Middle East on high alert as Israel marks one year since Hamas attack

Today’s agenda: Trump’s costly pledges; anxious Europeans save more; Netanyahu’s ‘Washington game’; Starmer ‘wields the knife’; and HTSI interviews Kim Kardashian

Good morning. The Middle East is on high alert today as Israel marks a year since Hamas’s horrific attacks in which 1,200 people were killed and 251 taken hostage. Thousands of Israelis are expected to pay their respects at memorials and events, including in Tel Aviv’s Hostages Square, where families and supporters have campaigned for the release of those taken.

Meanwhile, fighting continued on multiple fronts at the weekend. Israel launched its heaviest 24-hour period of air strikes on Beirut yesterday and bombed Deir al-Balah in Gaza. Hizbollah hit the Israeli port city of Haifa early this morning, Israel’s military said.

International criticism: French President Emmanuel Macron has called for a suspension of weapons shipments to Israel and warned against further escalation in Lebanon. Israeli Prime Minister Benjamin Netanyahu labelled those backing an arms embargo a “disgrace”. Meanwhile, Irish President Michael D Higgins slammed what he called “outrageous” threats by the Israeli military for the withdrawal of Ireland’s UN peacekeepers in Lebanon.

Israel’s next moves: The country is likely to expand fighting in Lebanon and Gaza. Yesterday evening, Israel declared a third closed military zone on its border with Lebanon, banning civilians from entering Manara, Yiftah and Malkia. Israel has also called for the complete evacuation of almost all of northern Gaza, where 300,000 people are estimated to remain, echoing warnings it made there throughout the year before major offensives.

Our reporters will bring you the latest updates from the Middle East here. We have more analysis on the past year of escalating conflict below.

• One year on: Many Israelis have retreated inwards, feeling abandoned by a world “gone crazy” that seems to care little for the hostages still in Gaza.

• A hostage’s mother: With her youngest daughter Doron still held captive by Hamas, Simona Steinbrecher has a plea for the rest of the world: bring them home.

• The FT View: Twelve months of conflict have left Israel no more secure, its people still traumatised and the region around it in pain and in flames, writes the editorial board.

• Hope, and a plan: In a Financial Times op-ed, Israel’s former prime minister Ehud Olmert and former Palestinian foreign minister Nasser al-Kidwa lay out their peace proposal.

Scroll down for our Big Read on Netanyahu’s adept manipulation of US foreign policy in the 12 months since he launched Israel’s war on Hamas. And here’s what else I’m keeping tabs on today:

• Economic data: Germany has August manufacturing data, while Halifax publishes its latest UK house price index.

• Nobel Prize: The award in physiology or medicine will be announced in Sweden, marking the first of this year’s prizes.

• EU: Spain is set to propose mini-coalitions between member states in a bid to end a decade-long stalemate over harmonising the bloc’s capital and credit markets.

• Companies: Ferrexpo publishes its production report, while Shell has a quarterly update. The BBC and other public UK broadcasters are expected to announce a new streaming deal with Amazon.

Five more top stories

1. Donald Trump’s economic plans would raise US debt by twice as much as Kamala Harris’s if he were elected, according to an analysis from the Committee for a Responsible Federal Budget. If the former president wins the White House and follows through with pledges including tariffs, tax cuts and immigration curbs, the non-partisan group forecasts federal debt will swell by $7.5tn to 2035.

• US swing states: From a “blue wall” to the American desert, these are the places where the 2024 presidential race will be decided.

• ‘No more bailouts’: A populist idea that is good economics and good politics has been missing from the election season, writes Ruchir Sharma.

2. Exclusive: US investors have stepped up funding in European defence technology start-ups, accounting for the largest chunk of private capital flowing to the sector this year amid a rise in global conflicts. Read the full story.

3. Exclusive: US partners at EY have been told the firm will hold back some of their pay for 2024 after a tough financial year. The decision to defer 2 per cent of partners’ annual compensation was taken to help the firm manage cash flow, according to people familiar with internal communications. Here’s how the company’s rank and file have reacted.

4. European households are saving at higher rates than during the pre-pandemic era, according to data that highlights a clear divergence from more buoyant US consumers driving the global economic recovery. While Americans are now comfortable to “spend, spend, spend”, here’s why Europe’s consumers are more cautious.

5. The UK chancellor is expected to spare private equity bosses from the top tax rate in this month’s Budget, as she looks for a compromise deal to close tax “loopholes” that does not drive investors out of Britain. Rachel Reeves told the FT that she would not be “ideological” about taxing the wealthy, addeding: “We are approaching this in a responsible way.”

• Capital gains tax: The Institute for Fiscal Studies has urged “serious reform” of the regime to make it fairer and more growth-friendly.

• Hiring slows: A survey shows that UK businesses have put hiring on hold because of uncertainty over the government’s plans on tax, industrial strategy and workers’ rights.

The Big Read

Benjamin Netanyahu long ago established what military analysts call “escalation dominance” over whoever sits in the Oval Office. No US president has wanted to disentangle from the Middle East more than Joe Biden, yet no other president is more likely to be defined by the region. Here’s how Israel’s leader has been, as a former Israeli diplomat put it, “running rings around Biden”.

We’re also reading . . . 

• Private credit: A rapid expansion in finance is coming together in an excitable cocktail of risk and opportunity that needs urgent monitoring, writes Patrick Jenkins.

• US chips drive: Local semiconductor production has progressed since Biden’s flagship Chips and Science Act, writes Rana Foroohar. What’s next?

• Starmer’s shaky start: After a fractious party conference, the UK prime minister has finally decided to “wield the knife” and “get a grip” on his stumbling administration.

• Jane Street: Here’s how a quirky and opaque New York firm generated net trading revenues of more than $10bn for four consecutive years.

Chart of the day

Investors seeking returns from the buoyant American market are turning to European stocks that have significant US exposure but are trading at a discount to their transatlantic counterparts, equity investors say.

Take a break from the news

“She understands her position within culture in a way that so many other people in the public eye just don’t,” says British singer Charli XCX of Kim Kardashian. HTSI speaks to the reality queen-turned-retail mogul, whose $4bn apparel empire is moulding a new generation of shoppers.

Additional contributions from Benjamin Wilhelm.