Germany's football and economic struggles

Good morning from the Financial Times. Today is Friday, july third, and this is your FTews briefing The U.S. labor market is slowing, and the Korean government wants people to cool it on their property investments. Plus, Germany is struggling to stay on top of industry and football Germany was for decades, undoubtedly one of the powerhouses of both European football and indeed global football. But in the last decade or so The crown has very much slipped. I'm Sepfyia Ahmed and here's the news you need to start your day The US economy added just fifty seven thousand jobs last month Economists expected more than double that It's a sign that the labor market is cooling But the number is still a lot higher than the ten thousand jobs that the US was adding on average each month in twenty twenty five That means that this year, the Federal Reserve has been less concerned about a weak labor market Instead, it's focused on tackling inflation from the Iran warar So investors were expecting the Fed to raise rates But this disappointing jobs report means that traders are scaling back their bets on that Now they think it's less likely that the feder will raise borrowing costs Global demand for AI semiconductors has been a big boost for the South Korean stock market there's a problem The government can't convince people to keep their money in equities Instead, more and more Koreans are pouring their earnings into an overheated property market Joining me now to discuss is the FT's sole correspondent, Daniel Tutor. Hi, Daniel Hi So how much money is coming into the Korean property market from the stock market So in the first three months of the year and this is before even the biggest peaks of the CosP indndex, it was just under three billion dollars going into a higher value property. So places like Kangao and so on. But the interesting thing is that it's about triple the usual level a property of around that level in Korea, about four percent of the money that goes into is usually from sales of stocks. but now it's something like thirteen So why does the government want people to get out of property or at least not put as much money into property So over the past several decades, people in Korea have come to believe that property is really the only investment The Korean stock market historically has not really gone anywhere. It's only been in the past year or so that it's really shot up. And there are all kinds of reasons for that. but property believe never goes down and always goes up, particularly in Seoul And the problem with that is that it makes property very expensive, of course On top of that, the president, Lee Je Myng, he believes in this concept of productive capital as he calls it. So if you put money into a property, That's not producing anything in terms of output. So he would rather you invested your money in the stock market. Who is benefiting from the money moving from the stock market into property I was talking to an economist named Kathleen O from Morgan Stanley here about this and she's also written a report about this issue. One of the things that she mentioned, and this is, I think in her report as well that the lion's share of These profits on stocks have gone to people who are already quite wealthy And so I think it will be relatively rare to see somebody who's from the working class or has Not that much money to begin with who has made enough money on stocks to okay, I'm going to be able to buy an apartment now. Well, what are the consequences overall for South Korea and for its economy if this trend continues I think the main problem really is that young people will not be able to buy property, particularly in Seoul. Now if you're a young person in Korea, you have any ambition whatsoever You tend to gravitate towards soul. It's where all the opportunities are. But even if you have a decent job, you can't buy an apartment. So this will only get worse and it will make, of course, inequality worse as well For the government itself, the property price issue is a real political banana skin If you are the president, you don't want house prices to go down, of course, because people who own property will hate you, but you don't want them to go up too much either. because people who don't get own property will pay you Um, so it's it's really u it's it swings presidential elections, but also just for ordinary people, it's, u It's very painful That's the FT's sole correspondent, Daniel Tutor Thanks so much Daniel Thank you very much capital is still struggling to stem an exodus of wealthy clients invvestors tried to pull four point seven billion dollars out of the firm's flagship private credit funds last quarter That's according to a recent FT analysis It's slightly less than last quarter, and the firm told investors it was encouraged by that change Both funds have capped withdrawals Shares in Blue Owl have fallen more than forty percent this year. It's now lower than its listing price Private credit industry, more broadly has had a pretty painful quarter The FD's analysis also showed that private credit funds honored less than half of the redemption requests that they received Germany has had a rough couple of weeks. both in industry and on the football pitch Let's start with the absolute shocker at the World Cup on Monday The countdown, the kickoff. At this level, at this World Cup level, the highs are so high and the lows are so low Germany, they did okay in the group stages, got through to the round of thirty two where they came up against Paraguay. That's the FT's sports editor, Josh Nble In that round of thirty two game, Paraguaay took the lead in the first half. Germany scored an equalizer in the second. it went to extra time, it stayed the same score. So ultimately they went to penalties It iss down to Jose Canalic A few have been in this position for Paraguay. Germany lost on penalties for the first time at a World Cup in their history. got sent packing by Paraguay who were ranked more than thirty places below them in the global rankings, or at least they were at the start of the tournament Germany, a four time World Cup winner How a squad rank at number ten globally before this year's game started? The reaction in Germany, I think is fair to say is sort of one of existential crisis about the state of German football. Because this isn't a new problem. Germany didn't even make it out of the group stages in the last two World Cups. This points to a sort of broader malaise that Germany was for decades, undoubtedly one of the powerhouses of both European football and indeed global football But in the last decade or so The crown has very much slipped and not only are they not an elite team, they actually haven't been an elite team for quite some time now. But the football team's crashout isn't the only malaise that's plaguing Germany. Its industry is struggling too. The country's iconic car maker, Volkswagen, announced brutal job cuts earlier this week and Franco German tank maker K NDS said on Wednesday that it was going to postpone its IPO until the market improves. The FT's Berlin correspondent, Laura Patel, says that this is all happening with the backdrop of a German economy that has been stagnating for years The country is suffering with what many describe as a triple shock Germany lost its biggest source of natural gas when the war in Ukraine cut off Russian gas flow to this country. Its relationship with the US is in tatters And at the same time, German industry, especially the car industry, is facing a huge China shock with very fierce competition from China So there's this just general sense that the country is not in a good place and I think that the football defeat deepens that sense of woe and angst. The triple shock she's describing has German Chancellor Friedrich Mertz backed into a corner But just yesterday, A little hope surfaced, at least on the economic front Chanceor Fedich Metz and his coalition partners from the Social Democrats managed to agree after a lot of wrangling a package of reforms which are aimed at kind of spruucing up the economy. It includes a lot of different things. ten billion euros worth of tax cuts for the middle class, labor market reforms, and some other provisions It remains to be seen whether or not These will actually make a difference to Germany's economy, which has bairly grown since the COVID pandemic. But I think there is some positivity from economists and businesses that this is a step in the right direction. So Germans are down on their football team and their economy But Laura has another perspective to offer them. I'm a Brit. I've lived in Berlin for about three years and when I compare the state of Germany to my own country, I feel that in many ways it still feels like a very prosperous country. I think a lot of Germans are comparing to say ten years ago, which was when Germany last won the World Cup in twenty fourteen and the country was in a very different place than Angela Merkel was Chancellor There's a lot of optimism, but I do still think this country has a lot going for it and Germans are It's veryy partial' a bit of self flagulation. and so I think to an extent, they're kind of enjoying this sense of doom and woe around the World Cup defeat Before we go, this is your last chance to take our survey about a Saturday FT newews briefing Just take a look at the link in our show notes. You could win a pair of Bose headphones if you fill it out This has been your Daily FT News briefing. Check back next week for the latest business news TheFT newews briefing was produced this week by Sonya Hudson, Katja Kimkova, Fiona Simon, and M Sfyia Ahmed Editor is Mark Filipino. Our show was mixed by Alex Higgins and Kelly Gry. And we had help this week from Peter Barber, Michael Lello, and Gavin Callleman. Our intern is Cole Van Milttenberg and our executive producer is Tophher Fourheadz Slow Phips is the FT's global head of audio and our theme song is by metetaphor Music