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At Aquinore. UK. Good morning from the Financial Times. Today is Tuesday, February 20th, and this is your

FT news briefing. Israel's economy shrinks 20%. Ukraine loses a key strategic outpost in the east.

As you said it was the first big battlefield setback for the Ukrainians in several months.

Plus, is open AI's business model sustainable?

I'm Josh Cabo duyant in for Mark Filipino,

and here's the news you need to start your day. Israel's economy has been hit hard by the war in Gaza.

The country's total economic output shrank by nearly 20%

on an annualized basis in the last three months of 2023.

That's according to official state data,

while the government has been pumping funds into the conflict with Hamas,

Israel's also dealing with more than 300,000 reservists

who've had to leave behind their day-to-day work.

And restrictions that Israel imposed on Palestinian border

crossings have caused a labor shortage in the construction sector. Moody's, the rating agency,

downgraded Israel's credit rating earlier this month over fears that the conflict could drag on.

Ukrainian forces have suffered their first big battlefield defeat since Russia's capture of

Bahmut last May. They pulled out of the eastern town of Abdevka at the weekend. In spite of these losses,

Ukraine has still managed to recapture and hold

about 50% of the territory taken by Russia when it launched its full-scale invasion in 2022.

But optimism about the strength of Ukraine's military force is fading as the country runs short of weaponry and ammunition.

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