Aurelia Butler

BRUSSELS (Reuters) – Poland will make joint European Union financing for defence its priority during its six-month presidency of the 27-nation bloc, arguing that security is a common European good, Poland’s Finance Minister Andrzej Domanski said on Wednesday.The European Commission has estimated the cost of boosting the EU’s defence capabilities at 500 billion euros ($525 billion) or more over the next 10 years. EU finance ministers will discuss possible financing models in April in Warsaw, Domanski said.”I believe that security is a common good, therefore we need a common solution. There must be a European solution,” Domanski said before Poland takes charge in January. Without saying how much money was needed, he noted that large projects, like a European air defence system, were not only about money but also about cooperation between nations.He also stressed the need for more efficiency, pointing to Europe’s 12 different tank systems as “insane”. Any joint financing model would most likely entail new joint EU borrowing, a highly controversial idea in Europe’s largest economy Germany which faces legal obstacles to joint debt. Diplomats say legal issues can only be bypassed if new borrowing were a one-off response to an emergency, like after COVID-19. POSSIBLE OPTIONSDiplomats said talks were along two main strands: one that would involve the EU’s long-term budget as security for new borrowing, following the model for the EU’s post-COVID 800 billion euro recovery fund.The other option is a special purpose vehicle with paid-in capital that would borrow against that capital, modelled on the euro zone bailout fund, the European Stability Mechanism (ESM), which can lend up to 500 billion euros.The option involving the EU budget would present more difficulties, because it would require unanimity of all 27 EU countries, limit participants to EU members and put the European Commission in charge – a prospect some countries do not relish in the context of defence policy.Creating an SPV would let the EU invite other nations like Britain and Norway, keep the scheme under control of governments rather than the Commission, and keep the debt raised off the balance sheet of governments.”From my talks with other ministers of finance, there is a broad support for the view that we need to do way more as Europe,” Domanski said. “There are a couple of solutions on the table. I think it’s way premature to decide which of them would be chosen.” The size of the EU’s financing needs will be better understood after the publication of a report by new EU Defence Commissioner Andrius Kubilius, due by early March, spelling out what defence efforts should focus on.For now, discussions on financing options are at an early stage. “We may be starting to tie our shoes before going to the starting blocks,” one EU diplomat said.($1 = 0.9519 euros) More

The Chinese-owned social media app requested the court set aside a government order requiring TikTok to wind-up its business in Canada, a filing dated Dec. 5 showed. Alternatively, it said the court could set aside the order and return it to the government for review along with guidance.A spokesperson for Canada’s Minister of Innovation, Science and Industry said in a statement that the government stood by its decision requiring TikTok to wind up its business in Canada. “The Government’s decision was informed by a thorough national security review and advice from Canada’s security and intelligence community”, the spokesperson said on Wednesday. Ottawa began investigating TikTok’s plan to invest and expand its business in Canada last year. The review led to a government order last month that required the firm to end its Canadian operations because of national security concerns.Closing its Canadian business would lead to hundreds of job losses, TikTok argued in its statement on the legal challenge. “We believe it’s in the best interest of Canadians to find a meaningful solution and ensure that a local team remains in place, alongside the TikTok platform,” it said on Tuesday.Under Canadian law, the government can assess potential risks to national security from foreign investments, such as the TikTok proposal. The law prevents the government from revealing the details of such investments.Last month’s order stopped short of blocking Canadians’ access to the popular social media platform. TikTok has more than 14 million monthly users in Canada, according to the company.The Canadian order followed similar action in the U.S. where President Joe Biden in April signed a law requiring Bytedance, which owns TikTok, to sell its U.S. assets by Jan. 19, 2025 or face a nationwide ban.On Monday, TikTok and Bytedance separately asked an appeals court to temporarily block the law pending a Supreme Court review. More

The impact would mainly be from disruption across global industries due to local lockdowns and worldwide travel restrictions, Lloyd’s said on Wednesday.The analysis by Lloyd’s and the Cambridge Centre for Risk Studies said that the most severe scenario could cause losses of $41.7 trillion, equivalent to a reduction in global GDP of 1.1%-6.4%. The least severe would lead to a $7.3 trillion loss.The COVID-19 pandemic and subsequent lockdowns caused huge global disruption and its impact continues to be felt in inflationary pressures. It also generated legal disputes over whether businesses were covered by insurance for losses.Lloyd’s did not give an estimate for the cost of the COVID-19 pandemic in the report.The insurance industry has developed cover for new outbreaks of infectious diseases, for interruption and cancellation of events due to a pandemic and for the development, storage and transit of vaccines, Lloyd’s said. More

OTTAWA (Reuters) – The Bank of Canada is poised to cut its key policy rate by another 50 basis points on Wednesday as weak unemployment numbers and poor growth underscore an economy that needs support, economists and analysts said.A minority argued that reducing borrowing costs by 50 basis points two times in a row could create a sense of panic, suggesting that the economy is teetering.Canada’s economic growth came in lower than BoC’s third-quarter prediction and early indicators show that the GDP might also miss its fourth-quarter target. Four rounds of rate cuts from 5% to 3.75% have not managed to stoke demand.This comes at a time when inflation has continued to stay within the BoC’s 1% to 3% target range and unemployment has matched a level not seen since eight years ago outside of the pandemic. “At the end of the day, the bank believes that the economy is operating in excess supply, and that it will operate in excess supply until 2026,” said Dustin Reid, vice president and chief strategist, Fixed Income from Mackenzie Investments.”Why wait and not get to your neutral range?” he said, adding that he expects the bank to cut by 50 basis points. The neutral range is considered to be the band within which rates are just enough to not restrictive economic growth but not stimulate it either. The BoC, which considers the neutral range between 2.25% and 3.25%, slashed rates by a super-sized half a percentage point in October, saying it needs demand to pick up so the economy can avoid recession. Another jumbo reduction of 50 basis points would bring rates down to 3.25%, the top end of the neutral rate. The central bank will announce its target for the overnight rate at 945 am ET on Wednesday. In a Reuters poll of economists, 80%, or 21 out of 27 respondents, predicted that the bank will cut the overnight rate by 50 basis points. The rest forecast a quarter-point reduction.Currency markets are betting on the chance of a half a percentage point cut at 88%.But Royce Mendes, head of macro strategy for Desjardins Group, said that a cut of 50 basis points could turn out to be a policy error at a time when there are several unknowns regarding how the economy will evolve. “The story of the Canadian economy and inflation is far more nuanced than the headline GDP, unemployment rate or inflation rate suggest,” Mendes wrote in a report. More

Economists polled by Reuters expect headline inflation to increase 0.3% in November on a monthly basis, taking the annual rate to 2.7% from 2.6% in October. The CPI data is the last piece of crucial economic data to be released ahead of the Fed’s next monetary policy meeting due on Dec. 17-18.Here are the forecasts from major brokerages before the CPI data:Rate cut estimates (in bps) Brokerages Dec’2024 2025 Fed Funds Rate BofA Global 25 50 3.75%-4.00% (end of Research June) Barclays (LON:BARC) 25 50 3.75%-4.00% (end of 2025) Macquarie 25 25 4.00%-4.25% Goldman Sachs 25 100 3.25%-3.50% (through (through September 2025) September 2025) J.P.Morgan 25 75(throug 3.75% (through h September 2025) September 2025) *UBS Global 25 125 3.00%-3.25% (through Research end of 2025) TD Securities 25 100 3.25%-3.50% (through end of 2025) Morgan Stanley 25 100 3.375% (Q4 2025) (through June 2025) Jefferies 25 100 3.25%-3.50% (through end of 2025) Nomura – 50 4.125% (through end of 2025) *UBS Global Wealth 25 100 3.25%-3.50% (through Management end of 2025) Deutsche Bank (ETR:DBKGn) 25 No Rate 4.375% Cuts Citigroup (NYSE:C) – 25 3.00%-3.25% (H1 2025) Societe Generale (OTC:SCGLY) 25 – – HSBC 25 100 3.25%-3.50% * UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group More

BUCHAREST (Reuters) -Romania’s pro-European parties reached a firm commitment late on Tuesday to form a governing majority that cordons off the hard right and potentially endorses a single candidate for a re-run of the country’s annulled presidential election.The ruling leftist Social Democrats won the most seats in a Dec. 1 parliamentary election which also saw three ultranationalist and hard-right groupings, some with overt pro-Russian sympathies, win over a third of seats.The parliamentary ballot was sandwiched in between two rounds of a presidential election which saw far-right NATO-critic Calin Georgescu emerge from relative obscurity to become the shock frontrunner. That prompted accusations of Russian meddling before the country’s top court annulled the presidential vote on Friday and said the entire process will need to be re-run.The new government in the European Union and NATO state will need to come up with a new calendar for the presidential election, likely in the first part of 2025. Outgoing President Klaus Iohannis, who will stay on until a new president is sworn in, will nominate a prime minister. The current legislative’s term ends on Dec. 21.On Monday, the Social Democrats, their current coalition partners the centre-right Liberals, opposition centrist Save Romania Union and the ethnic Hungarian party agreed to quickly form a pro-European government.”In the coming days, the four parties and representatives of national minorities will work on a common governing program based on development and reforms which will consider the priorities of Romanian citizens,” a joint statement said.Analysts expect the four parties, which have often clashed on policy issues, will struggle to agree measures needed to lower the EU’s largest budget deficit at 8% of economic output.Analysts, ratings agencies and Brussels have said tax hikes are needed, which will further erode the parties’ support. The parties also said they were considering supporting a single pro-European candidate in the presidential election, to boost their chances of winning against a wave of support for ultranationalists. It was unclear whether Georgescu would be allowed to run again, with prosecutors investigating his campaign. More

BANGKOK (Reuters) – Thailand’s cabinet on Wednesday approved debt support measures, including interest suspensions and reduced principal payments, to help tackle household debt, Prime Minister Paetongtarn Shinawatra said. The measures will support retail borrowers and smaller businesses and solve debt problems in a more tangible and sustainable way, she told a press conference.The government has been trying to ease Thailand’s household debt burden, which it sees as a constraint on consumption and economic growth.Thailand had an 89.6% household debt-to-GDP ratio at the end of June, amounting to 16.3 trillion baht ($482 billion), among the highest levels in Asia. Finance Minister Pichai Chunhavajira told reporters that cabinet also agreed to let banks pay a reduced annual contribution of 0.23% of their deposits to the Financial Institutions Development Fund (FIDF) for three years.The reduced FIDF contributions would help banks support debtors, officials have said.Banks currently must pay an annual regular contribution rate of 0.46% of their deposits to the FIDF, the central bank’s rescue arm that provides financial assistance to troubled institutions.The measures will help borrowers with debts that are up to a year overdue, covering housing loans of up to 5 million baht ($148,060), car loans not over 800,000 baht and smaller firms’ loans of up to 5 million baht, the government said.About 1.9 million borrowers with debts of 890 billion baht ($26.3 billion) would benefit from reduced instalments and interest suspensions for three years, the central bank said.Pichai said the debt measures would help reduce non-performing loans as the government tries to boost the economy.Southeast Asia’s second-largest economy is expected to grow 4% annually in the final quarter of 2024 and 2.8% for the whole year, Pichai told a separate press conference. Last year’s growth was 1.9%. ” Next (LON:NXT) year it will increase further… I dream of as much as 3.5%,” he said, adding growth would be supported by government stimulus measures.Central bank Governor Sethaput Suthiwartnarueput said household debt was a long-standing structural problem.”The overall economy is likely to expand and income tends to return gradually, but some debtors are still facing problems and need help to move on,” he said.   Pichai also said he would seek ways to provide credit of another 1 trillion baht for the economy via state-owned banks as liquidity was high.($1 = 33.82 baht) More

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