Good morning and welcome back to FirstFT. In today’s newsletter:
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UK Labour Party suffers serious blow in by-election
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US to tap AI to identify Chinese infrastructure targets
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Vegetarian diet linked to lower risk of five cancers
We begin in the UK, where Sir Keir Starmer’s government has suffered a serious blow after the Labour Party came third in the Gorton and Denton by-election, shedding votes to both the populist left and right in what had been a stronghold for nearly a century.
The winners and losers: The Green Party’s candidate Hannah Spencer won with 14,980 votes, against 10,578 for Reform UK and 9,364 for Labour, taking the seat with a majority of more than 4,000.
“Life has changed,” said Spencer in a victory speech in central Manchester. “Instead of working for a nice life, we’re working to line the pockets of billionaires. We are being bled dry. And I don’t think it’s extreme or radical to think working hard should get you a nice life.”
What this means: The result, after a three-way fight that was too close to call until polling day, leaves Starmer facing renewed turmoil in a party already worried about May local elections. A loss to the Greens had been a concern over fears the party could emerge as a viable alternative for progressive voters and pave the way for further defeats. Read the full story.
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Fiscal hole: A sharp drop in net migration threatens to undermine Rachel Reeves’ plans to showcase the UK as a haven of financial stability.
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More from the UK: Billionaire Igor Tulchinsky has struck a sponsorship deal worth about £5mn with the British Museum for a Bayeux Tapestry exhibition.
Here’s what else we’re keeping tabs on today and over the weekend:
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Ashtead: The FTSE 100 equipment rental company’s transfer of its primary listing to the US is set to take effect.
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Economic data: France, Spain and Germany release inflation data, with Germany also reporting January labour market statistics. Switzerland forecasts fourth-quarter GDP, while the UK publishes its latest consumer confidence survey and the US provides January inflation figures.
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UN Security Council: The rotating monthly presidency passes to the US from the UK on Sunday.
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Results: IAG, Melrose Industries, Pearson and Swiss Re announce earnings. On Saturday, Berkshire Hathaway publishes its annual report and letter to shareholders. See the Week Ahead for the full list.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. Exclusive: The Pentagon is seeking to make AI-powered cyber tools to identify infrastructure targets in China. US officials are in talks with companies about automating reconnaissance of Chinese power grids, utilities and sensitive networks as well as those of other adversaries, according to people with knowledge of the plans.
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Anthropic: The US has warned it will rip up its agreements with the start-up if it fails to reach a deal after the chatbot maker’s chief rejected a “final offer” to continue working with the military.
2. Exclusive: Amazon founder Jeff Bezos’s AI lab is raising tens of billions of dollars to acquire companies hit by the technology. Code-named Project Prometheus and valued at about $30bn excluding the new investment, the company is seeking to capitalise on disruption to the industrial sector.
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AI ambitions: Spiralling electricity demand threatens to hold the US back in its technological race with China, writes Gillian Tett.
3. Exclusive: Brookfield has hired Sir Nigel Wilson as the chair of Just Group, tapping an industry veteran to lead the life insurer. Read more on the former Legal & General chief’s appointment and the Canadian private capital giant’s push into the UK retirement market.
4. Paramount Skydance has triumphed in its months-long campaign to scupper Netflix’s deal to buy Warner Bros Discovery, after its $111bn bid for the Hollywood studio drove the streaming giant to walk away.
5. Vegetarians have a lower risk than meat-eaters of developing at least five cancers but have a higher incidence of a type of oesophageal tumour, according to the largest study on the potential impact of diet on the development of the disease. Here’s more on what the research uncovered.
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‘Wellness’ claims: Health influencers promise benefits from peptides, but most are untested in humans.
The Big Read
Investment by Beijing has transformed China’s universities despite lingering questions about research quality and intellectual freedom. The country’s growing academic clout is crystallising as many western institutions cut research spending.
We’re also reading and listening to . . .
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French politics: The far-right Rassemblement National stakes its claim to power in an impoverished city that has become a test of its ability to govern.
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Economic nationalism: Tariff wars may de-escalate but companies in the US and elsewhere are still expected to serve their country first, writes Patrick Foulis.
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Unhedged 🎧: The show unpacks the fallout from the US Supreme Court’s decision to overturn Donald Trump’s use of emergency powers to impose tariffs.
Map of the day
The US and Iran made “significant progress” in talks over Tehran’s nuclear programme and will meet again, Oman’s foreign minister said after negotiations in Geneva. The US has previously warned of the Islamic republic’s ability to strike American forces and partners in the region.
Take a break from the news . . .
A thousand-year-old castle in the Dolomites has been reborn as an indulgent retreat. Janine Gibson finds out why Castel Badia offers a ski weekend experience that is very different to your basic Alpine resort.
