country’s economic prospects at the launch of a report highlighting falling living standards and low productivity.

The uneven impact of the UK’s cost of living crisis was laid bare by official data showing households with mortgages were hit particularly hard and other figures showing how welfare restrictions had driven up child poverty.

German companies have slashed their investment plans, according to today’s closely watched Ifo survey. New data also showed German exports fell for the second consecutive month in October.

Poland’s central bank asked for support from the EU against the country’s incoming prime minister Donald Tusk, who it says is threatening the bank’s independence by calling for its chief’s removal.

The head of RWE, one of Germany’s biggest energy companies, said Europe was still exposed to supply disruptions and needed to boost its capacity to import gas to cope with unexpected outages on pipelines or import terminals.

Need to know: Global economy

Defaults by Chinese borrowers have hit a record high as the country’s economic problems deepen. A total of 8.54mn people, or 1 per cent of working-age adults, are officially blacklisted by authorities after missing payments on everything from home mortgages to business loans. FT reporters highlight the human cost of the country’s property crisis.

The heads of the IMF, World Bank and European Commission made the case in the FT for carbon pricing as a way of making polluters pay for what they emit and giving them an incentive to clean up their act.

Prime Minister Narendra Modi’s Bharatiya Janata party won a series of resounding victories in India’s state polls, strengthening its grip on national politics ahead of general elections next year.

Venezuelans voted to support their country’s claim to the long-disputed oil-and-mineral-rich region of Essequibo in neighbouring Guyana in a referendum on Sunday.

Argentine president-elect Javier Milei’s choice of Luis Caputo as his economy minister, known as the “Messi of finance”, has cheered investors amid the country’s worst economic crisis in decades.

Need to know: business

Toyota is considering new investments in the UK, including a new model at its Derbyshire car plant and the mass manufacturing of hydrogen fuel cells after the government pushed back the ban on the sale of petrol, diesel and hybrid cars until 2035.

Asset managers like BlackRock nowadays are talking more about maximising returns than about saving the world. Here’s our Big Read on the impact of the backlash against environmental, social and governance (ESG) factors in investment decisions.

The Vix volatility index, often referred to as “Wall Street’s fear gauge”, has fallen close to a four-year low over the past month, suggesting investors are confident that the Federal Reserve can tame inflation without sparking an economic downturn.

Aliko Dangote, Nigeria’s most successful businessman and the richest person in Africa, is about to bring online a $20bn oil refinery outside Lagos that could transform the continent’s biggest economy, even as he faces a struggle to secure crude supplies.

The World of Work

Employer loyalty is sometimes seen as such a force for good that it can be used to justify bad behaviour, writes management editor Anjli Raval.

Menopause is linked with productivity losses worth $1.8bn a year in the US, but could be easily rectified with the right support for older women in the workplace, says the Lex column (for Premium subscribers).

Alcohol may no longer be a key lubricant in office culture, but has become a crutch for many professional women. Health aside, going sober can be a liberating experience, writes columnist Emma Jacobs.

Alcohol may also play a role in fomenting workplace relationships, especially in party season. But are office romances a smart investment?

Some good news

Despite slow progress at the global climate summit, a report today offers a glimmer of hope: some 40 per cent of global power generation now stems from renewable sources.