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UK non-doms size up European tax breaks in hunt for fiscal advantage

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The UK’s impending abolition of a tax perk for wealthy residents has triggered a pan-European hunt for fiscal havens as the rich cast a wide net from sunny upstart destinations such as Portugal to dependable Switzerland.

Tax advisers across the continent are reporting a rush of inquiries that began when the UK’s previous Conservative government pledged to end its non-domicile tax regime from 2025, and accelerated when the new Labour administration said it would follow through on the plan.

Non-dom status is accessible to UK tax residents whose permanent home or “domicile” is overseas. It enables beneficiaries to avoid paying British tax on their foreign income or capital gains for 15 years, provided they do not bring them to the UK.

For the rich whose commitment to the UK will expire with the perk, there are no carbon copies of the British system but several countries offer similar incentives. Those who put a premium on lifestyle are also considering how other locations match up to London’s strengths (its social buzz) and weaknesses (its weather).

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Switzerland’s reputation as a haven means it is accustomed to attracting a steady level of interest from the well-off, but Stefan Piller, head of tax and legal at BDO’s Zurich office, said: “We’re getting more requests each week — and many more than we experienced last year.”

The alpine nation’s fiscal appeal centres on its low rates of income tax. Most cantons such as Geneva and Zug offer a lump-sum taxation or “forfait” system, based on individuals’ living expenses, for the very rich, which enables them to cut bespoke deals on what tax they pay. Zurich and Basel have abolished the system.

The resulting levies are “not cheap”, said Justine Markovitz, head of Withers’ Swiss practice, but they do provide much-desired certainty. The downside is that people in the forfait system cannot work in Switzerland.

Boats in the harbour at Monaco
Monaco is another option but it has very high living costs © Olena Serditova/Alamy

Another option is Monaco, the tiny Mediterranean principality with no income or capital gains tax, although its extremely high living costs deter some.

Many UK non-doms are weighing their options with April 6, 2025 in mind, the day when the old regime will be abolished. It will be replaced with a new residence-based system under which new resident applicants, who have lived outside the UK for at least a decade, will be exempt from UK tax on foreign income or capital gains for four years, not 15.

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Concentrating minds is the fact that the Labour government has said it will also remove the ability to permanently shield foreign assets held in a trust from the UK’s 40 per cent inheritance tax.

“It is inheritance tax that is causing most of the upset,” Markovitz said. “I’m finding many people say: ‘I can’t do that for my kids, I can’t sacrifice 40 per cent of my asset base.”

Switzerland does not set inheritance tax at a federal level and its cantons typically charge relatively low or no inheritance tax. Portugal, another place attracting the wealthy’s attention, does not impose an inheritance tax either. Lisbon does impose a 10 per cent “stamp duty” on Portuguese assets passed on after death, but it does not apply to assets overseas.

Portugal has offered more besides: in the past decade it has courted foreigners with golden visas and a generous fiscal regime for tax residents who remained domiciled elsewhere. But rich individuals are discovering much has changed.

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Its previous centre-left government scrapped the non-dom regime last year and replaced it with more limited tax incentives for foreigners and returning Portuguese expatriates who have work contracts in certain fields, including technology, R&D and academia. Those incentives include a tax exemption on foreign income, excluding pensions, and a 20 per cent flat tax on Portuguese work or business income from qualifying activities.

Now, crucially, a new centre-right government is drawing up regulations to implement its predecessor’s policy by year-end — and tax advisers expect more people to become eligible for the new system.

“We have received many questions,” said Luís Nascimento, a tax adviser at consultancy Ilya. “[But] until the government publishes the new ordinance, there is still a lot of uncertainty about what the new regime will be.”

Nuno Cunha Barnabé, tax partner at Lisbon law firm Abreu Advogados, said Portugal is also keen to sell its lifestyle. “If you live in London and what you like about it is going to fancy restaurants, the nightlife and the buzz, then Portugal is not for you,” he said. “But if you want a country that is quieter, where the weather is good, where there is outdoor living, Portugal is probably for you.”

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A Mediterranean lifestyle is also part of Italy’s appeal, which is set to endure despite Rome’s recent decision to double a flat tax on the foreign income of rich expats to €200,000 a year.

“If you are asking someone to buy a product and the next day it doubles, no one is happy,” said Jacopo Zamboni, executive director for private clients at Henley & Partners. But, he added, “when you assess the pros and cons, clients want a stable legislative framework — they don’t want only a stable tax amount.”

Italy’s regime, which is available for 15 years to new tax residents who invest at least €250,000, was set up in 2016 in a post-Brexit push to lure wealthy people away from the UK. Since 2017 it is estimated to have attracted about 4,000 multimillionaires, including oligarchs and private equity investors. Wealthy individuals who relocated before the recent increase will continue to pay €100,000 a year.

Boats and yachts in the gulf of Elounda near Spinalonga, Crete
The gulf of Elounda near Spinalonga, Crete. Greece’s tax regime has attracted more than 230 millionaires so far © Georgios Tsichlis/Getty Images/iStockphoto

Across the Ionian Sea, Greece boasts a lower cost of living than Italy — though that may be of negligible importance to the very rich — and a similar system. Introduced in 2019, its regime offers a flat annual tax of €100,000 on foreign income for 15 years for individuals who meet residency requirements and invest at least €500,000 in real estate, businesses, or securities.

So far the regime has attracted more than 230 millionaires to the country.

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Vassilis Vizas, leader of tax and legal services at PwC Greece, said he had seen a surge in interest in Greece from UK non-doms in recent months, but noted that most of them were rich individuals of Greek descent.

The durability of Greece’s fiscal regime is one issue on the minds of potential residents.

Although Vizas sees no signs of reforms on the horizon, he said “one common question is whether the favourable tax policies will remain unchanged”.

Additional reporting by Sérgio Aníbal in Lisbon

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Government urged to improve frontline health services after drop in childhood jabs in England

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A leading government adviser has called on ministers to urgently address low childhood vaccination rates by investing in frontline services after new data revealed an “extremely worrying” decline in uptake.

Professor Sir Andrew Pollard, chair of the UK’s Joint Committee on Vaccination and Immunisation, said the government needed to increase funding, especially for frontline nurses and health visitors with local knowledge.

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“The system for mopping up those who find it hard to access vaccination is not currently robust enough,” he told the Financial Times.

“We have to get this right, the future health of our children depends on it, and even their lives.”

The warning comes after data published by NHS England last week showed that uptake of all 14 key childhood vaccinations has fallen over the past year, with no vaccines meeting the World Health Organization’s target of 95 per cent coverage.

The share of children vaccinated against measles, mumps and rubella (MMR) by their second birthday fell to a 14-year-low of 89 per cent in the year ending March 2024.

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The UK Health Security Agency last month warned of a back-to-school resurgence of measles after major outbreaks in London, the West Midlands and North West drove infections to the highest levels since 2012.

Pollard said the spread of measles was a “red flashing warning light” that other diseases would soon start spreading without urgent action.

Low vaccination rates are a global problem, with nearly three-quarters of children living in countries where low vaccine coverage is driving measles outbreaks.

Dr Mary Ramsay, UKHSA director for public health programmes, said disruption to healthcare during the Covid-19 pandemic and complacency had caused vaccination rates to drop in England.

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“While there is much focus on vaccine hesitancy . . . it is not driving the long-term decline we have seen in uptake,” she said.

“[It] is more likely a combination of some people being complacent about the risk of some diseases, but also about people’s lifestyles and finding time to ensure your child attends their appointment.”

A 2023 survey by UKHSA found that 88 per cent of parents were happy with the safety of vaccines for babies and young children, although rates were lower among ethnic minorities and people from lower social grades.

Pollard said a lack of access was the main reason for the decline, with parents finding it difficult to find available appointments and to travel to GP surgeries, especially if they have to take multiple children on public transport.

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He added that some communities were unaware that vaccines are free, while others may have unfounded concerns over their safety.

MMR vaccination rates were lowest in London, which is home to 17 of the 20 areas worst affected by measles outbreaks. Hackney and the City of London had the lowest uptake across all local authorities in England, with coverage of only 68 per cent last year, down from 88 per cent a decade ago.

Dr Gayatri Amirthalingam, UKHSA immunisation deputy director, said London had “an ethnically and socio-economically diverse population and health inequalities persist”.

She added: “The population is also very mobile with many families moving in and out of the city and between boroughs, who may not immediately register with a new GP.”

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The NHS launched a new vaccination strategy in December, promising a more flexible appointment system that would make “booking a jab as easy as booking a cab”.

Local health teams will also have more flexibility to offer immunisation services in local venues such as community centres, sport facilities and places of worship.

Steve Russell, NHS national director for vaccinations and screening, said too many children were still not fully vaccinated against preventable diseases such as measles and whooping cough.

The Department of Health and Social Care said the NHS and GP practices send reminders to encourage parents and carers of children not fully vaccinated to come forward, adding it continued to look at ways to further boost vaccine uptake through community pharmacists and health visitors.

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Naples 1944 — heroism, hedonism and horror in wartime Italy

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In newly liberated but starving Naples, the American general Mark Clark hosted a banquet. He was served the humanlike flesh of a manatee taken from the municipal aquarium, which disturbingly resembled “a little girl who had been cooked”.

So, at least, runs the version of this often-told anecdote in Curzio Malaparte’s sensational semi-factual novel The Skin. Keith Lowe, however, has found that the aquarium remained open and stocked after the Allies occupied Naples in autumn 1943. It charged 20 lire to soldier-tourists to view the uneaten marine life. For Lowe, Mark Clark’s manatee menu symbolises the process “by which fiction becomes myth, myth becomes recollection, and recollection becomes history”.

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During and after the Fascist breakdown and the retreat of German forces, the Italian port suffered more from this slide between fact, memory and legend than almost any other theatre of the second world war. Torrid literary reportage has fixed the image of what journalist Alan Moorehead called “the moral collapse of a people” into anarchy, crime and despair as authority broke down. In The Skin, or Norman Lewis’s celebrated memoir Naples ’44, or John Horne Burns’s novel The Gallery, the city figures as a lurid arena of violent chaos and lawless sleaze.

For sure, Lowe’s meticulous historical sleuthing reveals disorder on a monumental scale, with “theft, prostitution or illegal trading” the sole means of survival for many citizens. But he also recovers the hidden history of a Mediterranean metropolis that freed itself from German domination before the Allies arrived — only to find its dreams for social renewal dashed by the naivety, ignorance and mismanagement of its well-intentioned liberators.

Especially in Savage Continent (2013), Lowe has made a speciality of aftermaths: what happens as conflicts end, and the “dramatic, exhilarating and traumatic” events that follow. On 1 October 1943, the King’s Dragoon Guards drove to cheers and flowers into a joyful city. Soon, Naples became a template for both the sunny and shady sides of post-Nazi life — and an early warning that allowed the blundering Allies to raise their game as social rebuilders later in 1944.

Lowe begins with the mingled hedonism and horror of the months after liberation. The departing Germans had trashed the place — 300 sunk craft choked the harbour — and terrorised the people. “Miracles of reconstruction” with military value (rebuilding the shattered port, quashing a typhus epidemic) coincided with the neglect of civilian needs by an Allied Military Government (AMG) largely staffed by “well-meaning mediocrities”.

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Naples turned into “a playground for foreign troops”, often drunk. One-fifth of the US 1st Armored Division contracted a sexually transmitted infection. Breakdowns in rationing and food distribution drove the spread of rampant corruption, “wholesale thievery” and large-scale prostitution: symptoms not of “moral collapse”, but rational behaviour as mass starvation loomed.

Naples 1944 then backtracks to the Fascist era and its finale in the stirring, often spectacularly effective, revolt of the Neapolitans themselves. During the “Four Days” of late September 1943, which “set the entire city alight”, audacious guerrilla exploits hastened the German exit. A closing section argues that Allied mis-steps, above all their eagerness to reinstate old elites, “smothered at birth” local hopes for reform. Lowe explains that foreign stereotypes, with Naples as an idyll of happy-go-lucky pleasure-seekers or “a paradise inhabited by devils”, played their part in blurring the Anglo-American vision.

Admirably, Lowe checks salacious myths against a vast range of Italian sources. He portrays the liberated city not as some grotesque pageant of vice but the stage for innumerable human dramas of heroism or compromise. If he judges the strategic bungles of the AMG harshly, Lowe recognises that exasperated Italian colleagues found officers “kind, patient and reasonable” — but way out of their depth.

“The prosecution of the war”, not civic revival, set their agenda. As this rigorous, but humane and colourful history, shows, that priority let a sclerotic status quo return. US politician Adlai Stevenson, who visited in 1944, warned that after a “total war”, “the peace must also be won”. Further north, the Allies applied that lesson. In Naples, they never did.

Naples 1944: War, Liberation and Chaos by Keith Lowe William Collins £25, 400 pages

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The office is not the only solution

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Remember the good old days? When office corridors buzzed with the sound of ideas bouncing between senior executives and junior recruits? And the kitchens! New products conceived in the time it took for the kettle to boil. Not to mention all that learning. In the past, a new starter only had to sit within five yards of an experienced colleague to absorb the entire contents of their brain.

Such pre-pandemic nostalgia infused the vision laid out this week by Andy Jassy, chief executive of retailer Amazon, who ordered a full-time return to the office. In a memo, he said the move would make it easier for staff to “learn, model, practice”. It would also “strengthen our culture” while making things like brainstorming “simpler and more effective”.

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I don’t want to rain on anyone’s rose-hued parade. But in ancient times — five years ago — employees would also bitch about silos, poor training and productivity. Remember offices on Fridays? No, me neither. What about off-site meetings because headquarters was too stultifying to produce new ideas? Sadly, yes. 

Of course, coming together in the workplace can spur connections, innovation and learning. My best gossip is usually from serendipitous chats. For some, the commute provides the spring in their step. But let’s not get carried away. The office is not the solution to every single workplace problem.

However, some seem to think it is — even if that view is not backed up by evidence. In her new book, Over Work, Brigid Schulte describes a leadership “echo chamber”. One expert tells her their team “was actually more productive” when working flexibly “not just in terms of hours worked, but literally in output”. They can readily demonstrate this to the CEO, but “can’t get them to listen because instead they’re listening to their fellow CEOs”. Other bosses flex RTO mandates to signal muscular leadership: take Elon Musk, who once described “laptop classes” as “living in la-la-land”.

Who knew something as boring as an office could become the centre of a culture war? But here we are. When UK business minister Jonathan Reynolds said flexible working could enhance productivity and opportunities this week, Kemi Badenoch, candidate to be leader of the opposition Conservative party, condemned his sentiment.

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Back and forth we go, distorting statistics, trading insults — shirkers on the one side, dinosaurs on the other. Will it never end?

David D’Souza, director of profession at CIPD, the human resources body, says it is a distraction “from critical conversations about productivity, flexibility, job security, fairness and balance. Organisations should be weighing up the complex factors behind this decision-making on evidence, as opposed to just feelings or what they see [others] doing.” Some human resources chiefs tell him of “pressure from the CEO” to see more physical presence on site “due to personal preference or nostalgia”. 

Yet despite the noise, the reality is leaders are generally pragmatic. Most white-collar employers offer some flexibility over location because it benefits staff and bosses. In the US, 67 per cent did, according to the Flex Index report. In the UK, the CIPD puts it at 83 per cent. A recent study in the Nature journal found that “a hybrid schedule with two days a week working from home does not damage performance” and improved staff satisfaction and retention.

Nick Bloom, one of the authors, told me he is sceptical of Jassy’s performance rationale because it goes against “data from many other studies in other companies showing that once you have three days a week in the office that generates about the same productivity as five”. While two extra days boost facetime, mentoring and culture-building, staff do not have quiet time at home for deep work. Counter to the slacker argument, “we know WFH workers tend to skip lunch and work pretty hard during the day”, he said.

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Which raises another explanation for Jassy’s RTO mandate. In his memo, he outlined a future vision of Amazon with “fewer managers [to] remove layers and flatten organisations”. Bloom muses that presenteeism might be the best strategy to make this happen. “Requiring five days in the office will lead to a surge in quits.” 

It will be interesting to see how this plays out, but one thing is for certain: Amazon needs home workers. Otherwise, who will be there for the package deliveries?

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UK traders set up own ‘inspection points’ for EU goods to tackle Brexit chaos

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At Provender wholesale plant nursery in Swanley, Kent, employees are unloading the first lorry load of goods into a newly-fitted, large biosecure barn established to carry out checks on products arriving from Europe.

Dysfunction in the post-Brexit border system is prompting a growing number of UK plant and food traders to try to set up their own “control points” where products can be inspected, as an alternative to state-run facilities.

The move is an attempt to lower costs and reduce friction in trade with the EU, while side stepping the delays that have beset the government-run inspection point in nearby Sevington.

“The way it’s going is we’re losing all control,” said Stuart Tickner, head of the nursery and biosecurity at Provender. “By becoming a control point, we bring some of that aspect of control back to us,” Tickner added. 

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Issues at the Sevington site, problems with the border IT systems and the slow roll out of a promised trusted trader programme, have piled pressure on businesses both sides of the border, leading some suppliers to give up exporting to the UK all together. 

The trusted trader programme, also known as the Authorised Operator Status was designed to test the possibility of allowing regular importers to carry out checks at their own sites, rather than at a border control post.

Stuart Tickner checks plants that have been imported from the EU and have cleared their customs checks
Stuart Tickner checks plants that have been imported from the EU and cleared their customs checks © Charlie Bibby/FT

The new post-Brexit border checks on food and plant imports from the EU were introduced in April by the previous Conservative government after several delays.

Provender said it hoped to reduce costs for its customers by establishing its own control point and cutting the common user charge (CUC) which companies say is hammering the sector.

However building it was a “high risk strategy” given confusion over the timing of the government’s border implementation plan.

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Until a trusted trader scheme is fully implemented, the nursery must use government inspectors to carry out physical checks on arriving goods.

The industry has long argued that traders should be allowed to carry out their own inspections because many already had the expertise needed to meet specifications on fruits, vegetables and plants. 

Nigel Jenney, chief executive of the Fresh Produce Consortium, said traders were being forced to pay millions in charges despite the industry having the infrastructure and personnel needed to carry out controls. 

“They should have used the industry’s facilities and expertise that already existed and we would have readily shared it,” he said. “It’s a problem of their own making.” 

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Laminated pages listing different plant pests so staff at Provender Nurseries know what to look out for
Laminated pages listing different plant pests so staff at Provender Nurseries know what to look out for © Charlie Bibby/FT

Seafrigo, a refrigerated food logistics company, was the first group to enrol in the pilot scheme and set up a designated inspection point. 

Mike Parr, chief executive of PML Seafrigo UK and Ireland, said the scheme was crucial to ensuring the flow of food into the UK.

But a decision on whether to take it beyond pilot stage had been “pushed down the road” since the idea was first tabled three years ago, he noted. 

Businesses like Seafrigo have invested hundreds of thousands of pounds in building capacity on their own premises but cannot get enough trade coming through to recoup those costs because the government does not provide enough inspectors. Those who do come are unavailable overnight.

“It’s the only way that bringing fruit and vegetables into the UK is going to work. Sevington is too expensive and too slow,” Parr said, adding he heard regularly that hauliers were offered no facilities at the site. “If they come to us, we have everything in place for them.”

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Staff at Provender Nurseries check plants that have been imported from Europe.
Moving controls away from the border to the premises of a trusted trader could cut waiting times and improve biosecurity © Charlie Bibby/FT

Currently 12 consignments of plants are held up at Sevington, many of which have been there for over a week, according to three people familiar with the situation.

No one in the supply chain was informed of the reason for the delays, according to the Horticultural Trades Association. By the time they were told the issues stemmed from an outbreak of pests in Italy, more shipments had arrived. 

“We have made it clear that delays like this with no communication are completely unacceptable. They must ensure that the industry has detailed and timely communication in the future,” the trade group said.

“Drivers don’t want to come to the UK any more, they’ve had enough,” said one customs agent who asked not to be named, describing “inhumane conditions” for drivers at Sevington, who have to wait for hours in a small room, only provided with a bottle of water while their goods await inspection. 

Some in the industry are pinning their hopes on the government agreeing a “veterinary deal” with Brussels that could reduce or remove the need for inspections and paperwork on most plant and animal exports.

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A deal could take years to agree and implement, however, and in the meantime the UK’s reputation as a trading partner has been damaged, the sector warned. 

A member of staff at Provender Nurseries checks a plant’s roots for imported pests
A member of staff at Provender Nurseries checks a plant’s roots for imported pests © Charlie Bibby/FT

Marco Forgione, director-general at the Chartered Institute of Export & International Trade, said the group had heard from many businesses in the EU who were preparing to stop trading with the UK, because of the increasing costs and uncertainty. 

“The true cost of BTOM [Border Target Operating Model] for traders is only just beginning to materialise and will impact the cost of living over the winter months with price increases being passed on to the consumer,” he said, adding that the government should “further assess” the feasibility of the trusted trader pilot.

While moving controls away from the border to the premises of a trusted trader could cut waiting times and improve biosecurity, it would not fix some fundamental flaws in the border system, traders said.

These included a lack of communication from the government on why some goods are flagged for checks and others not. 

“There still could be delays, but at least the plants will be an environment where they are cared for,” said Richard McKenna, Provender’s managing director. 

The government said: “[It is] committed to reducing barriers to trade and cutting red tape by striking a fair balance between business and biosecurity.

“We are piloting a trusted trader approach — the Authorised Operator Status — and full implementation will depend on the outcome of this pilot.”

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The best of TV and streaming this week

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Two searing documentaries tell the stories of war-ravaged Israelis and Palestinians; Michael Sheen and Ruth Wilson star in another replay of the Prince Andrew interview; Apple’s sleek new drama ‘La Maison’; Batman spin-off ‘The Penguin’ stars Colin Farrell; in ‘Wise Guy: David Chase and The Sopranos’ the showrunner looks back at the hit TV drama he created; more slick, squalid spycraft in ‘Slow Horses’; the journey from comedian to wartime leader in ‘The Zelensky Story’ — reviews by Dan Einav

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Sunday Number 59: World Puzzle

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FT.com will bring you the crossword from Monday to Saturday as well as the Weekend FT Polymath.

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Subscribers can now solve the FT’s Daily Cryptic, Polymath and FT Weekend crosswords on the iOS and Android apps

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