Trump tries for a Ukraine peace deal

0:03Good morning from the Financial Times. Today is Monday, August 11th, and this is your FT News briefing. The U.K. job market still looks bleak. And U.S. President Donald Trump is trying a new strategy to end the war in Ukraine. Plus, AI is upending India's critical IT sector. The computers are able to do many of these jobs for which multiple people were required in the past. I'm Jess Smith, and here's the news you need to start your day.

0:44The U.K. jobs market continues to look bleak, according to new reports. A survey out today from KPMG and the Recruitment and Employment Confederation shows recruitment activity in July close to a two-year low. It also points to slower pay growth and a glut of candidates. Another report shows that only a quarter of employers expect staff levels to increase in the next three months. 16 percent expect they'll have to cut headcount. The data isn't perfect. It's still hard to tell whether employment is falling or simply stalling, which poses a challenge for the Bank of England as it tries to figure out monetary policy.

1:29This week, U.S. President Donald Trump plans to meet with Russian President Vladimir Putin in Alaska to discuss the war in Ukraine. Trump's announcement of the meeting last week sparked a worried response from Ukraine and its European allies. The FT's Amy McKinnon has been following this, and she joins me now. Hi, Amy. Hi. Amy, this is going to be the first time that a U.S. leader is meeting with Putin since Russia's full-scale invasion of Ukraine in 2022. Why is Trump calling this meeting now? So the run-up to this summit in Alaska really begins around two weeks ago, where Trump set a 10-day deadline on the Russian leader to agree to a ceasefire or face consequences from the United States.

2:12Trump has done this a number of times. He set these two-week deadlines on Putin, and he's generally blown through them without much notice. But this time, there really seems to have been a shift in rhetoric in the U.S. president. He does seem to have become frustrated with Putin. And you can hear that in his public statements. But we're also hearing that from his advisors and people close to the administration that something has shifted. So during this ticking clock, this 10-day deadline that we've all been watching, Trump dispatched a special envoy, Steve Whitkoff, to Moscow to meet with Putin.

2:43And the outcome of that was an agreement to have Putin and Trump sit down together in Alaska at the end of this week. And one thing Trump mentioned in the lead up to the summit is the idea of land swaps, you know, that Ukraine and Russia would exchange territory to secure a peace deal. What would that entail exactly? So Trump hasn't elaborated yet on what he's talking about here when it comes to land swaps. But it seems to be that this would be some kind of agreement that Russia would take some parts of eastern Ukraine, maybe even parts that doesn't currently occupy. And Ukrainian forces would agree to pull back from that territory.

3:17But I think the phrase land swaps is a little bit confusing here because what we're talking about is Ukrainian territory. Ukraine really doesn't hold any of the Russian territory. So it's not like in other conflicts where you have parties agree to switch parts of each other's territory that they may be holding. What they're talking about here is the Ukrainian and Russian armed forces either moving into or giving up different parts of territory, which is Ukrainian territory. Right. And Ukraine doesn't seem especially interested in this idea. Its president, Vladimir Zelensky, says that his people, quote, will not gift their land to Russia.

3:54And Zelensky's European allies seem to be supporting him. Can you can you talk more about this pushback? Well, the Ukrainians have been worried all along about any kind of scenario where the fate of the country, where the end to the war is negotiated over their heads. And there's a lot of concern about the fact that at the moment, it doesn't seem like Zelensky is going to be invited to the Alaska summit. It's unclear whether there's going to be participation from Ukraine's European allies there later this week. So this really, I think, kicked off a lot of concern in Europe and in Ukraine. What we saw over the weekend was this flurry of diplomatic activity with European leaders meeting in the UK with Vice President J.D.

4:32Vance to discuss and come up with a joint statement, really kind of like bolstering their support for Ukraine, kind of backing Zelensky. And they said that they're convinced that the only approach is diplomacy, which will support Ukraine and pressure Russia to end the war. What would you say this meeting says about Trump's broader approach to Ukraine peace talks? Well, he's kind of waxed and waned over the first six months of his administration. In the early days, when you remember that famous Oval Office spat that he had with Zelensky, you know, he really seemed to be putting the pressure on Ukraine.

5:05There was a temporary suspension in military and intelligence support to Ukraine. There was that Oval Office bust up. There was a lot of kind of harsh words. And the Ukrainians really did, I think, do the best that they could to show that they were willing to negotiate, to cooperate with the United States. But Putin, on the other hand, hasn't budged. You know, we've really seen very little to suggest that Putin has climbed down from his ultimate goal of preventing Ukraine from ever really being an independent, sovereign country that can conduct its own foreign policy. And so Trump seems to have become frustrated with Putin.

5:39I think what we've seen over the weekend from Ukraine and from Ukraine's allies in Europe is really this growing concern that the pressure could once again flip back into Ukraine's court. Amy McKinnon is the FT's U.S.-Europe foreign affairs correspondent. Thanks, Amy. Thank you. Thanks for having me.

6:03In Hong Kong, commercial property troubles are weighing on the largest bank in Europe, HSBC. The bank is also the largest lender in Hong Kong, but the territory has been suffering from a prolonged slump in retail spending and sluggish demand for office space. HSBC has flagged nearly three quarters of Hong Kong commercial property loans as risky. That's almost triple the number of loans flagged at the start of the year. Now, much of the focus had been on Hong Kong's large conglomerates and their real estate holdings, but HSBC's pain now comes from loans to smaller real estate developers who are struggling with high debt loads and shrinking profits.

6:50In India, the IT industry has been the crown jewel of the country's economy. For decades, Indian tech companies have provided back-end services for the world's corporate giants. But now the industry is scrambling to reinvent itself so it doesn't get clobbered by artificial intelligence. The FT's Krishan Kaushik has been reporting on this, and he joins me now to talk more. Hi, Krishan. Hi. Christian, how big is the threat of AI to India's IT sector? So the threat is massive, which also many people feel is an opportunity for them. India has a massive pool of tech talent. You can hire tech talent for much cheaper in the country and at scale.

7:30So that makes it very lucrative to outsource these IT tasks to India. Now, what's happening with AI is the computers are able to do many of these jobs for which you needed individuals earlier at a much faster pace. and a single computer can do a job for which multiple people were required in the past. So that is a main threat that the industry is facing. So how bad is the damage so far? I mean, like how big of a hit have IT companies taken from clients shifting to AI? We don't know the exact numbers, but of course, all the major giants, the IT services giants here, TCS, Infosys, HCL, and Wipro, they have not had the best two or three quarters since the starting of the year.

8:09and the quarters coming ahead don't look very optimistic either because the conversations that they're having with the clients in the U.S. and Europe are not leading into new contracts at the moment. People are holding back from giving them new contracts. TCS just last month announced it will cut 2 % of its workforce globally. That's about 12 ,000 jobs, and that's largely at the middle and senior levels. And TCS might be the first one. Others might have to follow suit. So, Krishan, what are companies doing in response to this? So there are three things they're essentially doing. First, the hundreds of thousands of people that they employ, both in India and other parts of the world, they're re-skilling them to be adept for the AI world.

8:46They're re-skilling them of how to use AI first internally, which means that they know how to use AI, and then create solutions for their clients externally. Second, they claim that they have been investing in these technologies for the last 10 years. They're creating tools for all their clients, whether it's agentic bots, whether it's data analysis solutions. Those are the solutions they're trying to find for their clients. And third, what they're telling us is the clients would understand that the cost of adoption towards AI initially goes up before it starts coming down. So that's what they're also talking to the clients about, that if you want to adapt to using AI tools, it needs some initial higher input costs.

9:24Okay. So is India talking about or can it become a significant player in the AI space? And would that enable them to offset what's going on in the IT industry now? So India would love to be a significant player in the AI world, but India has not traditionally invested very highly in research and development of new technologies, which is why people claim that India is already quite behind in the AI race. India has not been able to produce any significant large language model that many countries like China and US and European countries have produced. Where India can still find its relevance is because, again, it has this tech talent at scale.

10:04It can offer solutions at a much faster pace. It's a huge market to train data on. So that's what these companies are betting on, that India might be able to produce applications for the international clients, and it can offer solutions. Krishan Kaushik is the FT's Mumbai correspondent. Thanks, Krishan. Thank you. You can read more on all these stories for free when you click on the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news. Thank you.

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