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Britain has a £20bn problem with its defence capabilities. Thanks to a combination of failing to manage large projects, a failure to make necessary efficiency savings and the fall in the value of the pound, a big gulf lies between the Ministry of Defence’s commitments and the budget available. This points to a bigger question: what continued role can the UK play in global defence?

In FT Weekend, Lawrence Freedman argues that in this age of cyber warfare, the UK’s military role is uncertain. Although the UK continues to be a permanent member of the UN Security Council and has a privileged geographical location, the threats of terrorism, cyber attacks and information warfare risk undermining the nation’s standing. Along with the continued influence of Vladimir Putin and the arrival of Donald Trump, the western alliance also finds itself in a precarious position.

The UK will, of course, continue to play a significant global role. But Lawrence argues that decisions will need to be taken soon if the UK is going to maintain a position that exceeds its size. How the UK deals with the threats of the 21st century is a much more fundamental question than how the Ministry of Defence can close its spending gap.

Person in the news: Courtney Weaver profiles Sarah Huckabee Sanders, the White House press secretary who has the hardest job in the administration: defending President Trump. Did her four home-baked pies help mend relations with the press corps, which she recently said was “purposely misleading the American public”?

Economicky Christmas: Tim Harford offers his three-point plan for a more efficient festive season. He recommends a passive gift-buyer strategy, giving the gift of time and attention and being aware of the efficient presents hypothesis.

A year of stasis: It may have appeared tumultuous but Henry Mance points out that none of the fundamentals have changed in British politics in 2017. Many of the key figures remain in situ while little progress has been made on the main challenges.

Best of the week

FT Person of the Year: Susan Fowler — Leslie Hook

We must share data to fight Alzheimer’s — Bill Gates

Brexit is turning into a civilised divorce — Gideon Rachman

Why a long Brexit transition is in everyone’s interest — Janan Ganesh

Bitcoin and cash cast a shadow over banks — John Gapper

Britain has more illusions to shed on Brexit — Martin Wolf

Impact investing for good and market returns — Gillian Tett

Strange and unhelpful ways that Britain thinks about productivity — Sarah O’Connor

The internet of things heralds the dawning of Pax Technica — John Thornhill

Bregrets? Why Britain has had few over Europe — Sebastian Payne

What you’ve been saying

Turning off the tap of throwaway packaging — letter from Andy Clarke

“Sir, The UK’s retailers make a vital contribution to the economy. With revenues of more than £380bn, the sector employs 4.6m people in the UK. Over the past decade Britain’s retailers have in the main focused on recycling in a bid to reduce the environmental impact of the plastic waste they produce. But we have to accept that this isn’t enough — by recycling plastic, we are merely recycling the problem.”

Comment from Nikolaus on Philip Stephen’s latest column, Why Europe need not kowtow to China

“It reminds me of the 80s when Japan was going to crush our economies. Europe scrambled to limit imports of Japanese cars, electronics and household appliances. We were anxious about Japanese investments dominating the European economy. Companies were introducing Japanese miraculous working methods as the model for the future. In fact, there was some analogy between our attitude towards Japan, then, and Mr Trump’s attacks on China, today. Well, Japan did not crush Europe. Most of us don’t even remember that we ever harboured that fear. All the more reason to follow Mr Stephens’ advice and stop self-denigration.”

Swiss private banks are in great shape, thank you — letter from Yves Mirabaud, Geneva, Switzerland

“It is true that private banking has not grown as much as the rest of the economy during the past 10 years. There was a financial crisis, after all. But with assets under management grown back to their pre-crisis level and an employment that remained stable throughout the decade, one can hardly talk about a ‘decline’. Yes, the number of banks diminishes, like in all other countries and since well before the crisis, but the business remains in Switzerland. Consultants predict doom every year, because mergers and acquisitions are good for them. I would be more concerned about the state of private banking in the UK, actually. It is not even half the size of that in Switzerland, and is about to lose its direct access to the EU market.”

Today’s opinion

Simeon Booker, civil rights pioneer and journalist, 1918-2017
The man from Jet who battled Jim Crow

Britain faces serious questions on its defence capability
In an age of cyber warfare, the UK’s international military role is more uncertain

Tech: transforming the world
Bitcoin futures launch gives us a glimpse of how innovation is shaping everyday life

A year of stasis for British politics
If 2016 was the first album, the past 12 months were the follow-up that failed to move the needle

Free Lunch: Banking union v fiscal union, part 2
Europe’s bank reforms are the most promising way forward for the euro

Person in the News: Sarah Huckabee Sanders: the White House’s steely foot soldier
The pastor’s daughter has the hardest job in the administration — defending President Trump

How Ireland is shaping Britain’s post-Brexit trade

Rapid changes in the climate for carbon-heavy investments
The Paris agreement has quickened the move to a greener economy

FT Alphaville: Mihir Desai explains the Wisdom of Finance

FT Alphaville: Tax “reform” and America’s transfer union

Undercover Economist: The economist’s guide to a happy Christmas
My three-point plan for a more efficient holiday season

Instant Insight: Big Tech and telecoms face sudden fundamental shift
The first major regulatory blow to the power of platform owners has forever changed the landscape, writes Rana Foroohar

FT View

FT View: The challenges looming for central banks in 2018
Monetary policy may soon become less predictable for investors

FT View: Bringing new hope to the fight against Alzheimer’s
The FT’s Seasonal Appeal enlists help for a great scientific endeavour

The Big Read

The Big Read: Rupert Murdoch and the disruption of a dynasty
With the sale of most of his company to Disney, the media tycoon is going back to his roots in news

The Big Read: Brexit: Inside the UK’s messy deal to secure an amicable divorce
As the talks neared conclusion, mishaps over an agreement for Northern Ireland almost brought Theresa May’s government crashing down

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