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The EU has only paid out a fraction of the money it says it has committed for green technologies, as companies spend up to 3,000 hours and an average €85,000 to access funds from a flagship programme.

Of €7.1bn awarded from the bloc’s Innovation Fund since it was established in 2021, only 4.7 per cent has been paid out to companies because of the red tape required to access the money, according to European Commission figures.

The application process is also extremely lengthy and bureaucratic. In an internal presentation this month, seen by the Financial Times, the commission said that 77 per cent of those seeking funding had to subcontract parts of the application process to consultants because of the “high burden”.

Average administrative costs were €85,000 per application, it said, even higher than the average €32,000 spent to access the EU’s research grant scheme, Horizon Europe.

Less than 20 per cent of applications to the Innovation Fund are successful, according to the presentation. Of the projects that had been awarded grants, only 6 per cent were operational, while 15 to 20 per cent face delays.

The hold-ups in disbursing the funds are the latest example of how bureaucracy is stifling the EU’s competitiveness. In a major report last year, the former European Central Bank governor Mario Draghi said that administrative burdens were one of the main reasons for Europe’s “static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines”.

The Innovation Fund, which uses revenues generated from the bloc’s emissions trading system, is one of the world’s largest financing programmes “for the demonstration of innovative low-carbon technologies”, the commission claims.

It was touted as one of the main funding platforms to help the bloc compete with the US after former president Joe Biden announced $369bn of funding and tax credits for green technologies through the Inflation Reduction Act.

Victor van Hoorn, director of trade body Cleantech for Europe, said some businesses have reported spending 3,000 hours on applications to the Innovation Fund — if carried out by one person alone this would be equivalent to more than a year and a half based on the EU’s 36-hour average working week.

“The biggest challenge [we hear] is the amount of resources, the amount of documentation and all of that for a frankly very low success rate,” said van Hoorn.

Eoin Condren, executive director for corporate development at cement company Ecocem, said for its last application to the fund, it had an entire team dedicated to it for five months “costing hundreds of thousands of euros”.

“Large companies can absorb that, but smaller firms developing breakthrough technologies can’t,” he added.

Condren also noted that much of the money went to “big umbrella technologies like [carbon capture and storage] and green hydrogen . . . yet these large, often lossmaking projects are notoriously hard to finance, causing long delays in actually deploying funds”.

An EU official said the low payment rate reflected “the normal or expected implementation milestones for Innovation Fund projects”, adding that “first-of-a-kind projects generally also need more time to reach financial close, be built and enter into operation compared to, for example, research projects”.

“While the application process is demanding, it is also an opportunity to improve the project and the effort is commensurate with the size of the support that is offered,” the official added.

Another issue with the fund is that market conditions in Europe make it difficult even for companies that receive grants to establish themselves and turn a profit.

Vianode, a company making low-carbon synthetic graphite for electric vehicle batteries, was awarded a €90mn grant in 2023 but decided not to go through with its European facility because of the flood of cheap Chinese graphite into the market. It instead set up in Canada, where it secured an offtake agreement with General Motors.

“In the end it comes down to what price you can compete for and with the Chinese dominance, the European market is very, very challenging for us now. It’s different in North America: there the battery producers have an incentive to choose non-Chinese,” said Andreas Forfang, vice-president for sustainability and public affairs at Vianode.

Leon de Graaf of the Brussels-based consultancy Sustainable Public Affairs, said the Innovation Fund “clearly serves a purpose”. Its application rounds were often several times subscribed, he said, adding that “the way the money is currently given is not fit for purpose”.

The commission has estimated that about €40bn could flow from the ETS into the Innovation Fund by 2030.

But van Hoorn said the small proportion that had so far been paid out showed that “most money is just sitting there due to complex milestones” resulting in a “huge opportunity cost” for the EU.

OpenAI’s huge early lead in the race to dominate artificial intelligence is under the greatest pressure since ChatGPT’s launch, as rivals Google and Anthropic gain ground in the cutting-edge technology.

Three years on from the debut of its popular chatbot, the $500bn start-up is grappling with the reality of soaring data centre costs, the technical challenges of remaining at the frontier of AI and the constant battle to retain key talent.

It is also facing a resurgent Google, with the release last week of Gemini 3, Google’s latest large language model, which is considered to have leapfrogged OpenAI’s GPT-5 and achieved gains from the model training process that have eluded OpenAI in recent months.

“It’s quite a strong difference with the world we had two years ago where OpenAI was leading ahead of everyone else,” said Thomas Wolf, co-founder and chief science officer of open-source start-up Hugging Face. “It’s a new world.”

Even before the launch of Gemini 3, OpenAI’s chief Sam Altman told staff in a memo last month that the company would “need to stay focused through short-term competitive pressure . . . expect the vibes out there to be rough for a bit”. The memo was first reported by The Information.

A year ago many had written off Google’s flailing efforts to narrow OpenAI’s colossal lead. Fears that its cash-cow search engine would be cannibalised by ChatGPT and other new AI powered search apps such as Perplexity left parent company Alphabet’s stock price lagging far behind its Big Tech rivals in the AI-driven rally through 2023 and 2024.

But Google’s turnaround began earlier this year, after a confident slate of updates at its IO developer conference in May and the viral popularity of its Nano Banana AI photo-editing tool this summer. This helped boost monthly users of the Gemini mobile app to 650mn, up from about 400mn in May.

The developments have seen Alphabet’s shares surge in recent months, with its market capitalisation now approaching $4tn for the first time, amid confidence on Wall Street that Google can combine its dominant positions in search, cloud infrastructure and smartphones to serve new AI capabilities to billions of existing users.

Koray Kavukcuoglu, Google’s AI architect and DeepMind’s chief technology officer, told the Financial Times that the Big Tech group had “pushed our performance quite significantly” by training its AI models using Google’s own bespoke chips.

“Being able to connect with consumers, customers, companies, at that scale is really something that we can do because of that full stack integrated approach that we have,” he added.

That “full stack” includes its custom tensor processing unit chips, which allowed Google to train Gemini 3 without needing to rely on the costly Nvidia chips that most of the AI industry uses. “I think we have a unique approach there,” said Kavukcuoglu.

Google “always had these muscles to flex”, said Michael Nathanson, co-founder and analyst at MoffettNathanson, an equity research firm, adding that the IO event showed that “they really managed to find their product footing”.

“The pressure has definitely flipped to Sam Altman and his ability to monetise and keep all the plates spinning,” said Nathanson.

AI researchers and users have been quick to praise Google’s advancements. The model outperformed GPT-5 on several key benchmarks.

Marc Benioff, Salesforce chief executive, said in a post on X: “Holy shit. I’ve used ChatGPT every day for 3 years. Just spent 2 hours on Gemini 3. I’m not going back. The leap is insane . . . It feels like the world just changed, again.”

Publicly, OpenAI has welcomed the competition. “We’re always excited to see progress in the field — competition pushes the whole ecosystem forward,” said Mark Chen, OpenAI’s chief research officer.

“Our models continue to set the standard in performance, reliability, and real-world usefulness, and we will continue to release even more capable models,” he added.

But internally employees are feeling pressure to compete on multiple fronts with deep-pocketed rivals with tens of billions of dollars to throw at building AI. “The arc of any fast-growing start-up is not just going to be up and the right,” said one person close to the company.

Some experts say OpenAI has overextended itself in its pursuit of scale at all costs. The group has spent the past year pushing out new products at a breakneck pace, from automated computer programming tools to its viral video app Sora.

“OpenAI is getting spread too thin. It’s impossible for them to do it all well,” said a partner at a Silicon Valley venture capital firm that has backed several AI model developers but not OpenAI.

The San Francisco-based company has pledged to spend $1.4tn over the next eight years on computing power, striking huge deals with Nvidia, Oracle, AMD and Broadcom. That is orders of magnitude more than OpenAI’s current sales, requiring its partners to use debt to finance the build-out.

“That’s a really, really tremendously risky bet for any company to make,” said Sarah Myers West, co-executive director of the AI Now Institute, a non-profit.

OpenAI’s biggest challenge is finding a big enough revenue stream to sustain that extraordinary investment.

The company believes it can attract hundreds of millions of paying subscribers to ChatGPT in the coming years. But its near-term plan to spin up more revenue from advertising, something Altman has hinted it will explore with Sora, will take it into a market already saturated by big players such as Meta and Alphabet.

ChatGPT has yet to dent Google’s strong lead in the ad market, and the start-up is only just starting to integrate ads and shopping features into its chatbot.

Meanwhile Anthropic, which was founded in 2021 by former OpenAI staffers and is currently raising a new round that is expected to value the company at more than $300bn, has built a large and fast-growing enterprise business.

Anthropic’s Claude chatbot has been overshadowed by the massive consumer hit of ChatGPT. But its long-standing focus on AI safety has helped Anthropic create a more reliable tool for corporate customers, its backers argue, and its coding tools are widely seen as best-in-class.

With more than 800mn weekly users, OpenAI still has a hugely dominant market share in overall chatbot usage but people are now spending more time chatting with Gemini than ChatGPT, according to data from web analytics company Similarweb.

The launch of Gemini 3 pushed Google’s AI app higher in the US and UK iPhone app store rankings. Still, ChatGPT has held on as the top AI app, according to Sensor Tower, which tracks mobile usage.

Erik Brynjolfsson, author and professor at the Stanford Institute for Human-Centered AI, said that it was too soon to count OpenAI out, with its vast array of new applications a good way to find new revenue sources that will fund its core research capabilities.

“All these companies have a surplus of very profitable opportunities all around them,” he said. “There’s room for multiple companies to do extremely well because the opportunity is so large.”

Data visualisation by Clara Murray

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Western banks have been the biggest beneficiaries of Hong Kong equity sales this year, shrugging off US-China tensions as dealmaking booms in Asia’s financial hub.

Morgan Stanley helped raise $11.6bn in equity offerings in the year to the end of November, according to data compiled by Bloomberg. Goldman Sachs was in second position after raising $7.4bn, followed by Chinese banks Citic and CICC and Switzerland’s UBS.

The data includes both initial public offerings and follow-on share sales by companies already listed in the territory, including a $4.6bn share sale by the world’s largest battery maker CATL and the IPO of mining company Zijin Gold.

Hong Kong’s capital markets have been revived by a wave of Chinese companies raising billions of dollars in the city, which is on track for a four-year high in IPO fundraising. Foreign investors are showing renewed interest in Chinese equities after years of shunning the market.

“For huge deals you still need these global brands,” said Alicia García Herrero, chief Asia-Pacific economist at Natixis. “The reason why they still need Goldman or Morgan Stanley is they want to attract foreign investment, especially into the big deals like BYD,” she said, referring to the Chinese electric vehicle and battery maker that had a $5.6bn share sale in March. 

Hong Kong-listed ECM activity hit $73.1bn so far this year, up 232 per cent on the same period in 2024, according to data from LSEG.

“We’ve seen quite a strong turnaround with respect to equity issuance from Chinese companies in Hong Kong,” said Saurabh Dinakar, head of Asia Pacific global capital markets at Morgan Stanley.

Rising US-China tensions have put the banks’ operations in Hong Kong under more scrutiny. This month, a US congressional committee wrote to Morgan Stanley’s chief executive Ted Pick to request more information on the bank’s underwriting of Zijin Gold, the offshore arm of China’s Zijin Mining.

The committee alleged that Zijin Mining is associated with human rights abuses in the Xinjiang region of China and has “deep ties” to the communist party.

Morgan Stanley declined to comment on this matter.

Federico Bazzoni, executive chair of Eight Capital Partners, said Chinese companies “need these [western] banks to reach out to international investors”. He added: “Of course, you’ve got the trade war and political tension but I think the markets are opportunistic.”

Chinese banks have expanded in Hong Kong, with the goal of taking a larger share of advisory fees in the territory, where deals often have bigger fees compared with mainland China.

CICC, a prominent mainland investment bank, recently announced a plan to acquire two smaller brokerages.

“We are seeing Chinese securities firms expanding aggressively in Hong Kong,” said Rowena Chang, a director at rating agency Fitch. “Typically they want a US investment bank and a local investment bank as joint sponsors.”

Chinese banks CICC, Citic Securities and Huatai Securities top this year’s Hong Kong deal volume for IPOs alone.

They have established relationships with Chinese companies that are already listed on a mainland bourse, said Jean Thio, a partner in the capital markets group at law firm Clifford Chance, which has advised on 18 IPOs in Hong Kong this year.  

Chinese banks are important partners for mainland companies seeking to list in Hong Kong because of their close channels of communication with regulators in Beijing such as the China Securities Regulatory Commission, which must give mainland companies approval before they list offshore.

“Communication with the CSRC is important and that’s where the PRC banks have strengths,” Thio added. 

Data by Haohsiang Ko

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One of the world’s biggest cyber insurers is pulling back from the market as it contends with rising claims and falling prices, even as rivals extend their bet on policies covering hacks and ransom demands.

Beazley reported this week that cyber gross written premiums, a measure of top-line revenue, declined 8 per cent in the nine months to September 30 to $848mn, sending shares in the FTSE 100 insurer tumbling on the day.

“There’s more claims, and they’re more expensive,” chief underwriting officer Paul Bantick told the Financial Times. He said a rise in ransomware attacks and hackings had been fuelled by rising geopolitical volatility, as cyber gangs used such tactics to sow distrust.

“What we’re trying to understand is why the market’s not reacting to those things,” he added.

While Beazley has trimmed its exposure, Chubb and AIG — two of its largest rivals in the US market — have maintained or grown their books. The diverging strategies highlight volatility in the nascent sector.

Chubb and AIG declined to comment.

Despite the rise in claims and high-profile attacks on businesses, premiums for cyber insurance have been falling since early 2024, according to broker Marsh, due to rising competition for a finite pool of clients and a broader flood of investment into speciality insurance.

“They’re all fighting for new business,” said Kelly Butler, head of cyber for Marsh. “It’s not an oversaturated market, but there’s a limited pool of buyers.”

Businesses in the US and UK have purchased more cyber coverage in recent years due to the rise in claims. Despite rising demand for policies, margins have been eroded as hedge funds, private equity firms and other investors flooded the insurance market.

Some risk managers also doubt that cyber policies will cover enough of the costs of an attack, after exclusions came under criticism from brokers and clients.

In response, Lloyd’s of London, the insurance marketplace, has pointed to the need to limit liability for potentially sweeping claims stemming from cyber risks, in order to offer any cover against the peril.

While cyber insurance prices had fallen 6 per cent to 7 per cent for each of the past four quarters, Butler said the price slide was now slowing.

Chief executive Adrian Cox told analysts on a call that Beazley was willing to continue to shrink its revenue from cyber in the US, where he said the business line had become “unprofitable”, to protect margins.

He warned that cyber insurance prices could experience “extreme swings in pricing” if others continued to cut their rates.

Beazley shares have since pared their losses, leaving them about 2 per cent lower since the start of the year and valuing the insurer at just over £4.8bn. The stock has gained 120 per cent since 2020, however.

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Infrastructure investors including BlackRock, Brookfield and Apollo are courting the leading oil and gas companies, sensing an opportunity as the sector grapples with lower prices and a lack of enthusiasm from public-market investors. 

At a closed-door meeting ahead of this month’s Adipec energy conference in Abu Dhabi, the heads of ExxonMobil, TotalEnergies, Eni and BP were urged to offload more of their networks of pipelines, storage terminals and other assets to raise cash to be deployed elsewhere in their operations. 

“You guys need to rethink how you think about capital,” one participant told the majors, arguing that equity markets were “not as receptive” to the industry.

“You’re trading at four to seven times earnings multiples. What’s wrong with selling your infrastructure assets for 10 to 12 times?” the person asked. “Take the cheap capital and reinvest it in your core business.”

Saudi Aramco is among those to embrace the trend, completing an $11bn sale and leaseback deal with BlackRock-owned Global Infrastructure Partners in August for the gas network of its Jafurah project. It is weighing further disposals, according to one person familiar with the situation. 

“Why sit on such a vast and lucrative asset base?” said the person. “A lot of the major sovereign wealth funds and private funds were frustrated they did not get a piece of the Jafurah pie and the deals team has been flooded with offers. So they were told to pitch and come formally with ideas.”

Aramco has not determined how much it may sell, according to the person, but such transactions have the potential to raise billions of dollars to support its balance sheet and fund capital spending.

Abu Dhabi moved in 2020 with a $20.7bn pipeline agreement with GIP, Brookfield and the sovereign wealth fund of Singapore, while Oman, Bahrain and Kuwait have all either completed or are considering similar transactions.

Such deals signal a change of approach for state oil companies that have not traditionally sought to open up their businesses to foreign capital.

David Waring, head of energy in Emea at Evercore, said the Aramco deal had “sparked a real wave of interest” from other state oil groups and infrastructure funds seeking a “piece of the action”.

Fossil fuel infrastructure has become more attractive for private-capital groups as expectations grow that the green energy transition will take longer than previously forecast.

Energy groups’ pipelines and other assets, which come with steady revenues backed by long-term contracts, are appealing to funds backed by pools of insurance money that are seeking to deploy large amounts of capital and secure reliable returns.

“They have captive insurance money, which is long-term and cheap,” said the head of the deals team at one oil company. “They sit in the middle and take 2 per cent to 3 per cent.”

The big international oil companies (IOCs), by contrast, have been more cautious, although they have started doing deals as they seek to balance their growth plans against shareholder demands for tight balance sheets and a focus on dividends and share buybacks. 

This year, Shell offloaded its interest in the US Colonial pipeline to Brookfield in a deal that valued the asset at $9bn, while BP sold a stake in the Trans-Anatolian network to Apollo for $1bn.

Waring suggested the influx of money from infrastructure funds into the state-run oil companies would trigger a reaction from the IOCs, which have often relied on more conventional financing.

“Can the IOCs afford to operate within the confines that the equity market imposes, without considering more innovative solutions?” he asked.  

As President Donald Trump approaches the one-year anniversary of his second term in office, the FT’s chief economics commentator Martin Wolf, and Nobel prize-winning economist Paul Krugman sit down to discuss the US economy and the state of American democracy. Are American consumers finally feeling the effect of Trump’s tariffs? Is AI to blame for the frozen labour market? Or is the spectre of a weakening democracy and plutocracy to blame for slumping consumer sentiment? In the first of four weekly episodes, Wolf and Krugman unpick the US and world economy, with Krugman explaining why he’s less pessimistic now than he was earlier this year.

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HONG KONG — China’s factory activity contracted for the eighth straight month in November, according to an official survey on Sunday, underscoring challenges for the country’s economy despite the U.S.-China trade truce.

The official manufacturing purchasing managers index rose slightly to 49.2 in November from 49 in October, China’s National Bureau of Statistics said.

The PMI is measured on a scale between 0 and 100, with a reading below 50 indicating contraction. The contraction was in line with analyst expectations.

A U.S. tariff cut earlier this month likely would mean that Chinese exports could gain competitiveness in the U.S. market, but it may be too early to say whether exports have regained momentum following the trade truce.

U.S. President Donald Trump said the U.S. would cut its tariffs on Chinese goods after meeting Chinese leader Xi Jinping in South Korea on Oct. 30, raising some optimism over Chinese exports and manufacturing.

A prolonged slump in China’s property market and falling home prices are still hurting consumer confidence, and real estate investments have been down. Intense price competition domestically in many sectors including the auto industry have also put pressure on many businesses.

More government policy support is required to help boost the economy, economists said.

But “policymakers appear to be delaying further policy support,” Lynn Song, chief economist for Greater China at ING bank, wrote in a note earlier this month.

While Chinese authorities previously rolled out measures such as trade-in subsidies for home appliances and electric vehicles, some of these subsidies are set to be phased out, and sales and demand are likely to drop, analysts said.

The fading boost from the consumer goods trade-in policies may be weighing on domestic demand for manufactured goods and “signals on domestic demand have been mixed,” said Zichun Huang, China economist at Capital Economics, last week.

Chinese officials have set a target of around 5% economic growth for the whole of 2025. The economy expanded 4.8% in the July-September quarter.

“This year’s growth target is likely to require minimal additional support to be reached,” Song wrote.