US government shuts down as lawmakers fail to break deadlock

Today’s agenda:

• Denmark calls on Nato to step up

• Millions of euros seized in VAT fraud probe

• Middle East sovereign wealth fund spending

Good morning and welcome back. The US government has shut down for the first time in nearly seven years, threatening hundreds of thousands of jobs and ushering in a new chapter of uncertainty for Donald Trump’s second term.

What happened: The shutdown, which began just after midnight Washington time, came after Republicans and Democrats failed to strike an agreement to fund the federal government into the new fiscal year. A Republican stop-gap measure to keep the government open until November 21 failed to win enough votes to pass the upper chamber of Congress. Shortly after the vote, the director of the Office of Management and Budget ordered government departments and agencies to “execute their plans for an orderly shutdown”.

What this means: The shutdown is expected to result in the furlough of around 750,000 workers at a cost of roughly $400mn a day, according to the Congressional Budget Office, which said the impact on business activity was “uncertain” and could hinge on whether staff are fired rather than furloughed. The CBO estimated the last shutdown cut output by $11bn, including $3bn that was never regained. Here’s more on the crisis in Washington.

• What to know about the shutdown: Lauren Fedor and Claire Jones explain what will happen when the US government stops running.

• ‘We’re not going to be bullied’: Democrats have stood their ground in a high-stakes showdown with Trump and Republican leaders over government funding.

• Trump allies: The US president has withdrawn his nominations of EJ Antoni and Brian Quintenz, who were picked to lead two US agencies.

• More US news: Trump said US cities should be used as military “training grounds” as he addressed an unprecedented gathering of admirals and generals.

Here’s what else we’re keeping tabs on today:

• Economic data: The Eurozone, France, Germany, Italy, UK and US report manufacturing PMI data. The EU releases its September Eurozone area inflation forecast.

• Italian Tech Week: Amazon founder Jeff Bezos will speak on a panel with John Elkann, chief executive of Exor and chair of Ferrari and Stellantis, at the event, which begins today and runs until Friday.

• BP: Albert Manifold takes over as chair, succeeding Helge Lund who steps down.

• Results: Acuity, ConAgra, James Halstead, RPM International and Topps Tiles report on earnings.

Five more top stories

1. Nato must step up its response to Russia’s hybrid war, which is “only the beginning” and is aimed at dividing Europe, Denmark’s prime minister has warned. She added that there was a need to discuss “more deeply” within the alliance how to respond to Moscow’s hostile acts. Read the full interview with Mette Frederiksen, who is hosting an informal meeting of EU leaders in Copenhagen today.

2. Millions of euros in cash were seized from a customs official’s office in Greece this summer as investigators stepped up a probe into VAT fraud linked to Chinese organised crime, the EU’s top prosecutor has disclosed. Laura Kövesi said the seized money came from criminal efforts to ship goods into Europe on a “massive” scale without paying required duties and taxes.

3. Europe will fall behind China in truck electrification if Brussels does not take urgent action to support the transition, industry leaders have warned. Manufacturers have struggled with slower uptake of electric lorries due to a lack of investment in charging infrastructure and power grids.

4. Exclusive: One of Britain’s best-known tech investors has warned of a “disconcerting” rise in artificial intelligence valuations, saying Nvidia’s planned $100bn investment in OpenAI brought uncomfortable echoes of the dotcom bubble. Here’s more from our interview with James Anderson.

5. Exclusive: JPMorgan Chase is gearing up to launch its own “DIY” investment service in the UK, moving into a market led by Hargreaves Lansdown, amid a push to get more British savers to invest. The service will allow investors to buy and sell shares, bonds, funds and other assets directly, and offer financial advice to wealthy customers.

The Big Read

China has been a critical market for Nvidia but the company is entangled in geopolitical tensions and is watching the rise of new rivals. How long can the artificial intelligence chipmaker stay ahead of the competition?

We’re also reading and listening to . . . 

• Ukraine: Kyiv is more than a victim — it is a model for western democracies and defence industries preparing for future wars, writes Canadian minister Chrystia Freeland.

• Black hole stars: A potentially new cosmic object raises the question of which came first: black holes, or stars and galaxies? Anjana Ahuja delves deeper into the mystery.

• Unhedged 🎧: The FT’s US finance editor and US deals correspondent talk about the $55bn Electronic Arts takeover, the largest leveraged buyout in Wall Street history.

Chart of the day

Sovereign wealth funds in the Middle East are set to outspend global peers for a fourth consecutive year with 40 per cent of all flows, despite lower oil prices and Saudi Arabia increasingly focusing on domestic investments. 

Take a break from the news . . . 

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