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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

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.

Chief executive Oliver Blume on Monday said the European automotive industry was in a “very . . . serious situation”, adding that manufacturing in Germany was increasingly becoming less competitive.

“The economic environment became even tougher, and new competitors are entering the European market. In this environment, we as a company must now act decisively,” he said.

As a result, the company said, it planned to walk back on its promise not to cut jobs in Germany until 2029, in a move that would put it on a collision course with its powerful works council.

The company’s flagship brand last June announced it wanted to cut €10bn in costs by 2026. Although agreements with unions meant the company had to rely on offering early retirement for its workers and not replacing them, VW on Monday said this had been “insufficient to achieve the urgently needed structural adjustments for greater competitiveness in the short term”.

Daniela Cavallo, chair of VW’s works council — which under German rules represents workers’ interests on a supervisory board level — on Monday issued a note to employees, warning that management was considering shutting German plants, as VW’s flagship brand risked slipping into the red.

“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029,” said Cavallo, whose clash with former VW chief executive Herbert Diess contributed to his ousting in 2022.

VW said that the “extremely tense” financial situation that the company was in meant that “even plant closures at vehicle production and component sites can no longer be ruled out”, adding that it would begin negotiations with labour representatives.

Cavallo, however, indicated that the VW executive plans would face fierce resistance. “With me, there will be no VW plant closures!” she told employees.

The brewing battle over restructuring at Europe’s largest carmaker comes as it faces lower demand both in its home market and China, where it sells most of its cars.

Blume on Monday noted that the economic backdrop was getting tougher, partially because “new competitors are entering the European market”.

Several Chinese electric-vehicle makers such as BYD have made plans to enter Europe, while VW and other legacy brands race to develop cheaper EVs.

EXPLAINER

Critics have accused the former US president of using the visit for campaigning, against the law — a charge Trump denies.

What was supposed to be a simple photo op for Donald Trump at the Arlington National Cemetery in Virginia on August 26 has now snowballed into a political controversy, with the Republican presidential candidate sparring with his Democratic challenger Kamala Harris, who accused Trump of disrespecting “sacred ground, all for the sake of a political stunt”.

Controversy has followed since Trump participated in a wreath-laying ceremony to pay tribute to the 13 US service members who were killed in the Kabul airport bombing in 2021.

The videos and photos that Trump used from the trip in a recent campaign video posted on his TikTok account have drawn criticism.

According to US federal law, campaign activity is prohibited around or near military cemeteries.

@realdonaldtrump

Should have never happened.

♬ original sound – President Donald J Trump

What happened?

It isn’t just the Trump campaign’s use of the cemetery visit for political purposes that has attracted scrutiny. The army has confirmed that Trump campaign staff “pushed aside” a cemetery worker, who attempted to stop photographing and filming in the vicinity of service members’ graves.

There is no known recorded video of the confrontation between the cemetery worker and the Trump campaign aides.

In a statement, the army criticised the Trump campaign.

“Participants in the August 26th ceremony and the subsequent Section 60 visit were made aware of federal laws, Army regulations and DoD policies, which clearly prohibit political activities on cemetery grounds. An ANC employee who attempted to ensure adherence to these rules was abruptly pushed aside,” an army spokesperson said in the statement.

What have Trump and Harris said?

The Trump campaign defended the visit saying he received permission from the families to film the grave of the fallen soldiers. It disputes that there was a physical altercation with the cemetery staff.

“Neither the families nor President Trump violated cemetery regulations or policies,” the Trump campaign sent out a statement via Arkansas Senator Tom Cotton, an army veteran and Trump supporter, on Saturday.

The Harris campaign criticised the former president in a lengthy post on X, saying the cemetery is a solemn place and “not a place for politics”.

As Vice President, I have had the privilege of visiting Arlington National Cemetery several times. It is a solemn place; a place where we come together to honor American heroes who have made the ultimate sacrifice in service of this nation.

It is not a place for politics.

And…

— Kamala Harris (@KamalaHarris) August 31, 2024

“If there is one thing on which we as Americans can all agree, it is that our veterans, military families, and service members should be honored, never disparaged, and treated with nothing less than our highest respect and gratitude,” Vice President Harris stated.

“And it is my belief that someone who cannot meet this simple, sacred duty should never again stand behind the seal of the President of the United States of America.”

What did the parents of the soldiers say?

The Trump campaign released another statement on Sunday stating that military families had invited the former president to the event in Arlington. The statement emphasised that Trump’s purpose was to pay tribute to the fallen heroes and acknowledge their sacrifice.

On Truth Social, the social media platform founded by Trump, parents of fallen soldiers defended Trump while criticising Harris and President Joe Biden.

Darin Hoover, the father of Staff Sergeant Taylor Hoover, said in a video, “We asked the Trump team to take the videos, take the pictures of our time there.”

Coral Doolittle, the mother of Corporal Humberto A Sanchez, blamed Harris and the Biden administration, saying, “They called the withdrawal in Afghanistan a success, and for us, it was just sadness and a disgrace.”

Jaclyn Schmitz, the mother of Lance-Corporal Jared Schmitz, said in a video, “Kamala, your statement is nothing more than a political spin to help you look better in your presidential campaign against Donald Trump. You have never walked a single day in our shoes. Our kids were murdered because of your administration, and you are partly to blame.”

For 10 months, the families of Israeli hostages held by Hamas have led protests, blanketed local and international media and begged Prime Minister Benjamin Netanyahu to agree a deal that would bring their loved ones home — even if it meant ending the war against Hamas.

So far, they have failed. But on Sunday, as news spread that six more hostages had been found dead in a tunnel underneath Gaza, apparently recently executed by their Hamas captors less than a kilometre from Israeli troops, a new wave of public anger swept Israel. Much of it was directed at Netanyahu.

By Sunday night, tens of thousands of Israelis were streaming through Tel Aviv streets, demanding that Netanyahu compromise and accept a deal that could see the hostages released in exchange for a lasting ceasefire and the freeing of thousands of Palestinian prisoners.

On Monday morning, a general strike shut down much of country after an influential trade union bowed to calls from the families of the hostages. Ben Gurion international airport halted departures, while universities, shopping malls and ports were shuttered.

But the public outpouring of grief and anger also reflected a divided nation — Netanyahu’s far-right allies, including finance minister Bezalel Smotrich, assailed the protesters and union leaders for “fulfilling [Hamas chief Yahya] Sinwar’s dream”. Several right-wing cities and settlements said they would not join the strike.

The tension between the two camps has grown with the realisation that time is quickly running out for the remaining 101 hostages in Hamas custody. At least 35 of them are already presumed dead by Israeli officials.

Relatives of the captives, meanwhile, are growing more desperate — and angry at Netanyahu. “If we do not succeed to get the Israeli government to an unqualified yes, then the evidence is out there that all of those hostages will die in Hamas captivity,” said Jonathan Dekel-Chen, the father of 35-year-old hostage Sagui, taken from a kibbutz on October 7.

“There is no reasonable explanation [for Netanyahu’s rejection of the deal] other than domestic political considerations and the retention of power,” he added.

Smotrich and other far-right ministers have threatened repeatedly to collapse Netanyahu’s coalition if he were to accept a deal tied to a comprehensive ceasefire, demanding greater military pressure on Hamas to free the hostages.

But so far, Israel’s military has managed to rescue just eight of the roughly 240 people taken hostage on October 7 and has killed three by mistake. However, 105 were released in November in a negotiated swap for Palestinian prisoners, during a shortlived ceasefire when humanitarian aid surged into the besieged enclave.

Hamas has blamed Sunday’s hostage deaths, and many previous captive fatalities, on Israeli air strikes and Netanyahu’s intransigence. It has not shifted in its core demand that any comprehensive hostage release — including of Israeli soldiers taken captive — hinges on a complete ceasefire, repeating that demand on Sunday afternoon.

But that second, negotiated hostage-for-prisoner swap has proved elusive, despite a mid-August push by the US, Egypt and Qatar to persuade the warring parties to agree to a US-backed proposal. The lack of progress has led to a public blame game that has divided Israeli politics and exasperated mediators.

Talks appear to have stalled because Hamas has demanded assurances that a lasting ceasefire will follow the hostage swap, and that Israeli troops will withdraw completely from Gaza. For his part, Netanyahu has insisted on demands that the Israeli military remains in control of the Gaza-Egypt border.

“The delay in signing the deal has led to [Sunday’s] deaths and those of many other hostages,” said the Hostage and Missing Families forum, an advocacy group. “We call to Netanyahu: Stop hiding. Provide the public with a justification for this ongoing abandonment.”

It remains to be seen whether this fresh anger will build enough political pressure to force Netanyahu to change his position.

The Israeli public has largely supported a negotiated deal with Hamas to free the hostages, according to several polls, but regular protests in Tel Aviv have yet to coalesce into a large national movement.

On Sunday, the mood appeared to be shifting as the streets swelled with protesters and much of the media and political opposition demanded that Netanyahu compromise.

But Netanyahu — Israel’s longest-serving premier — has weathered larger, more sustained protests before. “We’ve done so much to galvanise the public, to make sure that there is a majority [in the public opinion] for a deal,” said Moshe Lavi, the brother-in-law of hostage Omri Miran.

“But we are unable to penetrate the sole decision maker who needs to make the call — and if he is unwilling to make that call, he should be honest with the families,” he added.

“I spoke to many political and security officials, and heard that a deal is not progressing because of political considerations,” said Arnon Bar-David, chair of the Histadrut labour federation.

Dahlia Scheindlin, a veteran pollster who has followed the protest movement closely, said that while it wasn’t clear public sentiment could force Netanyahu’s hand, “if . . . there is a general strike and influential social and political leaders help bring the country to a standstill, that could possibly tip the government into changing its policy”.

Netanyahu rejected the accusation that his demands over the Egypt-Gaza border had held up a possible deal, saying Hamas had refused to enter serious negotiations for months. He said Israel had agreed to an updated framework for the US-backed deal, something Hamas has officially turned down.

“In recent days, as Israel has been holding intensive negotiations with the mediator in a supreme effort to reach a deal, Hamas is continuing to steadfastly refuse all proposals,” Netanyahu said. “Even worse, at the exact same time, it murdered six of our hostages.”

But leaks to Israel’s Channel 12 news over the weekend painted a different picture, enraging many of the families of the hostages, who have long warned that Netanyahu was delaying a deal to keep his coalition together.

Channel 12 reported that the premier clashed on Thursday at a cabinet meeting with his defence minister, Yoav Gallant, who warned that Netanyahu’s insistence on keeping Israeli troops along the Egypt-Gaza border threatened the talks to free the hostages and voted against it.

“The cabinet must gather immediately and reverse the decision made on Thursday,” said Gallant after the bodies were retrieved. “It is too late for the hostages who were murdered in cold blood.”

About 40,000 Palestinians have been killed since Hamas’s October 7 attack, according to local health officials, most of them women and children, as the Israeli military has destroyed large parts of the enclave. At least 1,200 people were killed by Hamas during its cross-border raid into Israel, according to the government, including many civilians.

The war has created a rapidly deepening humanitarian crisis marked by extreme hunger, the spread of disease and the displacement of most of Gaza’s 2.3mn civilians into UN shelters and sprawling tent cities.