European Reality Check

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LONDON, April 20 (Reuters) - European banks appear better positioned than U.S. peers to weather any stress from commercial property after an interest rate surge, but that does not mean Europe is out of the danger zone.

Aggressive rate hikes, still working their way through the system, follows a pandemic that hurt foot traffic to bricks-and-mortar retail locations and structurally changed work habits, with office occupancy rates still below pre-COVID levels.

Crisis radar falls on fault lines in Europe's commercial property

European banks appear better positioned than U.S. peers to weather any stress from commercial property after an interest rate surge, but that does not mean Europe is out of the danger zone.
www.reuters.com
 
BERLIN, April 20 (Reuters) - Airports in Dusseldorf, Hamburg and Cologne Bonn were virtually empty on Thursday in the first of another round of strikes called by Germany's Verdi trade union over the cost of living crisis.

Nearly 100,000 people will be affected by aviation security worker strikes on Thursday and Friday at the three airports, airport association ADV said, with around 700 departing flights to be cancelled.

Three German airports empty as transport strikes begin

Airports in Dusseldorf, Hamburg and Cologne Bonn were virtually empty on Thursday in the first of another round of strikes called by Germany's Verdi trade union over the cost of living crisis.
www.reuters.com
 
LONDON, April 25 (Reuters) - An initiative to offer an instant payments service in Europe from the end of 2023 said on Tuesday it has acquired two payment firms and obtained the backing of more banks after scaling back ambitions to take on U.S. payments giants Visa and Mastercard.

The European Payments Initiative (EPI) said it planned to acquire Dutch payments scheme Currence iDEAL, and PQI, a Luxembourg-based payment solutions provider that services iDEAL.

More banks join European instant payments pilot from end 2023

An initiative to offer an instant payments service in Europe from the end of 2023 said on Tuesday it has acquired two payment firms and obtained the backing of more banks after scaling back ambitions to take on U.S. payments giants Visa and Mastercard.
www.reuters.com
 
FRANKFURT, April 24 (Reuters) - The European Central Bank could inject cash into the banking system if the introduction of a digital euro were to cause an outflow of deposits, ECB board member Fabio Panetta said on Monday.

Ahead of the ECB's decision about developing a digital euro in October, European banking lobbies have warned that a central bank-backed currency could take deposits and business away from commercial lenders.

ECB says it can compensate banks if digital euro causes deposit flight

The European Central Bank could inject cash into the banking system if the introduction of a digital euro were to cause an outflow of deposits, ECB board member Fabio Panetta said on Monday.
www.reuters.com
 
In March, UK inflation continued to hover in the double-digit range as households grappled with the persistently high cost of living. Among the various expenses challenging British consumers' wallets, the price of an English breakfast has notably soared.

Economic data from the Office for National Statistics showed the consumer price index last month rose by an annual 10.1%, above a consensus forecast of 9.8%. This is a slight dip from 10.4% in February and still at four-decade highs.

Soaring Cost Of English Breakfast Shell-Shocks Consumers | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
 

Joint gas purchasing: AggregateEU mechanism to increase energy security for Europe​

25 April 2023
by eub2 -- last modified 25 April 2023

The European Commission launched on 25 April 2023 a first-of-a-kind process for European companies to register their gas purchase needs via the AggregateEU mechanism, to prepare for the joint purchasing of gas at EU level.

1. What is AggregateEU and how is it linked to the EU Energy Platform?​

AggregateEU is the new EU mechanism enabling demand aggregation and joint gas purchasing at the European level. It was set up following the adoption of Council Regulation (EU) 2022/2576 (the so-called "Solidarity Regulation") which introduced EU-level gas demand aggregation and joint purchasing for the first time.

This piece of legislation was proposed by the Commission on 18 October 2022, agreed by Energy Ministers on 24 November, and formally adopted on 19 December as part of the EU's toolkit to tackle the energy crisis. The Regulation obliges Member States to aggregate demand for volumes of gas equivalent to at least 15% of their respective storage filling obligations.

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Joint gas purchasing: AggregateEU mechanism to increase energy security for Europe — EUbusiness.com | EU news, business and politics

The European Commission launched on 25 April 2023 a first-of-a-kind process for European companies to register their gas purchase needs via the AggregateEU mechanism, to prepare for the joint purchasing of gas at EU level.
www.eubusiness.com
 
LONDON/DUBLIN, May 4 (Reuters) - European savers are pulling more of their money from banks, looking for a better deal as lenders resist paying up to hold on to deposits some feel they can currently live without.

The trend emerged as some of the region's biggest lenders outlined a profitable start to the year in results that also offered a glimpse of a phenomenon dubbed a "bank walk" - a slow but notable outflow of customer cash.

Fed up with shrinking savings, Europeans drain billions from banks

European savers are pulling more of their money from banks, looking for a better deal as lenders resist paying up to hold on to deposits some feel they can currently live without.
www.reuters.com
 
So the EU is starting to face the same banking stress hurting regional banks in the USA. Hopefully the have better balance sheets/liquidity than their American counterparts.
 
LONDON, May 10 (Reuters) - Britain must not get left behind in rapid financial innovation and it was getting closer to deciding "when, rather than if" it would issue a digital version of sterling, its financial services minister said on Wednesday.

The finance ministry and Bank of England launched a public consultation in February on preparing the ground for a possible digital pound that was likely to enter into circulation in the second half of this decade.

Britain edging closer to digital pound decision, says minister

Britain must not get left behind in rapid financial innovation and it was getting closer to deciding "when, rather than if" it would issue a digital version of sterling, its financial services minister said on Wednesday.
www.reuters.com
 
From the link:

British lawmakers launched an investigation on Friday into the fairness of the country's food supply chain, seeking to understand why households are facing the highest levels of food price inflation since the 1970s, reported Reuters.

The cross-party Environment, Food and Rural Affairs (EFRA) Committee of the House of Commons, the lower chamber of parliament, said it would examine how profits and risks are shared from "farm to fork", and the level of regulation.

It will also examine the impact of external factors on the supply chain, such as imported food and global commodity prices.

UK food inflation at 46-year high

www.thebeefsite.com
 

South Korea, EU agree to boost security ties amid Ukraine, North Korea tension

South Korea and the European Union agreed on Monday to launch a strategic dialogue between its top diplomats to develop a security partnership, a joint statement said, amid tension over Russia's invasion of Ukraine and North Korean nuclear threats.
www.reuters.com

Exclusive: Olympics-Paris 2024 hoping for Olympic flame on Eiffel Tower -source

Paris 2024 organisers have been planning to install the Olympic flame on the Eiffel Tower, a source with direct knowledge of the matter told Reuters on Monday.
www.reuters.com
 
Eleven years on, bilateral cooperation has progressed, particularly under the BRI, which has boosted trade, revived growth and sparked new possibilities across the CEECs and beyond through increased connectivity and cooperation.

BEIJING -- China and Central and Eastern European Countries (CEECs) have just concluded a key trade and commerce expo in Ningbo, east China, unleashing new potential for practical cooperation and deeper ties.

This year marks the beginning of the second decade of China-CEEC cooperation. Since 2012, China's trade with CEECs has grown at an average annual rate of 8.1 percent, and China's imports from CEECs have increased at an average rate of 9.2 percent annually. In the first quarter of this year, two-way trade totaled 33.3 billion U.S. dollars, up 1.6 percent yearly.

Belt and Road Initiative fosters shared growth between China, Central and Eastern Europe

China and Central and Eastern European Countries (CEECs) have just concluded a key trade and commerce expo in Ningbo, east China, unleashing new potential for practical cooperation and deeper ties.
subsites.chinadaily.com.cn
 
Car manufacturers are attempting to push back against the EU-UK Trade and Cooperation Agreement (TCA) which would require at least 45% local-content for electric cars, and 60% for batteries, from 2024.

The TCA, agreed between the European Commission and then-UK prime minister Boris Johnson, is part of an effort to encourage carmakers to re-shore battery production and supply chains closer to home, stimulating competitive production within Europe.

Car makers push back over EU/UK battery deal - The Loadstar

Car manufacturers are pushing back against EU-UK Trade and Cooperation Agreement (TCA) which requires at least 45% local-content for electric cars, and 60% for batteries, from 2024.
theloadstar.com
 

US Treasuries Blacklisted by German State as ESG Law Takes Hold​

For an illustration of how wildly different the debate around ESG is in Europe and the US, look no further than the German state of Baden-Württemberg.

One of the richest regions in Europe’s biggest economy, and the home of Mercedes-Benz Group AG as well as Robert Bosch GmbH, adopted a law this year that puts investing sustainably on par with more traditional criteria such as profitability and liquidity. It’s a decision that may affect as much as a fifth of the state’s €17 billion ($18 billion) of holdings, as it pivots away from ESG laggards.

More:

US Treasuries Blacklisted by German State as ESG Law Takes Hold - Blo…

archived 6 Jun 2023 05:18:27 UTC
archive.ph
 
A 25bp rate hike looks like a done deal for next week’s European Central Bank meeting. However, with growth disappointing, the economic outlook getting gloomier and inflation dropping, arguments for several more rate hikes are becoming weaker. That said, the ECB is likely to ignore this

ECB Preview: Don’t look back in anger

The ECB will likely hike by 25bp next week and there is more to come
think.ing.com
 
From the link:

PARIS (Reuters) - French Finance Minister Bruno Le Maire said last week he had secured a pledge from 75 top food companies to cut prices on hundreds of products next month to reflect a fall in raw material costs.

Supply disruptions exacerbated by Russia's invasion of Ukraine last year boosted commodity costs and fuelled a global surge in inflation. But food prices have continued to climb in France and many other countries even after energy and agricultural commodity costs fell sharply.

 
  • ECB to raise rates for 8th straight time
  • Seen leaving door open to more hikes
  • Forecast to show lower inflation in 2024

ECB to raise rates further even as economy stutters

The European Central Bank is all but certain to raise borrowing costs to their highest level in 22 years on Thursday and leave the door open to more hikes, extending its fight against high inflation even as the euro zone economy flags.
www.reuters.com
 

European Central Bank diverges from Fed, raising rates to highest in 22 years

The European Central Bank raised rates on Thursday as it attempts to bring down persistently high inflation.
www.cnbc.com

So, reading between the lines, the ECB plans to continue raising rates for at least the next year to year and a half.
 
FRANKFURT, June 19 (Reuters) - The European Central Bank should err on the side of further interest rate hikes as inflation could come in even higher than it expects, two ECB policymakers said on Monday, even as the bank's chief economist opened the door to a pause.

The ECB has raised rates by a combined four percentage points over the past year to stem a historic surge in inflation and said it would likely increase them again in July after its new forecasts put price growth above its 2% target through 2025.

"We need to remain highly data-dependent and err on the side of doing too much rather than too little," ECB board member Isabel Schnabel, an outspoken conservative, or "hawk," said in a speech.

 
  • Minimum wage to rise to 12.41 euros in 2024, 12.82 in 2025
  • Increase comes on top of 15% raise last year
  • Minimum Wage Commission shows divisions for the first time

Germany set to raise minimum wage by more than 3%, unions want more

Germany was set to raise its minimum wage by 3.4% to 12.41 euros ($13.53) an hour from 2024, based on the proposals of government-appointed commission on Monday, although unions and analysts said the hike would not be enough to cover inflation.
www.reuters.com
 
SINTRA, Portugal, June 27 (Reuters) - European Central Bank policymakers don't generally expect evidence that stubborn inflation is easing to be clear enough for them to pause the longest streak of interest rate hikes in the ECB's history this summer, sources told Reuters.

Conversations with seven rate-setters at the ECB's annual forum in Sintra, Portugal, showed most expected to increase borrowing costs again at both its July and September meetings despite signs the euro zone economy is flagging.

ECB policymakers see little chance of rate hike pause as inflation stubborn

European Central Bank policymakers don't generally expect evidence that stubborn inflation is easing to be clear enough for them to pause the longest streak of interest rate hikes in the ECB's history this summer, sources told Reuters.
www.reuters.com
 
LONDON, June 28 (Reuters) - UK law can accommodate crypto assets by creating a new category of personal property that would include digital assets, independent body the Law Commission said on Wednesday.

In a report commissioned by the government, the Law Commission said digital assets such as cryptocurrencies and non-fungible tokens (NFTs) do not fit within the traditional categories of personal property.

As expected, the Commission proposed adding a third category of "digital objects" to the existing categories of personal property, which are "things in possession" (tangible assets like gold) and "things in action" (such as debt or shares in a company).

UK legal body recommends new property law category for crypto assets

UK law can accommodate crypto assets by creating a new category of personal property that would include digital assets, independent body the Law Commission said on Wednesday.
www.reuters.com
 

Banking sector: Provisional agreement reached on the implementation of Basel III reforms​

The EU is about to boost the resilience of banks operating in the Union and strengthen their supervision and risk management by finalising the implementation of the globally agreed Basel III regulatory reforms. Today, negotiators from the Council presidency and the European Parliament reached a provisional agreement on amendments to the Capital Requirements Regulation and the Capital Requirements Directive.

Read the rest:

 
So they agreed how they plan to implement/comply with Basel III. There was no change to the Basel III itself.
 
Climate change, maritime & supply chain issues..............

The Rhine River, a vital lifeline of transportation and trade in Europe, is currently grappling with the pressing challenge of falling water levels.

Barge transports passing through the measuring point at "Kaub" are particularly impacted due to draft restrictions, and there is a looming possibility of other locations facing similar consequences in the near future.

At Container xChange, we are closely monitoring the situation and its impact on the shipping industry, particularly in northern and central areas where the river has become too shallow to accommodate fully loaded containerships at the choke point of Kaub and around Cologne and Duisburg.

 
European Central Bank President Christine Lagarde said Friday the bank will not “stand idly by” if there is a simultaneous increase in profits and wages given persistently high inflation in the region.

The euro zone has been battling high inflation for around a year given firstly, record-high energy costs, and more recently, soaring food prices.

'We would not stand idly by': Lagarde pledges ECB action if both profits and wages rise

There are concerns that some companies are increasing their prices more than is needed to compensate for higher costs, thereby boosting their profit margins.
www.cnbc.com
 
Corporate profits have been the biggest contributor to inflation in Europe since 2021.

This is according to a study published by the International Monetary Fund (IMF).

“Rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as companies increased prices by more than spiking costs of imported energy”, wrote IMF economists this June.

Corporate profits were biggest driver of inflation in Europe, IMF admits - Geopolitical Economy Report

Corporate profits caused 45% of inflation in Europe in 2021-2023, compared to 40% for rising import prices, IMF economists say.
geopoliticaleconomy.com
 
According to the Spanish think tank, the Elcano Royal Institute, China controls some 37 per cent of global rare earth reserves, which increases its geopolitical power. While these minerals are not mined in China, they are shipped there for processing and are fundamental for producing batteries, wind turbines and solar panels.

Chinese-made electric vehicles are in growing demand on the European continent. In November 2022 alone, exports of Chinese-made EVs to Europe were valued at €2.85 billion.

While the majority of these exports consisted of parts and vehicles designed by European automakers, they were all manufactured in China. Audit and assurance giant PwC estimates that up to 800,000 Chinese-built cars could be exported to Europe by 2025.

How does Europe plan to 'derisk' its economy?

As Europe moves towards its net zero goals, how can the bloc protect its economy and industries when its supply chains rely so heavily on China for a wide range of materials? Watch our Crash Course on the roadmap ahead. #Realeconomy
www.euronews.com
 
Processing rare earths is environmentally problematic. That's why the world lets China do it. They are poisoning themselves for the sake of market dominence.
 
Originally posted on Fortune

In panic mode after ruble plunges below a penny, Russia rescues Vladimir Putin from humiliating currency collapse with emergency hike​


Not even Fed chair Jay Powell can be accused of ever moving that far this fast.

In an emergency meeting on Tuesday, Russia's central bank governing board decided to increase interest rates by 3.5 percentage points, reaching 12%. This action aims to prop up the ruble, which has been significantly impacted by Western sanctions in response to the conflict in Ukraine.

“This decision is aimed at limiting price stability risk,” it said in a statement, justifying its second hike in less than a month by citing “substantial” upside risks to inflation from the collapsing currency.

Just four days prior, a deputy governor had dismissed concerns around the exchange rate in comments to the state news agency TASS.

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