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Halloween Chat — ‘Beetlejuice’ and the lost art of soft horror  

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This is an audio transcript of the Life and Art from FT Weekend podcast episode: ‘Halloween Chat: ‘Beetlejuice’ and the lost art of soft horror’

Lilah Raptopoulos
Welcome to Life in Art from FT Weekend. I’m Lilah Raptopoulos, and this is our Friday chat show. Today, to celebrate Halloween season, we have decided to return to a classic that’s recently been revived and lives forever in the public imagination: the original 1988 film Beetlejuice. Beetlejuice was directed, of course, by Tim Burton. It stars a young Alec Baldwin and Geena Davis, who play a married couple living in the countryside who die in a car accident and quickly realise that they’ve become ghosts. And a family from the big city has bought and moved into their home. Their job is to scare the family away and they contact an unhinged demon named Beetlejuice to help, played by Michael Keaton. High jinks ensue.

[‘BEETLEJUICE’ TRAILER PLAYING]

Lilah Raptopoulos
Beetlejuice is a cult classic. It’s a Halloween costume staple. It’s been remade as an animated series, a theme park ride, a musical, and as of last month, a legacy sequel, Beetlejuice Beetlejuice. And today, we’re going to talk about why it endured and whether films like it even exist any more.

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OK, let’s turn on the juice and see what shakes loose. I’m Lilah in New York, and I am alone. I am utterly alone. Joining me from London is the FT’s political columnist, resident film buff and our favourite bio exorcist — I have been told to see what happens if I say his name three times — Stephen Bush, Stephen Bush, Stephen Bush. Hi, Stephen. Welcome.

Stephen Bush
Hi.

Lilah Raptopoulos
With me in New York, his qualifications are, I’m doing the whole thing: he attended Juilliard, he’s a graduate of the Harvard Business School, he’s travelled quite extensively, he lived through the Black Plague, and he had a pretty good time during that. It’s our executive producer, a horror expert, a huge Halloween fan: Topher Forhecz. 

Topher Forhecz
Hi, happy to be here. I will take horror expert, among my many titles.

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Lilah Raptopoulos
I think. As one of the few people who I have watched horror films for.

OK. So when we were deciding how to celebrate Halloween season, I lobbied hard for this, the original Beetlejuice, because it’s just this cult classic that keeps reappearing in the culture. And I wanted to rewatch it. It was, for all of us, a rewatch, not a first-time watch. So why don’t we start with this? Stephen, what is your relationship to the film and what was it like to rewatch it?

Stephen Bush
Yeah. It was odd one watching it again. I was sort of goth-adjacent as a teenager, I guess. I never sort of committed to the style, but I, you know, I loved all of that stuff. And it’s one of those . . . and then I realised it’s a film that I thought I had a stronger set of memories of than I did. And I realise it’s a film which I primarily remember as an aesthetic, as a kind of costume party staple, rather than it being a film which I had any strong memories of. And it was slightly strange. Watching it again had an oddly dreamlike quality because I realised I remembered the images of it much more strongly than the plot.

Lilah Raptopoulos
Yes, me too.

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Stephen Bush
And . . . actually, the thing I found a bit odd about it was realising I don’t think it’s that good.

Lilah Raptopoulos
Whoa.

Topher Forhecz
I just gave up my ghost.

Stephen Bush
It was a real kind of . . . oh, maybe, actually it slightly made me increase my . . . not so much my opinion of the sequel, but it did slightly give me that feeling of, oh was the first one good or was I just 15 and watching it at a house party at the time? It’s . . . I mean, in some ways it’s — as with a lot of Tim Burton’s stuff — it’s a great artist’s film rather than actually being a great film, I think.

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Lilah Raptopoulos
OK. What was it like for you to rewatch it, Topher?

Topher Forhecz
So I dearly loved this movie. And part of the thing is that I have now reached the age where you can safely grow up with a movie and I can have different experiences of it by viewing it at different times in my life. And so I think I can’t really escape that. Like, I can’t really escape the, like, sense memory of the Danny Elfman score and the long credits. And just like what that does, the chemicals in my brain just like brings me back to my childhood.

But I think the thing that I really picked up on this time is just the density of the plot and how quickly it moves mirrored with the density of jokes in the . . . they’re just like it’s constantly firing things at you and it moves in like a 90-minute pace. And there’s stuff in there that I think as an adult you pick up on in ways that you don’t as a kid. I just think it’s a movie that is so dense that it rewards multiple viewing experiences and then you bring things to it as you get older, including, unfortunately for my case, being a jaded New Yorker and like this movie is a movie about jaded New Yorkers. 

Lilah Raptopoulos
Yeah. Who leave New York. 

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Topher Forhecz
You know, and can’t and are like not fazed by a bunch of ghosts because they’ve seen too many weird things on the subway, you know? And so they’re like, huh. OK, how can we make money off it? You know, or like Charles just wanting peace and quiet in the country and then immediately is like, trying to, like, turn the whole town on its head. And like, I feel personally attacked by that as someone who will, like, go upstate and just be like, so nice to get out of the city. But what did you think?

Lilah Raptopoulos
Well, I guess I would like to state the obvious, which is that this movie is just a total delight to watch. It’s just fun. It’s an early Tim Burton, and so it has all the things you would expect from a Tim Burton. But it was at the time people didn’t know him, so they didn’t expect it, which was probably exciting. There is claymation, there is an in-between sandworm world inspired by Salvador Dalí, there are shrunken heads. This ghost couple, the Maitlands, can pull their faces out into insane-looking shapes. The costumes are incredible. Beetlejuice’s striped suit is iconic. Catherine O’Hara is the perfect evil stepmother. It’s just great. It’s like funny, it’s gross, it’s kind of mundane too. It makes death seem not scary, but sort of mundane. So anyway, all of that is a total joy.

I will say that like Stephen, I actually also this film, I realised as I was watching it existed almost like exclusively in my unconscious. I know I watched it as a child. I didn’t remember almost any of the plot. But then occasionally a scene would come up, like when they first meet Beetlejuice, it’s about 45 minutes in and he says, hold that for me, will yah? And he takes a mouse out of his pocket and he gives it to Geena Davis and she freaks out. And in that moment, just it all came flooding back to me. I felt like I was five again. So my rewatch was a total joy. But Stephen, why didn’t you like it? I’m dying to hear why you didn’t like it.

Stephen Bush
I think it’s partly the . . . both my reaction to it and the sequel are reminders of the perils of going back to something that you haven’t watched for a very long time. Because where I think it really works is as an intelligent children’s movie, right? It has loads of great jokes with watching adults. And one of the things Catherine O’Hara is really skilful in it, she does a good job of kind of double acting. She sort of works as a kind of grotesque figure for children, while doing a lot of the more subtle jokes about someone from the city who’s done that — to me, the most horrific act of all — which is to leave the city.

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Lilah Raptopoulos
I agree, Stephen.

Stephen Bush
The bit I’d completely forgotten is how much it’s a movie about the Maitlands. And actually in an odd way, I almost this time around or do you know what I would actually much rather watch a movie about like these two people who are young and in love, who then suddenly are stuck in this house together, they think forever. I was just like, oh, but actually, this is a really interesting idea, isn’t it? And this is, god, I have become one of those angry bros who downright stings on Rotten Tomatoes. Essentially, I realise my problem is is that I watch a children’s movie and I’m aggrieved that it was for kids.

Lilah Raptopoulos
Interesting. Yeah. It’s almost like you wanted the movie to grow up with you.

[‘BEETLEJUICE’ MUSICAL SCORE PLAYING]

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Lilah Raptopoulos
I want to get a little bit deeper into why this film, you know, like stuck so stubbornly in our cultural imagination for so long. Like, again, the symbol is powerful of this guy in the striped suit and the crazy hair, I guess. What about it made it unique at the time. What about it sort of allowed it to be iconic over time? What do you think it is?

Topher Forhecz
Yeah. I think for me, I think what made it stand apart, and I think it is kind of interesting to bounce . . . I, you know, sort of going off of what Stephen saying about it is kind of just a kid’s movie and or a theme or, you know, being that edgy. Is that a fair characteristic, Stephen?

Stephen Bush
Yeah. (inaudible)

Topher Forhecz
OK, great. I think the thing that has really helped the movie live on is that there is a lot of craft still devoted to the movie, which is kind of what I was saying about the density of jokes where it’s like every little bit of the movie has been considered. From, you know, like this weird comb art piece sculpture is almost a character in the movie. Like you see it so vividly. The set design has been very considered. The underworld, the rules of the underworld are all very considered. There’s so much craft and attention to detail that I think that has really helped stick Beetlejuice in the public consciousness, and I think that’s really helped it carry on.

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Lilah Raptopoulos
Yeah, there are a lot of just like iconic visuals. There’s Catherine O’Hara’s lightning bolt sideburns. There’s, you know, Winona Ryder’s spiky tooth bangs. There’s also this classic dinner-party scene that really held up perfectly. It was, you know, the ghosts are messing with this dinner party that this horrible couple has put on to try to scare the family away. And to do that, they, like, possess or take control over the dinner guests. So they turn the whole party into puppets who are forced to do the Calypso and forced them to start singing and performing Harry Belafonte’s “Day-O”. And then their shrimp cocktail reaches out like arms and sucks them into the bowls. And it just really scratched the itch for me. Stephen, what do you think about it sort of made it memorable over time?

Stephen Bush
I think it’s a couple of things. I think particularly the thing about Beetlejuice is because it is, yeah, a film in which a director with a very distinct visual sensibility is able to produce this film that is very distinctly his, but where actually in some quite good ways it is a tight 90 minutes. You know, for all I said, I thought I wasn’t sure was actually that good. It’s tight. It doesn’t have long scenes where you’re going, come on, Tim, wrap it up.

And then I think the other reason why it endures is that the average child who watches it then did graduate to Edward Scissorhands, to the rest of Tim Burton’s oeuvre. And so it’s a film which I think for lots of people is the beginning of their relationship with films, with horror, also with the idea of a film having an author. And I think that’s one of the reasons why it has a kind of enduring resonance. In addition to the fact that, yeah, I’m going to slightly recant my opening of the podcast, in this, in fact is ultimately just a solid children’s flick that goes in lots of unexpected ways.

The thing I realised watching it is and the film The Others, which is a horror film from the mid-noughties, is actually, when you think about it, a beat-for-beat remake, but played straight. And it does lots of really clever things. It plays with lots of genres. And the first time you watched it, you don’t realise it’s playing with lots of genres. And it then has, and obviously this particularly appeals to small children, then has this kind of, you know, loud, scatological character who, yes, is only in it for a very brief amount of time. But when he’s in it, is magnetic.

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[‘BEETLEJUICE’ MUSICAL SCORE PLAYING]

Lilah Raptopoulos
So I wanted to switch gears a little bit and talk about children’s movies today. I asked you both to watch Beetlejuice, the original. But we also all saw the sequel that came out this fall, Beetlejuice Beetlejuice. And I think the comparison is pretty interesting because it does have all the fun weirdness of Tim Burton, and it’s also a delight to watch. But it was also just . . . I mean, in my opinion, it was doing so much, it felt like Beetlejuice on steroids, like there were maybe two too many plot lines. It was almost like a Marvel movie, like we were on the run. It was chaotic. I just really wanted them to slow down and trust that we had attention spans.

Topher Forhecz
Yeah, yeah. I mean, I do. I think there’s a couple of things going on there. One of which is I feel like Beetlejuice Beetlejuice really isn’t a kid’s movie and it feels like it’s made for the people who have seen Beetlejuice. And also I feel like that plays on its like themes of, you know, generations of women looking out for each other and trying to reconcile with one another, which I also think kind of fell apart in the middle of it. But I also that is indicative of what you’re saying, which is, yeah, that movie is just a straight-up mess. But . . . 

Lilah Raptopoulos
Fun mess.

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Lilah Raptopoulos
Yeah. Well, that’s the thing. Like, it’s nice to see Tim Burton again. I feel like I haven’t seen Tim Burton in 20 years because he’s just . . . I just feel like he’s just been pumping out things that he really . . . it’s hard to find him in it. And you could see him actually being concerned with the jokes in that movie as opposed to, you know, I feel like he almost felt like just at some point he woke up and he’s like, well, I guess I just have to do Alice in Wonderland because I’m Tim Burton, I’m weird and like, we’re just going to have to do it.

So it was it was a nice return to form, but I think it does give way to you can tell as a filmmaker, Tim Burton is more interested with punch lines themselves. He’s really good at those, but I don’t think he’s a story guy. Like I just . . . I think my favourite movies of his, I haven’t seen Ed Wood, full disclosure, and I know that’s a lot of people’s favourites, but I love Mars Attacks, I love Batman Returns, I love Beetlejuice, I love Batman. But a lot of those movies, arguably their scripts are total messes, but they’re just a lot of fun to hang out in. So and I think that’s more what Beetlejuice 2 felt like to me.

Stephen Bush
Yeah, I mean, I think . . . I’m going to be incredibly pretentious, I think, or as David Foster Wallace once said, all stylists often become prisoners of their own style. And I think the thing about Beetlejuice is, it is, is Tim Burton, a long time ago became a prisoner of his own style. And I suspect one of the reasons why I was slightly . . . why I have this kind of slight weird relationship rewatching Beetlejuice where I realised I most enjoyed it when it was the least like a Tim Burton film, which isn’t because the Tim Burton film bits of Beetlejuice don’t work. It’s because I’ve seen too many bad late-period Tim Burton films. It’s one of the biggest mistakes I made in lockdown was to rewatch a lot of Wes Anderson films in a very short space of time. And it made me start to hate some of the later ones. Not because they were any worse, but just because I was tired of the style.

The sad thing about looking back at the original Beetlejuice is it’s a film without a successful book behind it, or pre-existing IP or a directorial name where nonetheless, this relatively neophyte director is allowed to do quite a lot but clearly is being restrained a bit. Beetlejuice Beetlejuice is a film which kind of leans into lots of his weaknesses. And if, like me, you’ve started to find his style a bit like, OK, yeah. There’s a thing with weird eyes. OK cool. Then it becomes quite wearying quite quickly.

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Topher Forhecz
Yeah.

Lilah Raptopoulos
Yeah, yeah, yeah. So do you think that a movie like Beetlejuice could be made today? It feels like we’ve been circling this idea that kids’ films today aren’t the same. And from my perspective, Beetlejuice was cool because it kind of made weird mainstream. It was accessible, but it was weird. And that feels sort of missing now, and I’m not sure why. I felt like there were a lot of films at the time that were spooky but soft. There was Hocus Pocus, there was The Witches, there was Death Becomes Her. That’s missing now.

You know, these days, like, scary movies feel laboured to me or they feel stylised or they feel like really made for the internet, like Megan or Cocaine Bear or the A24 movies. They’re not playful, you know. I don’t know if that’s because family-friendly soft horror, like, it’s kind of gone as a genre. I don’t know if it’s because TV has taken that over, like it’s just made a bunch of spooky things for teens on Netflix like the show Wednesday. What is it? What do you think it is?

Stephen Bush
Well, it is partly about the market change, right? The family film has slightly disappeared slash the only available family film are Marvel movies, and even they seem to be in some slight commercial trouble. That kind of like sort of fun horror, then? Yeah. Broadly speaking, everyone, even someone who’s watching Beetlejuice for the first time, knows that Lydia is never actually going to be forced to marry Beetlejuice. Right? And OK, there are some children who do find Beetlejuice scary, right? But there’s a cosiness to it.

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That kind of cosy horror doesn’t exist any more, really. And I suspect it is because fewer and fewer films are made for the whole family. Right? And actually, when I think about, you know, even so, even say like Inside Out 2, which is a very good bit of children’s entertainment, which has some, you know, I would say some probably profound things to say about the human condition. Right? So it’s not scary. It’s not really trying to be. It’s not got a kind of anarchic feel to it because ultimately it’s not built for, because it doesn’t need to be, a family of four of three different ages all sitting in a multiplex watching it together. And that is a slightly sad thing about, you know, things becoming more siloed.

Lilah Raptopoulos
Mm-hmm. What do you think, Topher? You’re looking with a furrowed brow.

Topher Forhecz
I think it does come down to box office and what is going to get people in seats. And this isn’t really a clever or original answer but, you know, you see a lot more sequels these days. I think there is a tendency by studios to play it safe, to not take flyers on anything that might scare away families or be too much. And that creates sort of a tampering down of creative risk. You know, Beetlejuice is a movie that has neck wounds and cuts and people flattened and eaten by sharks, and there’s a club scene for some reason. And I just think there is sort of a weird crisis within the box office where they don’t want to take a risk on that.

You know, movies are too expensive these days. I think probably the closest thing that we’ve had recently is sort of in the claymation space with, you know, things like Coraline maybe. But yeah, I think that there is a lack of interest on the studio’s part to want to devote a bunch of money to something that might be too off-putting or too spooky or too much for kids. That being said, horror is doing great, at least in general. I mean, Terrifier 3 is like one of the best performing movies in America.

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Lilah Raptopoulos
So then I guess my question about that revolves around this feeling that there actually is a lot of desire for this, like, soft horror. I asked our listeners on Instagram, just like what their favourite horror or favourite Halloween movies are. And they were all like, I mean, this might be because they’re my listeners, but a lot of them were like Practical Magic and Sleepy Hollow and Hocus Pocus and Scream and, you know, movies that were like kind of scary but also kind of not scary. And so it seems like there’s this appetite for it. There’s obviously this appetite for straight-up scary right now, otherwise they wouldn’t be made. I guess I’m trying to sort of figure out why.

Topher Forhecz
Horror fans will show up to the box office. But maybe from a studio perspective, it’s better to just turn it into a limited series on TV because you don’t know if the kids like young children will show up in a way that they already have Disney+ at home so they can just watch Hocus Pocus 2 there.

Stephen Bush
I think there are two things. I think one, there is a more broad infantilisation of children and teens. And there are, you know, there are a whole bunch of sort of further restrictions on what young people can do. And I suspect that slightly bleeds down into a kind of expectation, although this is the thing that things like Hocus Pocus and Beetlejuice are and The Witches are all doing is they are pushing at the limit of, is this too scary for kids?

And we’re clearly in a cultural moment where the commercial returns of cosy horror are not guaranteed, but the backlash of, oh, you’ve made something too scary for kids, feels larger and something that you’ve got to be more worried about. And I think those two things are linked. But I do not you know, I . . . one of my many terrible habits is a habit of stalking strangers’ letterbox choices. And I am fascinated by the phenomena of people who are clearly going to films with their partner where you get the one person who is basically one-star, I hate horror, and then the other person making like one-star, I hate romcoms.

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It’s like, guys, you know, you don’t have to go together. But I think there is this time for this kind of unmet desire for that kind of child, you know, child-friendly, therefore kind of by definition a more upbeat, slightly more of a moral centre form of horror, where you know, than actually, broadly speaking, you know, goodwill prevail and only really terrible characters will actually meet some kind of violent end. Of a kind which just is currently being squeezed out both commercially and culturally.

Lilah Raptopoulos
Yeah, yeah, yeah.

Topher Forhecz
I feel like the main takeaway that always comes across when we all gather on this show is just studios need to be braver.

Lilah Raptopoulos
Yeah, yeah. All right. Stephen, Topher, thank you so much. We will be back in just a moment for More or Less.

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[‘SWAMP NOTES’ PODCAST AD PLAYING]

Lilah Raptopoulos
Welcome back for More or Less, where each guest says one thing they want to see more of or less of in culture. This week we are hijacking More or Less so each person can go into detail, making the case for their favourite Halloween movie. I put a call out for listeners on my Instagram about this so I’ll shout out some of those too later. But first, Stephen, what’s yours?

Stephen Bush
This is a controversial pick because I’m going to pick what’s actually has its name on the title. It’s not really a Tim Burton film, The Nightmare Before Christmas. Now, some people would go, wait a second, it’s a Christmas film. But it’s a film about how the inhabitants of Halloweentown try and put on their own version of Christmas with macabre consequences. But I think it’s really it’s a film that you can watch from any time from the start of October until Christmas Eve. It’s a Halloween and it’s a Christmas film. But I think it’s a brilliant example, I think, of the type of cosy horror we were talking about. You know, Mr Oogie, he’s got these horrible sort of claymation-y bugs. The main character is, you know, this skeleton who is kind of scary, but, you know, also kind of reassuring. I think it’s a delightful Halloween movie. It’s one of my favourite Halloween traditions is to watch it. And yeah, I love it very much.

Lilah Raptopoulos
It’s a great one. Great movie, I agree. Topher, what about you?

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Topher Forhecz
So I am going to fudge this and say this is my favourite Halloween movie this year. This year in my house we have been trying to watch cult classics and sort of B horror movies, whereas I think Beetlejuice is a perfect object. We have been celebrating the imperfect objects that have been sort of relegated to the dustbin of horror history. And there is this one imprint that I want to shout out that restores and publishes these sort of schlocky horror movies called Vinegar Syndrome. They’ve been a great resource. And the movie that played like gangbusters to a crowd this year is a movie called Blades, which the pitch . . . 

Lilah Raptopoulos
Plural.

Topher Forhecz
Blades. Yes, correct. The pitch that I read that made me buy the movie was it’s like Jaws, but instead of a shark, it’s a lawnmower, and instead of the ocean, it’s a golf course. And it’s just pure, terrible, wonderful, nonsensical nonsense. But it’s . . . it really . . . it brought the house down this year. Blades.

Lilah Raptopoulos
Great one. Blades. OK. Mine is one that I watched as a child and then my partner brought back into my life as an adult, and it still held up. It’s the Great Pumpkin, Charlie Brown, 1966. It’s only 25 minutes. It’s just a real classic. And my favourite part is this subplot where Linus believes in the Great Pumpkin, which is basically like this pumpkin that comes down on Halloween and gives everybody presents. And he decides to wait for him in a pumpkin patch. But he has to choose the most sincere pumpkin patch.

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So I don’t know. Every time I watch it, I think about what it means to be a sincere pumpkin patch and the, like, kind of delusion of belief and belief in things that you just want to be true and how that’s really just the joy of being a kid and wanting witches to be real and wanting broomsticks to fly and, you know, believing in ghosts. So It’s the Great Pumpkin, Charlie Brown. Yeah.

A few listener ones. I will put a link to them in the show notes, but we have quite a few screamheads who say that Scream is 35 per cent Dawson’s Creek, 65 per cent horror. A listener named Dean rewatched House recently, the 1977 Japanese psychedelic comedy horror.

Topher Forhecz
Hell, yeah. That movie rocks. We watched that this year. That is a movie that has an auteur vision like that is just unto itself. There’s nothing like it. It’s great.

Lilah Raptopoulos
Yeah, he says it still holds up as bonkers and amazing. Tons of love for Hocus Pocus, as I said. One listener described Rosemary’s Baby as, domestic surveillance and paranoia is my favourite genre and also it’s a movie about a haircut. And finally, a recommendation for giallo films, the Italian murder slashers from the 60s and 70s, which actually Beetlejuice Beetlejuice references with the great Monica Bellucci.

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OK. We’ll put all of these recommendations in the show notes. Topher and Stephen, this was so much fun. Thank you both for coming on the show.

Topher Forhecz
Thanks.

Stephen Bush
Thank you.

[MUSIC PLAYING]

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Lilah Raptopoulos
That’s the show. Thank you for listening to Life and Art from FT Weekend. I have dropped all of the movies we mentioned today into the show notes and also linked to Stephen’s newsletter there. If you’re into UK politics, it is the cream of the crop. Also in the show notes are ways to stay in touch with me on email and on social, where I’m mostly on Instagram @LilahRap chatting with all of you about culture.

I’m Lilah Raptopoulos and here’s my wonderful team. Katya Kumkova is our senior producer. Lulu Smyth is our producer. Our sound engineers are Joe Salcedo, Breen Turner and Sam Giovinco, with original music by Metaphor Music. Topher Forhecz is our executive producer and our global head of audio is Cheryl Brumley. Have a lovely weekend and we’ll find each other again on Monday.

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Why chancellors need fiscal rules

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Why chancellors need fiscal rules

This article is an on-site version of our Inside Politics newsletter. Subscribers can sign up here to get the newsletter delivered every weekday. If you’re not a subscriber, you can still receive the newsletter free for 30 days

Good morning. Rachel Reeves has tweaked the UK’s fiscal rules, giving herself considerable wriggle room to spend on capital investment (she hopes to spend an extra £20bn a year having changed the fiscal rules she inherited from Jeremy Hunt to increase her headroom to do so by £50bn). Some thoughts on the purpose of fiscal rules and these changes in today’s note.

Inside Politics is edited by Georgina Quach. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to insidepolitics@ft.com

Money for nothing

Fiscal rules have three major uses. The first is to reassure markets and investors that you aren’t crazy, stupid or both. One reason why Rachel Reeves is setting out her tweaks to the UK’s fiscal rules in our pages and at the IMF is because she wants to tweak these rules without delivering Liz Truss 2: This Time In Red! This also explains why she is strengthening the UK’s fiscal police, or the Office for Budget Responsibility.

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Whether that will work is not my department — read this excellent blog by Louis Ashworth over on Alphaville for more on that — which contains a lot of fun charts, including this one from Deutsche Bank:

However, there is also a political dimension to the strengthening of the OBR, which is to find ways to remind people that the Conservatives made Liz Truss prime minister and to continue to punch that bruise.

My worry here is that while the OBR is, in my view, a fantastic innovation that has improved the UK Budget process, there’s a trade-off between strengthening the OBR and making too many decisions by elected politicians subject to outside organisations. We’ll have to look more closely at the detail of what Labour ends up doing on this, but I do have some concerns about it.

This is the area in which Jeremy Hunt’s fiscal rules had already passed with flying colours: he stabilised the UK’s standing after Kwasi Kwarteng’s mini-Budget.

The second use for fiscal rules is that they are a device through which finance ministries control their spending departments. Hunt’s fiscal rule to have debt falling as a proportion of GDP in five years’ time was less good at this, because in practice the five year rolling target meant that the previous government could, and indeed did, use frankly implausible future cuts to make the sums “add up”. As Richard Hughes, chair of the OBR, put it:

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Some people refer to that as a work of fiction — that’s probably generous given that someone has written a work of fiction. The government hasn’t even bothered to write down what its public spending plans are.

How effective Reeves’s tweaked rules are at this part depends on how exactly she will end up defining her commitment to get debt falling.

And the third is that they should discourage the finance minister of the day from making stupid decisions. 

One recurring stupid decision that chancellors of the exchequer have tended to make is to cut back on capital spending when they are in a hole, politically or economically. Indeed, this is essentially what Reeves herself did in the summer: cancelling the A303 Stonehenge tunnel scheme and Edinburgh’s planned exascale computer in order to meet in-year pressures.

It is also how Hunt was able to buy himself the wriggle room against his debt rule to make his cuts to national insurance, by pencilling in planned cuts to capital spending.

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Reeves’s tweaked rule removes that incentive to trim capital spending in tough times, so in that respect it is a significant upgrade. Of course, your ability to benefit from that rule depends on many other things, not all of them in your control, as well as whether the tax incentives you are creating for businesses and individuals to innovate and invest are right.

So, while this rule is, on paper, a significant upgrade, the degree of the improvement depends very much on what else happens and what precisely Reeves does with it in next week’s Budget.

Now try this

I had a lovely time at the Royal Festival Hall yesterday, where conductor Marin Alsop and the London Philharmonia played work by Gustav and Alma Mahler.

Honesty compels me to admit that I don’t really like any of the work Alma did while Gustav was alive, but it was very interesting to hear them “in conversation” with one another as it were, and it was as good a performance of Mahler’s Symphony No 5 as I have ever heard. Here’s an excellent set of the whole cycle by Simon Rattle and the City of Birmingham Symphony Orchestra.

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However you spend it, have a wonderful weekend!

Top stories today

  • ‘Despondent’ shoppers | Consumer confidence in Britain has fallen to its lowest this year as households and businesses “hold their breath” for tax rises in next week’s Budget.

  • Work schmerk | Keir Starmer said that anyone who owns shares and rental property is not a “working person”. The prime minister is coming under increasing scrutiny about what he means by the phrase “working people” in his manifesto given next week’s Budget is due to involve up to £40bn of tax rises and spending cuts.

  • University entry gap widens | The gap between university entry rates for disadvantaged students and their peers in England has reached its highest level since records began in 2005.

  • That sinking feeling | Local authorities in England are predicting a collective deficit of £9.3bn by 2026-27, almost four times the figure estimated for this year, according to research that underlines the scale of the strains on council financing.

  • The shadow of the past | The Guardian reports that Keir Starmer has opened the door to non-financial reparations for the UK’s role in the transatlantic enslavement, as he came under pressure from Commonwealth leaders to engage in a “meaningful, truthful and respectful” conversation about Britain’s past. More recently today (speaking to the leaders in Samoa) he stuck to the line that he wanted to look forward and that the future should not be “in the shadow of the past”.

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The Morning Briefing: FCA records 40% rise in complaints and the Wellesley Grove Journal

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The Morning Briefing: Phoenix Group scraps plans to sell protection business; advisers tweak processes

Good morning and welcome to your Morning Briefing for Friday 25 October 2024. To get this in your inbox every morning click here.


FCA records 40% rise in complaints about non-financial misconduct

The Financial Conduct Authority has recorded a 40% increase in non-financial misconduct complaints including bullying, sexual harassment and discrimination last year.

The findings are from the FCA’s survey which looks at how investment banks, brokers and wholesale insurance firms record and manage allegations of non-financial misconduct.

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The survey of over 1,000 firms found that the number of allegations reported increased between 2021 and 2023.


The Wellesley Grove Journal

Hosting the MM Awards this year was comedian Lucy Porter, who did such a fantastic job of pointing out how full of acronyms this industry is, we wanted to highlight it here….

“I wanted to find out more about you, so I asked Tom and his lovely team, and they said that these are the Money Marketing Awards, or the MMAs.

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“They said that, in the room tonight, we might have CEOs, CFOs, MDs and VPs from companies like CCLA, HSBC, HL, AJ Bell and M&G.

“They said some of you might be members of the PFS, the CII or the CISI. They said you might have MCSI after your name, or be a proud owner of a DipFa or RQF Level 4 diploma.”



Quote Of The Day

Keeping a pot for life will make it far easier to keep track of and boost engagement as members can see their pension grow in one place rather than having a fragmented picture through scattered pensions.

-Helen Morrissey, head of retirement analysis, Hargreaves Lansdown comments on the lost pension problem, with an estimated 3.3m pots going astray.

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Stat Attack

Ahead of National Pension Tracing Day, this Sunday (27 October), new research from digital wealth manager, Moneyfarm, has found that

29%

of the nation have no idea how many pension pots they have – believing that they probably have around £13,303 sitting across approximately three ‘lost’ pension plans – yet a whopping

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79%

say they don’t know how to begin tracking them down.

27%

say having multiple different pots is inevitably hard to keep track of, leading to feelings of worry and frustration

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18%

say they are unconcerned because they believe there is plenty of time to track them down later in life.

Source: Moneyfarm



In Other News

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The Income Protection Task Force (IPTF) has announced ambitious plans for 2025 as part of its annual membership presentation.

The plans outlined will see the continuation of some of the organisations key work including 7Advisers, Income Protection Action Week, workstream meetings and the return of the Let’s Talk IP podcast.

It will also include several ambitious projects for the year ahead focusing on the organisation’s key objectives — education, collaboration and insight.

The group also announced an organisation restructure including the introduction of a Board to provide professional oversight.

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Andrew Wibberley will step down as co-chair after four years, with Jo Miller becoming managing director and Board chair and Vicky Churcher becoming executive director and vice chair.


Keir Starmer hints at tax rises on people with income from assets (The Guardian)

UK consumer and business confidence weaken ahead of Budget (Financial Times)

Europe seeks to underpin Russia sanctions, fearing Trump overhaul (Reuters)

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Did You See?

The government appears to have four key objectives ahead of its first Budget next week:

  • Cover the £22bn black hole it has uncovered
  • Make the UK pension system less or non-dependent upon state support
  • Encourage the UK population to become more financially self-reliant
  • Encourage investment in UK business

Richard Hulbert, insight analyst at Defaqto, makes four big predictions ahead of the Budget.

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Qantas to retrofit A330-200 economy cabins

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Qantas to retrofit A330-200 economy cabins

These will be the same seats that will feature on the upcoming ultra-long-haul A350-1000ULR aircraft

Continue reading Qantas to retrofit A330-200 economy cabins at Business Traveller.

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Business

Yen carry and US tech

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Chart showing the gap between the US’s and Japan’s real policy rates:

Unlock the Editor’s Digest for free

This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters

Good morning. Yesterday UPS reported a strong increase in package volumes for the second quarter in a row after a long post-pandemic slump. Whether this is a victory of the US goods economy, for Shein and Temu, or for all three remains to be seen. Tell us what you have been ordering: robert.armstrong@ft.com and aiden.reiter@ft.com.  

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Is yen carry funding the US stock rally? 

Dhaval Joshi at BCA Research thinks that the yen carry trade is an important — indeed, the important — factor in the US tech stock rally, and that the biggest risk to the rally is therefore a strengthening yen. 

His argument is based on the historically wide differential between US and Japanese real rates. Here is his chart of the gap between the two countries’ real policy rates:

Chart showing the gap between the US’s and Japan’s real policy rates:

It was at just the moment this differential blew out in mid-2022 — and yen financing for US assets became correspondingly cheap — that US tech stock valuations recovered from the beating they took in the first half of that year, when the Fed began to raise interest rates. Joshi provides this tidy chart showing how tech valuations decoupled from 30-year bond yields and started to track yen weakness (the brown yen plot is flipped; up means the yen is weaker relative to the dollar):

Chart showing how tech valuations decoupled from 30-year bond yields

Joshi concludes from all this that 

Borrowing in yen at deeply negative real rates has fuelled the latest inflation in US tech valuations . . . the biggest risk to the bull market is not a US recession. The biggest risk is the end of the deeply negative real rates in Japan versus the US.

Interestingly, the end could come from trouble at either end of the trade:

The causality could run either way. Higher real rates in Japan versus the US and the associated stronger yen would deflate US tech stock valuations, as happened in July and August this year. Or a puncturing of the hype and hope surrounding generative AI would unwind yen funded leveraged exposure to US tech, and thereby result in a stronger yen.

Joshi suggests investors hedge this risk by being long the yen.

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This theory appeals to Unhedged for several reasons. It is contrarian. And it is nice to have a story about why US stock valuations have risen and stayed high in the face of rising bond yields (a puzzle we discussed yesterday). And we don’t have a particularly good alternative story, other than some “animal spirits” hand waving, or some mumbling about the resilience of the US economy. 

But correlations can deceive. And we wonder whether, in a world where Japanese official policy is (by fits and starts) hawkish and US policy has recently shifted in a dovish direction, whether many investors out there would have the courage to put on the kind of trade Joshi describes — especially after the carry trade scare this summer, and given the volatility of the rate environment ahead of the US election.

We tried to reproduce Joshi’s policy rate differential chart using data we gathered elsewhere; this is what we got:

Line chart of Japan real policy rate minus US policy rate showing Rebounding

Our version shows that the rate cap has already closed by 1.3 percentage points, and the trend is clear. 

James Malcolm, a UBS FX strategist focused on Japan, says that

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The carry trade itself got wiped out so much [this summer]. We had a dramatic move there. What always happens after these events [is] risk limits get tightened up . . . I spend a lot of time every day talking to people who trade Japan. On the whole, FX guys have had a poor few months, and very little profit and loss cushion. They have no capacity to take risks at the moment.

FX consultant Mark Farrington agrees: “Given how high volatility is, it makes it less likely” that traders are still taking advantage of yen carry, he says. “There are too many unrelated risks floating around.”

If there are any brave carry traders out there, email us. 

(Armstrong and Reiter)

Housing

A few months ago we said that the US housing market was just plain awful. Inventories were rising, yet prices were unaffordable and rising. The situation has gotten worse since. Inventories of new homes have now reached their highest in more than a decade. Chart from John Burns Consulting:

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Chart showing the number of unsold homes in the US rising

Meanwhile, more existing homes are coming on to the market after years of homeowners being unwilling to give up cheap mortgages. “The [mortgage] lock-in effect is slowly waning,” says Rick Palacios at John Burns Consulting, “And you have select markets, like Texas and Florida, where people are starting to put homes on the market for unique reasons, [such as] property and hazard insurance.”

Line chart of Months of existing home supply for sale showing Slowly unfreezing

In a market with high inventories, you might expect prices to fall. Not in the broken US housing market. According to Troy Ludtka at SMBC Nikko Securities America, we are seeing more supply come “at a time when there is no demand”. Prices have ticked down for new homes but sales are subdued. For existing homes, prices are still increasing.

A chart showing the median prices of new and existing home sales

Homebuilders are pulling back. Housing permits and housing starts remain weak:

Line chart of Thousands of units showing Not getting better

With builders building less and the decline in mortgage rates stalling, new supply is not on the way.

Line chart of average 30-year fixed residential mortgage

An economic slowdown would bring rates down and help unlock the market — and rising housing inventories and discouraged homebuilders make a slowdown more likely. Residential fixed investment is an important “swing factor” in GDP growth. The Bureau of Economic Analysis highlighted the downturn in housing investments in the second quarter, when there was more building than there is now. But no one will celebrate a looser housing market that is triggered by a recession.

(Reiter)

One good read

PMSR.

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Vinted app down leaving shoppers and sellers locked out of accounts

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Warning for 335,000 taxpayers ahead of key HMRC deadline including Vinted and eBay sellers - do you need to act?

VINTED has crashed leaving shoppers and sellers locked out of their accounts.

Over 1,000 users have complained about being unable to use the second-hand marketplace early Friday morning.

The Vinted app is down for thousands of customers

1

The Vinted app is down for thousands of customersCredit: Getty

Reports on Downdector show over 71% of customers have been unable to use the app.

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Meanwhile, another 21% have not been able to log into their accounts.

The issue appeared to peak at 8:30am with over 1,300 reports being made.

People have taken to X, formally known as Twitter to complain.

One user wrote: “Is Vinted App not working for anybody I’ve got the wheel of eternity but it’s not loading?”

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Others said that when they try to log on to the app on their phone they are met with a message stating that something has gone wrong.

The issue comes as it is payday for thousands of workers across the UK, with many looking to treat themselves to some online shopping,

Another user said: “It’s payday and Vinted isn’t working? Like… what else I meant to do all day.”

The Sun has approached Vinted for a comment.

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This is not the first time the shopping app has crashed.

Customers reported a similar issue back in September, and also in May.

Vinted has skyrocketed in popularity over the past few years, as it has become an easy way for households to flog their old items for extra cash.

I have 500 five star reviews on Vinted – the mistake people always make & the information you MUST include to make cash

It has become a lucrative business for many people, with some racking up £1,000’s each year by selling online.

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Vinted has capitalised on this, launching this month a “pro” version of the app, which would allow sellers to register as sole traders and be identified as professional sellers

The upgrade is free to use and users can sell an unlimited number of of items for free.

However, The Sun revealed the second-hand seller had paused new registrations to its new professional selling feature after it made some users’ National Insurance (NI) numbers publicly available, putting them at risk of fraud.

HM Revenue & Customs (HMRC) advises that you should not share your NI number with anyone who does not need it to prevent identity fraud.

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The Sun has learned that the Independent Commissioner’s Office (ICO) is now investigating the breach after a number of sellers reported it.

Commenting on the issue a spokesperson for Vinted said: “For a small number of Vinted Pro members, their NI number was visible on their profile page.

“While our teams were working on fixing the issue completely, we temporarily halted the ability to upgrade accounts to Vinted Pro.

“We apologise to anyone that was affected and encourage members who have questions to reach out to our member support team.”

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What can I do if my money isn’t paid out?

If you’re struggling to get your cash from Vinted, first get in touch with the app and let it know you haven’t received your money.

Provide evidence to show you haven’t received the money such as your latest bank statements.

There is also information on Vinted’s help page for users who haven’t seen their money hit their bank account. Visit: vinted.co.uk/help/73-my-withdrawal-has-failed.

You can contact the website’s member support team directly via the app if you are still experiencing issues.

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If you’re still having issues or aren’t happy with how you have been treated, you may be able to complain to a third party dispute resolution service, such as Complain.biz..

Do you need to pay tax on items sold on Vinted?

QUICK facts on tax from the team at Vinted…

  • The only time that an item might be taxable is if it sells for more than £6,000 and there is profit (sells for more than you paid for it). Even then, you can use your capital gains tax-free allowance of £3,000 to offset it.
  • Generally, only business sellers trading for profit (buying goods with the purpose of selling for more than they paid for them) might need to pay tax. Business sellers who trade for profit can use a tax-free allowance of £1,000, which has been in place since 2017.
  • More information here: vinted.co.uk/no-changes-to-taxes

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Beijing uneasy with North Korean troops in Russia

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Even before Kim Jong Un sent troops to support Russia’s fight against Ukraine, there were signs that North Korea’s main backer, China, was unhappy with his regime’s deepening ties with Moscow.

In a letter last week seen as signalling Beijing’s growing displeasure, Chinese President Xi Jinping thanked Kim for a congratulatory message on the 75th anniversary of Communist China’s founding — but omitted a traditional reference to North Korea as a “friendly neighbouring country”.

Kim appears unabashed. Western allies this week revealed that North Korea had sent more than 12,000 troops, disguised as ethnic minorities from Siberia, to fight on Russia’s front lines, a move that analysts say will only heighten Beijing’s concerns over its neighbours’ increasingly cosy military ties.

“The North Korean troop deployment is a dramatic step, and China will not like it one bit,” said Andrei Lankov, a North Korea expert at Kookmin University in Seoul.

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For China, the deployment — a sharp escalation in a partnership that has deepened since Moscow’s full-scale invasion of Ukraine in 2022 but was previously largely limited to munitions — threatens to destabilise the delicate balance of power on the Korean peninsula.

Closer Russian-North Korean ties could also spur the US, Japan and South Korea to strengthen their military alliance in east Asia, which Beijing already views as aimed at containing its growing power.

Beijing wants to avoid at all costs a rerun of the early years of the cold war, when the Soviet Union, North Korea and China formed a “northern triangle” that faced off against a “southern triangle” of South Korea, Japan and the US, Chinese scholars said.

“China’s situation now is really difficult, genuinely a dilemma,” said Zhu Feng, executive dean of the School of International Studies at Nanjing University. “On the one hand, we don’t want to see the return of the cold war to east Asia. On the other hand, the US is trying to strengthen solidarity with South Korea and Japan.”

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Japan’s chief cabinet secretary Yoshimasa Hayashi on Friday said that escalating Russian-North Korean co-operation was “deeply concerning” and would “worsen the situation in Ukraine and impact the security of the region around Japan”.

China’s wariness has been evident since April, when it sent one of its most senior officials, Zhao Leji, to Pyongyang. While the two sides did not reveal details of the talks, analysts said Beijing was unhappy about the prospect of losing influence over North Korea, which it sees as a crucial buffer state against US-backed South Korea. 

In June, Kim went further, agreeing a strategic partnership with Putin that contained a mutual assistance clause in cases of aggression against one of the signatories — a move that was of deep concern to China.

The following month, the Chinese ambassador to North Korea did not attend July anniversary commemorations in Pyongyang marking the end of the Korean war, despite the two countries marking 75 years of diplomatic relations this year.

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China’s foreign affairs ministry on Thursday said Beijing was “not aware of the relevant situation” when asked about Pyongyang’s decision to send troops.

China’s concerns include becoming potentially embroiled in the conflict itself if North Korean troops’ involvement in the fight against Ukraine made the Asian country — Beijing’s only military alliance partner — a legitimate target for Kyiv, said Shen Dingli, a Shanghai-based international relations professor.

“China has a treaty-bound obligation to defend North Korea,” said Shen. “If North Korea is attacked, China is legally bound to send its troops and [if necessary] to use all means to protect North Korea.”

Some defence analysts have raised concerns that North Korea’s contribution to Russia’s war effort could mean Pyongyang has secured a reciprocal commitment from Moscow to intervene in a conflict on the Korean peninsula — a prospect that would alarm Beijing.

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But Lankov said such a possibility remained “extremely remote”.

“The North Koreans are doing this for money, military technologies and battlefield experience, not out of any sense of solidarity with Russia,” he said. “Russia is not going to get themselves into trouble just out of gratitude to Kim Jong Un.”

China is also worried about Russia helping North Korea improve its nuclear capabilities, which could accelerate an arms race in the region, said Chen Qi at the Institute of International Relations at Tsinghua University in Beijing. Kim visited Russia’s Vostochny Cosmodrome, the country’s most advanced space rocket launch site, last year.

But Chen was sceptical Russia would prioritise its relations with North Korea over those with China, on which Moscow has relied for economic and geopolitical support since its full-scale invasion of Ukraine.

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Some analysts said Beijing might be tolerating North Korean arms shipments to Russia to alleviate pressure to provide direct military assistance itself.

Jaewoo Choo, head of the China centre at the Korea Research Institute for National Security think-tank in Seoul, said “Beijing may actually be secretly pleased that Russia is providing economic aid to North Korea in China’s place”, at a time when China’s own domestic growth was lagging.

“China remains in the driving seat because ultimately it has control over both countries,” said Lankov, referring to Pyongyang’s reliance on aid from Beijing. “If China wanted to put a stop to this nonsense as they see it, then they could do so.”

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Additional reporting by Leo Lewis in Tokyo

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