Aurelia Butler

Responding to the decision, French Finance Minister Bruno Le Maire said Fitch was underestimating the positive impacts of the government’s plans to reform and strengthen the economy, and reaffirmed France’s commitment to cutting its debts.Fitch, which also revised up the country’s outlook to stable from negative, said France’s economy – the euro zone’s second-biggest – would expand by 0.8% this year, in line with the euro zone average but below the agency’s 1.1% growth forecast in its last review in November. “Social and political pressures illustrated by the protests against the pension reform will complicate fiscal consolidation,” the global credit ratings agency said.The French economy grew by 0.2% in the first quarter despite a series of strikes against the government’s pension bill, but inflation remained stubbornly high.Fitch forecast that inflationary pressures will ease during the second half of 2023 due to base effects, and that inflation will average at 5.5% in 2023, before slowing to 2.9% in 2024. Inflation in France rose to 5.9% year-on-year in April from 5.7% in March. Statistics agency INSEE said the increase was partly due to higher energy prices.Fitch added that France’s fiscal metrics are weaker than its peers and it expects general government debt/GDP to remain on a modest upward trend, reflecting relatively large fiscal deficits and only minor progress with fiscal consolidation. Earlier this month, Le Maire said France’s national debt burden, which reached a record just shy of 3 trillion euros ($3.31 trillion) at the end of last year, is expected to ease from 111.6% of economic output in 2022 to 108.3% by 2027.France faces a high debt servicing cost at the moment, with the country borrowing at about 3% from 1% a year ago. On Friday, French Budget Minister Gabriel Attal said that by 2027 the cost of servicing the country’s debt could be its biggest budget-spending item.($1 = 0.9074 euros) More

Baykar has come to prominence internationally in recent years because of the company’s light drone TB-2, which has been used in Ukraine, Azerbaijan and North Africa and has been a huge export success, catapulting the firm to becoming one of the largest Turkish defence exporters.Named Kizilelma, the drone expands the company’s product range from slow, ground attack drones to fast and agile autonomous ones that work alongside fighter jets.”It is designed to be a highly autonomous, under human purview of course, air-to-air combat vehicle” said Bayraktar, who led the design of the 15-meter-long jet-powered UCAV. “In a sense, the Kizilelma expresses a whole new future for combat aviation.”Baykar plans to begin production in small quantities next year. Kizilelma made its first flight in December and began formation flight tests with Baykar’s other drones this month. The craft is ready to begin test flights alongside piloted jets. Deployment on Turkey’s amphibious ship is scheduled for next year.There is already demand from abroad for the new drone, though its specialised capabilities mean it can be sent to less export markets.Bayraktar, who is married to Turkish President Tayyip Erdogan’s daughter, spoke on the sidelines of an aerospace and technology festival organised by his own foundation. High profile military projects have figured prominently in Erdogan’s election campaign and Bayraktar said he sees the drone as the culmination of a national aspiration and a product “where we tell the world that our country is not only a player but also a game maker.” More

PARIS (Reuters) -French President Emmanuel Macron has thrown himself into what he calls a “catharsis” operation by confronting angry voters in a series of walkabouts, an attempt to regain control of the narrative that could also expose how distant he has become.After weeks of protests against his decision to raise the minimum pension age by two years, Macron’s popularity ratings have plunged to near record-low levels, threatening to paralyse his reform agenda and turn him into a lame duck. Macron, who cannot stand again in 2027, needs to cool the political temperature to strike deals on pay and conditions with unions over the next few months, but also to prevent far-right leader Marine Le Pen from capitalising on the discontent in future elections. The French leader has embarked on a nationwide PR offensive, with several walkabouts in French towns and villages a week — a shift in communication strategy after staying out of the public eye for most of the pension debate.Be it a charming Alsacian village, a remote Mediterranean town or a medical centre in the Loire valley, the response has been the same: seething anger, finger-pointing, boos and pot banging. In a Burgundy food market on Thursday, Macron was harangued by a man who decried the high level of government debt, the lack of investment in hospitals and punitive local taxes. “You talk a lot of nonsense everyday,” the man told Macron, after the president, barely able to squeeze in an answer, said he should get his numbers right. Such direct confrontations, the president reckons, are essential to give people a cathartic release after weeks of anger directed at the government’s pension bill and Macron himself.An Elysee insider told Reuters Macron came up with the strategy himself, deciding it was better to let pent-up frustration come out now than let it fester.”The logic of what I’m doing in the coming days, weeks and months is to let this anger come out in a totally legitimate way,” Macron told reporters in Alsace last week.The move echoes Macron’s decision in 2019 to launch what he called a “great debate” following the yellow-vest rebellion, a broad anti-government movement triggered by high fuel prices. In this instance, weeks of town-hall meetings across the country helped him stage a political come-back by appearing to listen more to people.VISCERAL REJECTIONRepeating that feat will be hard, however. An opinion poll by pollster Ifop taken exactly a year after Macron’s re-election and a few days after he signed the pension reform into law, showed his popularity ratings close to lows reached during the yellow-vest crisis. Within that, the share of voters “very unhappy” with him reached 47% in April, a 7-point increase in a month and a record-high for this sub-segment.”We can observe a visceral and gut-deep rejection among almost one in two French people,” Ifop’s Frederic Dabi said.Macron has crystallised anger with a series of faux pas and cutting remarks over the past six years that have left a lasting impression of haughtiness among the general public.”The French don’t want to listen to him anymore,” Julien Odoul, a far-right lawmaker said. “It’s not brave to meet the French, it’s just the president’s job.”For many government officials, the hatred appears irrational given Macron’s positive record on the economy, with unemployment down to a 15-year low, inflation among the lowest in Europe, and the economy escaping recession so far.But a comeback is made all the more difficult by a hardening of political opposition in parliament.Before the pension reform protests, the government managed to pass legislation on issues such as nuclear energy and renewables with the help of both left-wing and right-wing lawmakers outside Macron’s centrist alliance.But making deals with other parties is now more difficult. The hard-left NUPES alliance has adopted a strategy to demonise Macron. Making deals with the far-right, meanwhile, would play into the hands of Le Pen, who wants to “normalise” her party to boost her governing credentials.The conservative Les Republicains (LR), a natural ally on economic and law and order reforms, was badly split by the pension episode, and can no longer be relied on. That was apparent again this week, when his prime minister Elisabeth Borne was forced to give up on an immigration bill.She had to admit she had failed to reach a deal with LR on the legislation, which aimed to please both left-wing and right-wing voters by speeding-up expulsions of illegal migrants while making it easier to obtain residency permits for those who work in sectors struggling to find workers.ROADMAP UNCLEARThe government has this week published a “roadmap” of what it wants to achieve this year. Its next big reform is a plan to make those receiving the minimum welfare benefit work or get training for 15-20 hours a week.That’s already causing unease. Martin Hirsh, an influential voice on poverty issues who worked in former president Nicolas Sarkozy’s government said it would amount to “unpaid work” and was a “terrifying” prospect.All of this is made trickier in the context of rising interest rates on a debt pile worth 112% of GDP. The government is working on a spending review. No details have been revealed so far but cutting spending could prove politically explosive. The government can always use executive powers to pass the budget bill at the end of the year, but the reputational costs of doing so are high — as the pension bill showed.At the food market, however, Macron appeared determined to carry on.”Some people are not happy, some people tell me off, but you can talk. And sometimes you can convince them,” he said with a smile.($1 = 0.9098 euros) More

(Reuters) – The Federal Reserve on Friday blamed the deregulatory zeal that occurred during the Trump era for contributing to the second-largest bank failure in U.S. history, appearing to take a clear stand on an acrimonious policy divide in Washington.Amid the turmoil that Silicon Valley Bank’s implosion unleashed on the financial system last month, some Republicans and industry advocates have argued strenuously that a 2018 roll-back of post-financial-crisis safeguards was not to blame.But the Fed’s searing 100-page post mortem says bipartisan legislation in 2018 loosened post-financial crisis safeguards, undermining oversight by hindering the work of bank supervisors and encouraging the capital weakness that ultimately proved fatal to SVB.Greg Baer, president of the Bank Policy Institute, a lobby group, said the Fed had blamed the 2018 changes when the results of its own review showed “the fundamental misjudgments made by its examination teams.”According to the Fed, SVB’s management bore significant blame and bank examiners also made grave missteps. The report, however, also pointed to the Fed’s vice chair for supervision at the time, without naming him, for creating what it said was a culture of weak and lax supervision that favored inaction. Randal Quarles, who was appointed to the Fed by President Donald Trump in 2017, oversaw the Fed’s bank supervision until his resignation in 2021. Quarles did not respond to requests for comment on Friday. The Federal Reserve did not offer any further comment on criticism of its report and actions. The report appeared only to harden long-set policy positions. Democratic Senator Elizabeth Warren, who serves on the Senate Banking Committee and has led post-crisis reforms to rein in financial sector excesses, said the report “clearly identified” 2018 legislation among the “major contributors” to SVB’s demise. Patrick McHenry, the Republican chair of the House of Representatives Financial Services Committee, blasted the Fed report as a “thinly veiled attempt” to justify positions like those of Warren.In 2018, a significant number of Senate Democrats joined all Republicans in rolling back key provisions of the 2010 Dodd-Frank Wall Street reforms enacted after the global financial crisis. Among other things, the new law raised the threshold at which the most intensive oversight is required to $250 billion in assets, from $50 billion, a key point cited in the report.The reforms ultimately meant looser regulation and lower capital requirements at precisely the wrong time, according to the report.”While higher supervisory and regulatory requirements may not have prevented the firm’s failure, they would likely have bolstered the resilience of Silicon Valley Bank,” the report said.The collapse of SVB and Signature Bank (OTC:SBNY) last month burned a $23 billion hole in a government fund for deposit insurance, which officials are preparing to recoup in special fees expected to fall most heavily on the largest U.S. banks.It was unclear on Friday whether the Fed report made it more likely lawmakers could ultimately undo 2018’s deregulation, with a narrowly divided Congress consumed by a battle over raising the government’s borrowing limit to avert a default on U.S. sovereign debt in the coming months.According to the report, the 2018 law caused the Fed to raise the supervisory threshold for large banks, i.e. those smaller than the “global systemically important banks,” to $100 billion in assets from $50 billion — delaying stricter oversight of SVB “by at least three years.”Had SVB been subject to the capital and liquidity requirements that existed before, the report said, SVB “may have more proactively managed its liquidity and capital positions or maintained a different balance sheet composition.” More