Good morning from The Financial Times.
Today is Thursday, March 13, and this is your FT News Briefing.
New data shows just how hard it is to cut U .S.
government spending.
And Europe's electric battery darling has gone belly up.
Plus we look at how China is trying to edge out American soft power in Africa.
I'm Sonya Hudson and here's the news you need to start your day.
U .S. federal spending increased by $40 billion in February year over year and it hit a new record.
That's according to Treasury data out yesterday.
This comes despite efforts from Elon Musk to cut spending.
His so -called Department of Government Efficiency, claims to have saved $100 billion dollars already.
But only a handful of departments reported any decreases in spending in February.
One of them was the Department of Education, which cut $6 billion dollars.
Now it is still early days in Doge's efforts.
A source told DFT that a lot of layoffs might not be reflected in last month's data.
Sweden's Northvolt has filed for bankruptcy.
It marks the end of Europe's best hope for competing with car batteries from Asia.
Northvolt was once considered Europe's best -funded startup, but it's now unable to secure enough financing to continue.
Here to explain what went wrong is the FT's Richard Milne.
Hi, Richard! Hi there.
So tell us about the hopes that were pinned on this company when it first launched back in 2016.
Yeah, so it was started by a couple of former Tesla executives who wanted to make sure that Europe in the technology that's absolutely crucial to the car industry had a player to go alongside all the Asian players from China, Japan, Korea, and Tesla.
They found a good site in Sweden with plenty of green energy.
They got in a lot of money, sort of $15 billion from governments and investors.
But then it started to go wrong and the wheels gradually and then very suddenly come off.
Yeah. How did the wheels come off?
What happened? I mean, it's a real mixture of things, I think they tried to do too much too fast.
They were trying to build at one stage as many as six factories, they had issues with Chinese equipment, there were complaints from workers that we spoke to that there was poor management, there were poor safety standards, and then, you know, on top of all this you've had a slowdown in the electric vehicle market and that led to a stage where investors sort of led by Volkswagen were wary of putting more money into this, you know, vision of making batteries in northern Sweden.
So where does NorthVoltz bankruptcy leave everyone who was involved in this project?
I mean, essentially, it's going to be liquidated.
It's got a number of assets that are interesting.
it's got its battery factory in northern Sweden that's produced more than a million cells.
It's got a very advanced R &D facility called Labs in central Sweden, so I think the expectation is that a lot of the people that they were talking to at the end, who almost certainly included truck maker Skañar and maybe some other parts of the Volkswagen group, could well be picking over the bones.
and then equity, shareholders, are essentially totally wiped out by this.
So there are billions of dollars that are disappearing from Goldman Sachs, Volkswagen pension funds, particularly in Sweden.
This is pretty dramatic, and this is probably causing more than a few investors to wonder about green investments elsewhere and how wise they are.
I think the bigger picture is that the Chinese in particular see this as an opportunity to take even more market share if they can.
Does Europe actually need to make its own batteries?
I mean, others seem to be doing it better and also more cheaply.
So I do think this is a really crucial technology for Europe.
I mean, the automotive industry employs 13 or 14 million people in Europe.
Europe, and so I think if Europe just gives up in this area, that is going to have knock -on effects across the automotive supply chain.
I spoke to Tom Johnson, the chair of NorthVault, who was pretty clear that Europe needs to pony up the cash on this.
Now my observation would be we've got war in Ukraine, there's a lot of worry about defence spending.
Can Europe have two thoughts in its mind at the same time, or will it just give in and take the easiest solution of China.
I mean, I think that's going to have enormous implications for the future of industry in Europe.
Richard Milne is the FT's Nordic and Baltic bureau chief.
Thanks, Richard. Yeah, thanks so much.
US inflation fell more than expected in February to 2 .8 percent.
In January, it was 3 percent.
The drop gives the Federal Reserve a little bit of breathing room when it comes to interest rates.
The central bank faces the very unenviable task of trying to bring down inflation by keeping rates higher, but not so high that they trigger a recession.
And the Fed has to do this while President Donald Trump rattles markets with his own economic agenda.
Futures markets are now pricing in at least two rate cuts this year, and feeling pretty confident about maybe a third.
For decades now, the U .S.
and China have been competing for influence in Africa and the road goes through Zambia almost literally.
The two superpowers have been investing in a pair of cross -continental railways that are meant to carry critical minerals across Central Africa.
But with the US now stepping back in overseas aid, can China capitalize on the void left behind?
I'm joined by the FT's Monica Mark to talk more about this.
Hey, Monica. Hi, Sunil.
So tell me about these railways that both the US and China have been investing in.
What's the history there?
So this is a pair of colonial era railways that are backed by the world's two biggest economies.
And they run from a part of Africa known as the South Central Copper Belt, which is really rich in copper, cobalt, and other minerals that are critical to the green transition.
So essentially, everyone needs these minerals.
The Lubeito Corridor cuts from the Republic of Congo across to the western coast of Africa through Angola, and it's backed by the US.
And then on the other direction, we have the Tezara Rail which was built in the 1970s by China, and that can ferry goods to the East Coast and from there can go to China and to the Middle East.
And what's happening with the two competing railways now?
You know, I mentioned earlier that the US has started to pull back a lot of its aid efforts in Africa.
So both of these rails need to be upgraded.
They're pretty old.
The libido one is over a century old.
The US had been backing it partly through its foreign assistance programs, which Donald Trump has now halted and his frozen development the 43 billion dollar budget of USAID has been torn to shreds.
So we don't know essentially what's gonna happen with Lobita for now because there's loans that need to be dispersed that are in question now.
And what experts believe now is that this is a precursor to how US foreign assistant might start looking going forward from here.
What about China? How is it adjusting its stance now after all of these decades of investing in Africa?
So China in 2013 launched the biggest, and most ambitious, and most expensive infrastructure building project that the world has ever seen with the Belt and Roads Initiative.
And this is a really grand plan to sort of spend trillions of dollars in expanding China's soft power but also just Chinese money, basically, in the form of loans.
What happened is there was a series of high -profile defaults under this program.
So China has realized that it needs to start doing business a bit differently under this Belt and Roads initiative, and what it's doing, it's a kind of leaner model where it actually does smaller loans.
And there's an official phrase in China now, small and beautiful.
And rather than big policy banks coming in, private companies are coming in and taking smaller stakes, or they are building and then operating the projects themselves.
So, then there's more incentive for them to make sure that this project is actually going to be completed and is going to be profitable.
Okay, so China has this new approach to funding infrastructure projects in Africa.
The US, on the other hand, is pulling back.
What does that mean for the competition between the two superpowers for influence on the continent?
That is a difficult question to ask, and I think that's what everyone's waiting to see.
How is this going to play out, which is why it is always going to be really interesting to watch, because it could end up being a sort of bellwether for what the Chinese approach to Africa might look like.
Would Trump is very difficult to say what's going to happen?
The US was doing a lot of its humanitarian work in Africa through USAID?
That's now gone. So definitely some soft power has been lost.
And now the question is about whether libito is going to continue.
I would imagine that there are a lot of African governments who are kind of going to be just watching and wondering, is this a reliable partner for us to be doing projects with, whether it's financial or otherwise across Africa?
Monica Mark is the FT's South Africa Bureau chief.
Thanks, Monica. Thank you.
Before we go, more of the mobile gaming industry is Pokemon Go -ing to Saudi Arabia.
A Saudi -owned developer is buying the Hit app, and a handful of others, for $3 .5 billion.
Pokemon Go was an overnight success when it came out in 2016.
Millions of people took to the streets to play this augmented reality game.
The deal is part of Saudi Arabia's plan to diversify its economy and become a global hub for gaming.
It now has stakes in a ton of major companies, including Nintendo and Activision Blizzard.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News briefing.
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