Aurelia Butler

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MONTEVIDEO/BRASILIA (Reuters) -South America’s Mercosur trade bloc will meet in Uruguay on Thursday with fresh signs the group could use the event to announce a long-delayed deal with the European Union after last-minute negotiations to get it over the line.Uruguay’s president penciled in a meeting with European Commission President Ursula von der Leyen at the presidential residence in Montevideo for Thursday afternoon, in a positive signal for trade talks.The trade deal, supported by most of the South American countries and being pushed by Germany and Spain, has met strong opposition from France due to fears about agricultural imports to Europe that would hit the nation’s powerful farming sector.Negotiators from all sides came together in Brazil last week, senior diplomatic and government sources told Reuters, with plans that delegations could travel to Montevideo if a deal is clinched during virtual talks continuing this week.All four founding members of Mercosur support the current terms, two sources told Reuters on Wednesday. Their support has further raised hopes the EU chief will travel to the Dec. 5-6 summit in Uruguay’s capital with the intention of finalizing the agreement, two European sources said, though most cautioned that nothing was likely to be signed. One source said von der Leyen had reserved a plane ticket just in case.”The last round of negotiations ended with important progress,” Mauricio Lyrio, secretary of economic affairs at the Brazilian foreign ministry, said on Monday.”We’re hopeful. Pending issues are being submitted to the leaders to be finalized.”Bernd Lange, a German Social Democrat who chairs the European Parliament’s trade committee, on Tuesday said the domestic situation in the EU was the main obstacle to a deal and the decision whether to travel this week remained uncertain.”They are discussing on the 13th floor (office of the Commission president) taking the luggage and going to the airport or not. It’s a little bit complicated,” Lange said during a briefing. In the works for over two decades, the trade deal has been delayed by European concerns over farming competition, while Brazil, Argentina, Paraguay and Uruguay, all major producers of soy, corn and beef, have criticized European protectionism.Brazilian President Luiz Inacio Lula da Silva said last week, however, that the deal was being negotiated directly with von der Leyen as a new round of in-person talks took place in Brazil. He is confident a deal will be finalized this year.Others voiced skepticism. “If Ursula goes to Montevideo it will be to show EU commitment to concluding the deal, but it will not be signed,” one European diplomat in Brasilia said.Another diplomat in Uruguay said: “I’m still 60-40 that it fails to go anywhere.”DEAL OR NO DEAL?Paris, which is in crisis after lawmakers passed a no-confidence vote against the government, has tried to convince other EU members to form a blocking minority. Poland recently joined in opposition. France needs a minimum of three countries making up over 35% of the EU’s population to jam up the deal.Other EU countries including Germany and Spain are leading a coalition of 11 member states in favor. They want new trade routes that would reduce reliance on China and insulate members from U.S. President-elect Donald Trump’s planned trade tariffs.An EU-Mercosur deal was initially struck in 2019, but never ratified due to EU demands for commitments on deforestation and climate change. Some officials feared the same could happen again now even if a final text is agreed.”While we will applaud if something is signed in Montevideo this week, let’s see when it actually takes effect,” said Ignacio Bartesaghi, from Uruguay’s Catholic University. A final and legally binding version of the agreement would also need to be carefully reviewed and translated into some two dozen languages before it could be formally signed, Brazilian negotiator Lyrio said. That could take months still.ARGENTINA’S MILEI MAY MAKE DEBUTThe Montevideo summit is also expected to see Argentine libertarian President Javier Milei debut at a Mercosur event, following thinly veiled threats to pull out of the bloc unless allowed to pursue bilateral trade deals outside it, including with the United States.Like outgoing Uruguayan President Luis Lacalle Pou, Milei wants the group to be more flexible. Uruguay under Lacalle Pou had entered into formal negotiations on a free-trade agreement with China, a decision that his successor is unlikely to pursue. Some diplomats said the EU-Mercosur talks would impact Milei’s likely approach to the group.If the EU-Mercosur deal goes ahead, Uruguayan foreign policy adviser Bartesaghi said it would “pour cold water” on any plans Milei has to break ties with the bloc because it would prove it could achieve something.A deal strengthens the “argument to keep the group together, it buys time and calms Milei down,” he said, adding that if it fell apart it could however boost Milei’s argument. More

(Reuters) – The Federal Deposit Insurance Corporation has started to directly monitor financial-technology companies that partner with banks across the U.S., Bloomberg News reported on Wednesday.The fintech monitoring system will help FDIC examiners anticipate potential vulnerabilities before they become a problem for banks, the report added, citing people familiar with the regulator’s supervisory operations. More

The Bank of Korea may purchase government bonds and expand repo operations if needed, and the government is closely monitoring markets and will deploy measures according to contingency plans if needed, the Finance Ministry said in a statement. ($1 = 1,411.1300 won) More

BOGOTA (Reuters) -Colombian President Gustavo Petro said on Wednesday that finance vice minister Diego Guevara will step into that ministry’s top job, after previous minister Ricardo Bonilla resigned amid an ongoing corruption scandal.Petro had said earlier on Wednesday he was expecting Bonilla’s resignation, but that he does not think the former minister has committed any wrongdoing.The growing scandal, which is being investigated by the attorney general’s office and other entities, revolves around the alleged misdirection of resources from the national disaster management agency (UNGRD) and has been tied to various officials, including a former interior minister.”It will be Dr. Guevara, the current vice minister, a university professor, who knows the whole effort we have been fighting,” Petro told journalists after a meeting in Montevideo with outgoing Uruguayan President Luis Lacalle Pou, when asked about Bonilla’s replacement. Bonilla said in his resignation letter that he needed to “assume my defense as a citizen with my legal team, devoid of my public position, to concentrate on the process and avoid whatever damage from affecting the government’s public agenda.” Bonilla added he was highly confident he would convince investigators of his innocence. The scandal ignited earlier this year when two former UNGRD officials were accused of ties to suspicious purchases of water tankers for 46.8 billion pesos ($10.5 million), which were supposedly bought to supply remote areas of Colombia’s La Guajira province with water.The Supreme Court called on former Interior Minister Luis Fernando Velasco to testify in the probe, saying its investigation “begins with the hypothesis of the crimes of bribery and possible illicit enrichment.”UNGRD former deputy director Sneyder Pinilla, one of the two officials investigated, said former presidents of the senate and chamber of representatives, Ivan Name and Andres Calle, received huge sums of money to help push the president’s social and economic reforms through Congress.Both Name and Calle denied the accusations. “I expect his resignation, not because I believe him guilty, but because they want to tear him apart for being loyal to the government’s program and they want to unconstitutionally take down the government,” Petro said earlier in a long posting on X.Petro has repeatedly accused his political enemies of seeking to illegally remove him from office.Bonilla is the second finance minister to leave Petro’s government, which took power in August 2022. More

LONDON (Reuters) – British companies face a challenging 2025, the British Chambers of Commerce said on Wednesday with an increase in employment costs and potential tariffs on exports likely to hit their investment and trading prospects. The possibility of higher trade tariffs, as proposed by incoming U.S. president Donald Trump, and global conflicts are expected to weigh down on trade, on top of post-Brexit trade barriers with the European Union, the BCC said.Trump has floated blanket tariffs of 10% to 20% on nearly all imports when he returns to the White House in January. “With fears of a tariff war and continued trade barriers with the EU, international trade will be challenging for many firms,” the BCC’s head of research David Bharier, said.The BCC revised down its forecasts for net trade which it now expects to contract by 1.4% in 2025 and 1.5% in 2026.Earnings growth is expected to slow next year, mainly reflecting increased costs including the higher social security contributions that will be paid by employers and a 6.7% rise in the minimum wage, both of which come into effect in April.”The knock-on effect of rising business costs are likely to restrict wage growth in the short term and employment, as firms struggle to pass on costs and boost recruitment,” Bharier said.The Bank of England is closely watching wage growth as it considers further interest rate cuts which Bank Governor Andrew Bailey has said are likely to be gradual given the inflation pressures still in the British economy.Business investment is forecast to grow by just 0.9% next year, compared to a previous forecast of 1.4% growth. It is expected to grow by 2.1% in 2026.The downgrade was exacerbated by the rise in social security contributions paid by employers, the BCC said. Finance minister Rachel Reeves announced the increase in her budget in October. The BCC now expects Britain’s economy to grow 0.8% in 2024, a downgrade from a previous forecast of 1.1%. But growth was revised up for the coming two years – with expansions of 1.3% expected in 2025 and 1.5% in 2026, higher than previous estimates of 1.0% and 1.1% respectively, echoing upgrades by other forecasters after Reeves announced increases in public spending.The BCC said the social security rise would have a “small impact” on the growth forecasts. The Organisation for Economic Cooperation and Development on Wednesday trimmed its forecast for British economic growth this year to 0.9% from 1.1%, but raised its 2025 projection to 1.7% from 1.2% previously. More

WASHINGTON (Reuters) – U.S. President-elect Donald Trump on Wednesday nominated University of Maryland finance professor Michael Faulkender as deputy U.S. Treasury secretary, returning him to the department where he helped implement a pandemic relief program that kept paychecks flowing to workers idled by COVID-19.Faulkender served as Treasury’s assistant secretary of economic policy, where he advised then-Treasury Secretary Steven Mnuchin on economic policy issues. If confirmed as deputy secretary, this role would be expanded to a broad range of other areas, including sanctions policy, financial markets regulation, tax policy and the $28 trillion Treasury debt market.Trump earlier this month named prominent investor Scott Bessent as his choice for Treasury secretary, a decision that appeared to calm market concerns about Trump’s planned tariffs and tax cuts that could balloon budget deficits.”Mike is a distinguished Economist and Policy practitioner who will drive our America First Agenda,” Trump said in a post on Truth Social. “He will help Treasury Secretary Nominee Scott Bessent usher in a new Golden Age for the United States by delivering a Great Economic Boom for all Americans.”At the end of the first Trump administration Faulkender returned to the University of Maryland’s Robert H. Smith School of Business, where has been a finance professor since 2008.He also has served as the chief economist for two years at the America First Policy Institute, conservative think tank that has helped shape Trump’s policy agenda. Trump has drawn several nominees from the group’s ranks.During a hearing of Congress’ Joint Economic Committee in March, on the U.S. fiscal situation, Faulkender testified that by January 2021, the U.S. economy was already recovering from the COVID-19 pandemic as a result of Trump administration aid programs, including the $800 billion Paycheck Protection Program, which he helped sell to Congress in 2020.The program gave grants to small- and mid-sized companies that allowed them to continue paying employees that could not work during the pandemic.Faulkender said that an additional $2 trillion in COVID-19 aid from the Biden administration approved in 2021 helped fuel inflation and said spending cuts were needed. Debt growth and rising debt services costs “have the potential to create a bond market failure that would crush our economy and rupture our society,” he said in prepared testimony. “To solve this problem, we must greatly reduce spending and deregulate our economy to bring down inflation, thus bringing down the interest rate that must be paid on our outstanding debt.” More