How Ireland became the weak spot in Europe’s defences

Exchanges on navigating macro uncertainty. Exchanges on the forces shaping global markets. For the sharpest analysis on finance, business, and the economy. Count on Exchanges, the Goldman Sachs podcast. Listen now. Good morning from the Financial Times. Today is Tuesday, November 25th, and this is your FT News Briefing. Traders are gearing up for tomorrow's autumn budget, and we'll give you an update on Europe's pharmaceutical sector.

Plus, European countries are grumpy with Ireland over its weak defenses. We'll see if that can change. I'm Mark Filippino, and here's the news you need to start your day.

A bunch of investors are betting that the UK budget will send the pound lower against the dollar. Chancellor Rachel Reeves is unveiling her budget tomorrow. Traders are worried that she'll raise taxes and that would hurt an already struggling economy. Now, an increase in taxes has long been expected. The pound is sliding on this, and it's close to its weakest level against the dollar since April.

Good news for Bayer and bad news for Novo Nordisk in the pharmaceutical sector this week. Bayer shares rose on reports of a successful trial for its stroke prevention medicine. Novo shares slid on news that one of its diabetes drugs had failed to... the progression of Alzheimer's. Here to explain is the FT's Anu Adeoye, who covers the sector. Thanks for joining us, Anu. Thanks for having me. All right, let's deal with the good news first. Tell us about Bayer's new anti-stroke medicine.

Who is it for? And how effective is it? So Bayer's drug called asyndexion is intended for people who have suffered something called a non-cardioembolic stroke. or people who have suffered a mini stroke because people who have suffered these types of strokes are at risk of a second type of stroke so patients who took a 50 milligram daily dose of this drug combined with a standard antiplatelet therapy

were significantly at a lower risk of a second stroke compared to those who were on a placebo. And investors were really excited about this. Its stock ended the day up 10%. How important is this for the German conglomerate? Yeah, it's a welcome respite for Bayer. You know, they've faced declining sales of some of their blockbuster drugs. And they've had this long running legal challenge in the US that they inherited from their largest acquisition ever. So in 2018.

They bought Monsato, which is now the US-based subsidiary. And there's this ongoing lawsuit about the herbicide called Roundup, which contains glyphosate. And there's people who have filed lawsuits. alleging that this can cause cancer. Of course, Bayer and regulators have rejected those allegations, but these difficulties for Bayer have cost them some trouble. They've announced the closure of a factory in Germany for the first time with other job cuts.

still underway. So these positive late stage results is good news for a company that has had turbulent times over the past year. Yeah. Okay, let's move on to Novo Nordisk's disappointing trial of one of its diabetes drugs. They were testing its effectiveness against Alzheimer's. Yes, so these results have been eagerly awaited by...

industry, by analysts, by investors, and also obviously by people who have been studying how to slow down Alzheimer's. There were two different trials with nearly 4,000 patients. the results show that patients who already have Alzheimer's did not show any significant improvement, even as it showed some improvement in biomarkers related to the disease. And so this was a disappointment. I should add that even before the results came out.

Novo had said these trials were, quote unquote, a lottery ticket, which suggested that the company did not have super high expectations for what the results could be. Yeah, and this really disappointed investors. Its share price ended the day down nearly 6%. Anu, can you put this into context for me? How has Novo's overall performance been this year? Yeah, so, you know, Novo...

obviously came onto the scene with Ozempic and Wigovi, which is the blockbuster weight loss and diabetes treatment drug. But the past year has not been really good for a company that once used to be the most valuable listed company. in europe their share price has lost about 60 percent of its value they lost a bruising bidding war with pfizer over the

obesity-focused biotech called Metzerra. And they've also kind of fallen behind in terms of the weight loss drug. Last week, Eli Lilly became the first $1 trillion company. And Novo is currently hovering at about...

just roughly $195 billion in terms of market cap. Now, yeah, we've talked a lot about Novo recently. Is there anything that you're watching out for when it comes to the company going forward? I guess the... main question of what we're watching out for is how will novo you know replenish their pipeline how will they convince investors that you know they have drugs that can

make the company compete with other companies who are buying the obesity space and thinking they could make some progress. So that's kind of the thing to watch out for with Novo Nordisk in the coming months. Anu Adeoye is the FT's Acting Global Pharmaceuticals correspondent. Thanks, Anu. Thanks for having me.

The U.S. stock rollercoaster continues, but yesterday was on the ascent. The Nasdaq composite jumped more than 2.5%, and the S&P 500 was up 1.5%. Investors seem to be moving past their fears about overvalued companies that are linked to artificial intelligence. Those concerns created a big sell-off last week. And yesterday's optimism came on the back of some good old-fashioned Fed speak.

Governor Christopher Waller became the latest member of the Federal Reserve to throw their weight behind a rate cut in December. Now, the S&P is still down almost 3% from its record high at the end of October. But... Deutsche Bank analysts said that the sell-off was overdue because the S&P typically pulls back 3% to 5% every couple of months.

There's a big hole in Europe's defense against Russia, and it's Ireland. A cluster of transatlantic data cables run off the coast of Ireland. They're critical for global communications and financial transactions. But the country's military neutrality leaves it unable to protect that infrastructure. Here to tell us more is the FT's Jude Weber in Ireland. Hi, Jude. Hi, Mark. So give us the rundown on these undersea cables. How vulnerable are they?

Well, they're quite vulnerable. I mean, first of all, there are a lot of them and they connect the US to the UK, to the EU. So, you know, they're very strategic. And Russian ships have been showing up in Irish waters. You know, these ships have been loitering over areas where there are cables and also where there are energy pipelines.

clear obviously what they've been doing, but they're drawing attention to the fact that Ireland is pretty undefended. And not only is the country's infrastructure undefended, it's, like I said, militarily neutral. What exactly does that mean, though, Jude? Ireland's neutrality, it's a bit complicated. It sometimes seems a bit contradictory, but it's an absolute article of faith for very many Irish people. So what that means is they don't take military sides in a conflict.

But for example, after the full-scale invasion of Ukraine, Ireland has supplied non-lethal equipment to help the Ukrainian forces. Ireland's a member of the EU, but it's not a member of NATO. Ireland doesn't have a very big navy. eight ships and not all of its ships can go to sea at any one time. Ireland has no radar, no sonar, no ability to receive classified intelligence. And that classified intelligence will be coming from...

friendly countries like the UK, on which it relies quite heavily to help defuse these kinds of threats. So have there been any moves to make Ireland less neutral? No. No, it's very, very, very delicate. And obviously this is a situation that...

that's very frustrating for the UK and for European partners. And it's especially frustrating because Ireland has lots and lots of money. So at a time when they're all under pressure to spend more on their defence, Ireland spends a very, very tiny amount on defence. the lowest in the EU. and leans heavily on the UK for support in its defence, for example, from the RAF to intercept any airborne threats. So we've been hearing quite a lot of frustration from friendly countries.

Okay, so just to recap, Ireland doesn't seem like it's going to change much about the situation. The UK and the EU are clearly frustrated and are worried about the future of those undersea cables that we were talking about. What's the path forward here? Well, I think Ireland is very aware that it's going to be in the spotlight. In the second half of next year, Ireland will hold the rotating EU presidency.

We saw what happened in the Danish presidency. There were those drone incursions. So obviously Ireland is aware that it's going to be in the spotlight. But I think the government probably thinks its hands are tied. The budget has been set for next year and that has lifted spending on defence, but...

by a very small amount in the grand scheme of things. And there's going to be no change to neutrality. It's an issue that they take seriously. They're coming out with a new maritime defence strategy, which will be published in the next few weeks or months. But this, you know, an actual policy change, I think, is quite unlikely. Jude Weber covers Ireland for the FT. Thanks, Jude. Thank you.

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