Biden authorises Ukraine to strike Russia with long-range US missiles

Today’s agenda: G20 summit begins; ECB report on bank capital requirements; tracking the German election; stealth sackings; and offshore oil is back

Good morning. We kick off the week with news that US President Joe Biden has authorised Ukraine to launch limited strikes into Russia using US-made long-range missiles, two people familiar with the decision said.

What caused the policy shift? Biden is shifting his stance in response to the deployment of thousands of North Korean troops to support Moscow’s war effort and after a barrage of Russian strikes on Ukrainian cities at the weekend.

The move comes after months of resisting pleas by Ukraine’s President Volodymyr Zelenskyy to lift restrictions on the use of western-made, long-range weapons inside Russia, and about two months before the end of Biden’s White House term in January.

Why it matters: “Even if limited to the Kursk region, ATACMS [Army Tactical Missile System] missiles put at risk high value Russian systems, assembly areas, logistics, command and control,” said Michael Kofman, senior fellow at the Carnegie Endowment for International Peace think-tank. “They may enable Ukraine to hold on to Kursk for longer and raise the costs to North Korea for its involvement in the war.”

Bill Taylor, former US ambassador to Ukraine, said Biden’s decision made “Ukraine stronger and increases the odds of a just end to the war” and “may also unlock British and French missiles. Possibly even German”. Read the full story.

And here’s what else we’re keeping tabs on today:

• G20 summit: Officials from the world’s richest nations gather today in Rio de Janeiro, with Donald Trump’s re-election threatening to disrupt international initiatives on climate change and taxation. UK Prime Minister Sir Keir Starmer will also urge G20 leaders to “double down” on support for Ukraine.

• UK-China ties: Starmer holds the first face-to-face talks by a British prime minister with China’s President Xi Jinping since 2018.

• UK weapons lawsuit: London’s High Court begins hearing a case against the previous UK government’s decision to continue arms sales to Israel.

• UK economic data: Rightmove releases its November house price index and S&P Global publishes its UK consumer sentiment index.

• Companies: Boohoo is due to announce the results of its retail offer of new ordinary shares. Big Yellow Group, Cerillion and Sirius Real Estate have results.

Five more top stories

1. Iran has kept the door open to negotiations with Donald Trump’s administration, but warned that any attempt to reimpose “maximum pressure” will fail to extract concessions from the Islamic republic. Read the Financial Times’ interview with deputy foreign minister Majid Takht-Ravanchi, who said the 2015 nuclear deal — from which Trump withdrew — “could still serve as a foundation”.

2. Exclusive: The European Central Bank is debating whether to publish sensitive research showing capital requirements for big EU lenders would rise by a double-digit percentage if they faced the same rules as large Wall Street rivals. Here’s what else we know about the ECB report, which some senior policymakers are pushing to publish to counter heavy lobbying to water down the rules.

3. The UK government could force pension funds to invest more in British assets if reforms fail to drive savings into domestic infrastructure and companies. Pensions minister Emma Reynolds told the FT: “We are an outlier in terms of our own pension schemes.” Read the full report.

4. European plastics manufacturers are closing plants amid a deep decline in production as EU companies struggle to compete with a global glut of cheap material. Plastic production in Europe declined 8.3 per cent in 2023, in sharp contrast with a 3.4 per cent increase globally as countries including China and the US scaled up production.

5. US business leaders are warning that Donald Trump’s plan to deport millions of undocumented workers could create mass labour shortages, closing restaurants, crippling farms and small businesses and raising prices. One immigration lawyer said: “People are worried about the price of food now? Wait until [food producers] can’t get workers.”

Sign up for our White House Watch newsletter for more updates from Washington as it braces itself for Trump’s second term.

The Big Read

Years after one of the worst spills in history in the Gulf of Mexico, oil companies are drilling even deeper into the seabed in search of discoveries. But while the industry heralds a new era in offshore drilling, the increase in activity — with almost $104bn expected to be invested this year — has raised concerns.

We’re also reading and listening to . . . 

• Investability gap: UK banks are bracing themselves for a competitive threat from Donald Trump’s deregulatory agenda that is set to bring many benefits for US banks, writes Patrick Jenkins.

• EU challenge: Leaders across the Atlantic know they must make Europe great again. But where is the money going to come from?

• Stealth sackings: Small-scale dismissals — over seemingly minor violations — are prompting questions about whether cost savings are being disguised.

• Economics Show 🎧: Soumaya Keynes asks Kimberly Clausing, a professor at UCLA and formerly Biden administration economist: would Trump’s tariffs really be that bad?

Chart of the day

The German federal election on February 23 will determine the fate of Europe’s largest economy. Voters will go to the polls seven months earlier than planned after the ruling coalition collapsed this month. Follow the FT’s live poll tracker here.

Take a break from the news

The Who’s 1966 track that cemented the band’s pivotal role in rock’s development — ‘Substitute’ — is a witty snapshot of an insecure British youth negotiating the decade’s radical social change. The song typified the harder, louder ‘rock’ genre, and was later covered in multiple styles.