Honda and Nissan outline plan for $54bn merger

Good morning and welcome back to FirstFT. This week the service will be truncated as we will be taking a break for Christmas Day. Here’s what on the agenda today:

• More details of the planned Honda-Nissan merger

• Russia’s plan to tap into growing demand for nuclear power

• An FT investigation into UK private equity boss Guy Hands

• The Life & Arts 2024 quiz

Honda and Nissan have signed a memorandum of understanding to begin talks that could lead to the biggest domestic merger in Japanese automotive history and create the world’s third-biggest carmaker by sales.

The Japanese groups said at a press conference in Tokyo earlier today that they aimed to reach a definitive merger agreement by June and complete it in 2026. Under their current market capitalisations, the combination would be worth $54bn.

Honda chief executive Toshihiro Mibe said the talks were driven by the need to maintain global competitiveness in the face of a “drastically changing business environment”.

The consolidation could also include Mitsubishi Motors, the Japanese carmaker that has been in an alliance with Nissan since 2016. Mitsubishi has signed a separate memorandum of understanding and aims to decide next month whether to join the talks. Read more on the details of the agreement.

Here’s what else we’re keeping tabs on today:

• Economic data: Brazil’s central bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates. Fears over the country’s budget deficit triggered panic last week in the markets.

Five more top stories

1. President-elect Donald Trump said he would demand the Panama Canal be “returned” to the US and attacked the Central American country over what he considered “ridiculous” fees for maritime freight to use the canal, which is vital to the US economy. Panama’s President José Raúl Mulino hit back at Trump. Here’s more on the diplomatic feud.

• More Trump administration news: The president-elect has tapped Stephen Miran, an economist and critic of Federal Reserve chair Jay Powell, to chair his Council of Economic Advisers, and named Stephen Feinberg, co-founder of private equity group Cerberus Capital Management, for a senior defence post. Read more on the latest appointments.

• The US and the WHO: The new administration is pushing to pull the US out of the World Health Organization on the first day in the White House. For more administration news sign up to the White House Watch newsletter.

2. Exclusive: Palantir and Anduril, two of the largest defence technology companies in the US, are in talks with about a dozen competitors to form a consortium that will jointly bid for US government work in an effort to disrupt the country’s oligopoly of “prime” contractors. The consortium is planning to announce as early as January that it has reached agreements with a number of tech groups. Here’s what we know so far about the project.

3. The UK economy failed to grow in the third quarter, in the latest blow to a Labour government already under fire from businesses for its tax-raising Budget. GDP did not register any growth in the three months to September, the Office for National Statistics said today, down from its first estimate of a 0.1 per cent expansion. Here’s more on the factors that are constraining the UK economy.

4. Russia is building more than 10 nuclear units abroad as it looks to tap into rising energy demand driven by artificial intelligence and developing markets, according to an envoy of President Vladimir Putin. The plans come as Moscow seeks to boost its global influence by expanding its nuclear fleet. Here are the countries where Russia is constructing new plants.

5. The German government has promised to investigate what authorities knew about a man charged with a fatal attack on a Christmas market in Magdeburg on Friday after multiple agencies admitted receiving warnings about him. Here’s what we know about the 50-year-old Saudi dissident accused of killing five people and injuring 200 more.

The Big Read

In the Italian city of Trieste, a community-based approach to mental illness has pro­duced startling res­ults at a relatively low cost. The model contrasts starkly with others that make much greater use of psychiatric institutionalisation. The final instalment of the FT’s series on mental health takes a look at the decades-long debate about the best way to care for people liv­ing with mental ill­ness.

We’re also reading . . . 

• FT Investigation: Terra Firma founder Guy Hands has been accused of raging at staff and making sexually inappropriate comments.

• Luxury scale-back: A softening in the market is a harbinger of things to come in equities and the real economy, writes Rana Foroohar.

• Disinformation storm: Companies need new playbooks for dealing with online falsehoods as AI intensifies the risks, writes Anjli Raval.

• The Economics Show🎧: European Central Bank president Christine Lagarde tells Martin Wolf what Europe needs to do to close the gap with the US.

Chart of the day

Investors poured record amounts into global bond funds this year as they bet on a shift towards easier monetary policy by major central banks. Bond funds have attracted more than $600bn in inflows so far this year, according to data provider EPFR, topping the previous high of almost $500bn in 2021. This “was the year that investors bet big on a substantial shift in monetary policy”, said one portfolio manager. The record flows came despite a patchy year for bonds.

Take a break from the news

From Swifties to Sondheim, Cardi B to a multimillion-dollar banana: here are 40 fiendish questions to test your knowledge of 2024 from the FT’s Life & Arts team.