Welcome to the first issue of Newswrap, the new name for the redesigned Disrupted Times newsletter. We’d love to know what you think of the rebrand — fill out the survey at the bottom of this email or send your thoughts to newswrap@ft.com.

Today’s top news stories

• A general strike has shut down much of Israel amid growing anger at the government’s failure to secure the release of hostages held by Hamas after six captives were killed in Gaza at the weekend. The UK said it would halt exports of some arms to Israel.

• Volkswagen is considering shutting factories in Germany after a savings programme launched last year has fallen short of several billions of euros — a decision that would be a first for the 87-year-old company.

• Private equity executives warned that the UK’s overhaul of capital gains tax could spark an exodus of dealmakers from Britain.

Good evening.

The Alternative for Germany’s election victory in Thuringia, just a few months after the success of the far-right in France, has intensified concerns over the rise of populism in the EU’s two biggest economies.

Why this matters: The EU, which has just begun a new five-year leadership cycle, is most efficient when Germany and France act in concert. Brussels’ concern is that economic challenges are fuelling the rise of the radical left and right in the two countries and weakening their ability to act as the bloc’s twin drivers of progress.

The AfD’s success, the first time a far-right party has been triumphant in state elections in the country’s postwar history, has highlighted the deep divisions between east and west Germany, which persist 34 years after reunification.

This is despite what some west Germans see as generous treatment of their neighbours, which has included €1.6tn in transfers, massive investments in infrastructure and thousands of new jobs in high-tech industries such as semiconductor manufacturing, especially in and around Saxony’s capital, Dresden.

Employment and wage trends are quickly converging, but easterners still have much lower savings and investments. They also continue to flock west, storing up deeper demographic problems for the areas they leave behind.

German business groups had already warned that the AfD, which campaigned heavily on an anti-immigrant platform, risked economic “catastrophe” for eastern Germany, deterring the influx of workers that the region badly needs.

France meanwhile is still without a prime minister or permanent government following President Emmanuel Macron’s ill-fated gamble to call a snap general election to “clarify” the outcome of European parliament polls that produced a victory for the far right. 

The crunch will come later this month. A budget must be ready by mid-September and submitted to parliament on October 1. It is being prepared by the caretaker government, which is under pressure from the EU to reduce the public debt and so will require strong political support. 

The new team in Brussels meanwhile faces a looming row with member states over a radical overhaul of the bloc’s common budget starting in the autumn. Other challenges include continued support for Ukraine, business competitiveness, trade frictions and enlargement to the east. Discord among its two biggest players is something it could well do without.

Picture of the day

Economics

• US presidential contender Kamala Harris is under fire from Big Oil and Republicans who want her to clarify her energy and climate policy, as she tries to please her progressive base without alienating voters in shale areas such as Pennsylvania, a crucial swing state. Harris today is set to voice opposition to the Japanese takeover of US steel.

• Unlike private equity bosses, green investors are much more positive about the new UK government’s agenda, although concerns remain around the country’s sclerotic planning system, supply chain problems and skills shortages.

• Will AI really shift the dial on productivity? MIT economist Daron Acemoğlu airs his doubts in the new Economics Show podcast. Google’s James Manyika in an FT interview concurs that productivity gains are not guaranteed.

• Serbia’s Jadar Valley region, home to Europe’s largest deposit of lithium, is the focus of fierce protests by environmentalists. The government says the proposed new mine for the key component of batteries for electric vehicles could add up to €12bn to the country’s GDP, which totalled €64bn in 2022.

• China’s steel exports are set to reach an eight-year high, flooding the world with cheap supplies and risking inflaming global trade tensions further.

• Europe needs to rely less on Chinese technology, Danish Prime Minister Metter Frederiksen told the FT, or it risks repeating the problem of relying too much on Russian oil and gas.

Chart of the day

Ireland has an enviable problem: how to spend a €8.6bn surplus. An argument is raging on whether the windfall from the country’s five-times-faster than expected growth should be spent on a massive public investment boost or saved for the future.

Business

• UK ministers are going to look into the use of “dynamic” pricing by sites such as Ticketmaster after fans were forced to pay well over the odds for tickets for rock band Oasis’s comeback tour.

• A takeover fight for convenience store 7-Eleven could reshape corporate Japan. This Big Read explains.

• Kleptocrats don’t just steal money, writes author and historian Anne Applebaum: they also undermine the basis of our democracy.

• Who said romance was dead? Online dating apps such as Tinder and Bumble are creating AI-powered “wingmen” to teach frustrated Gen Z better chat-up lines.

The first pictures have been released for the Wildlife Photographer of the Year contest, developed and produced by the Natural History Museum, London. The 2024 entrants include this snap of two Florida manatees, a species that has rebounded in number following a clean-up of once polluted waters.

Care to join us at the FT Weekend festival? Get your tickets for the celebration on September 7 at Kenwood House in London, featuring debates, tastings, masterclasses and much more. As a newsletter subscriber, you can save an extra £20.