Aurelia Butler

German investor sentiment turned positive for the first time since Russia’s invasion of Ukraine in January, in a further sign that the downturn in Europe’s biggest economy may not be as sharp as feared. The ZEW Institute’s indicator of investors’ expectations of the outlook for the coming six months, a closely watched measure of economic confidence, rose for the fourth successive month to 16.9, from minus 23.3 in December. The reading was well above the minus 15 forecast in a Reuters poll of economists.“The more favourable situation on the energy markets and the federal government’s energy price brakes have contributed to [the improved reading],” said Achim Wambach, president of the Mannheim-based research institute. The positive figure comes after the German federal statistics office last week reported that the country’s economy expanded 1.9 per cent last year. The office expects stagnation in the fourth quarter, against previous analyst expectations of a contraction. A surge in gas prices following Russia’s invasion of Ukraine in late February led to fears of a sharp downturn in Germany’s energy-intensive manufacturing sector. However, energy prices have fallen sharply in recent weeks to levels last seen before the outbreak of war. Extensive government support for businesses and households has also helped soften the impact of the energy crisis. Those fiscal support measures, combined with the lifting of Covid-19 restrictions in China, fuelled a boost in consumption that offset the economic blow of the war in Ukraine, according to the ZEW Institute.Wambach said Germany’s export opportunities had also improved on the back of China’s easing of pandemic-related restrictions.The 40.2-point leap in investor morale follows a recent slowdown in the rate of German inflation. Harmonised consumer prices rose by 9.6 per cent in the year to December 2022, versus the 11.3 per cent figure recorded for the previous month, according to finalised inflation data published on Tuesday by the German federal statistics office. The inflation figures, however, reflected a drop in gas and fuel inflation resulting from government subsidies and falling oil prices. The core inflation rate — which strips out changes in the prices of food and energy, and is seen as a better measure of underlying price pressures — stood at 5.2 per cent in December 2022, an increase on the 5 per cent in November.The rise in the core rate makes it likely that the European Central Bank will raise interest rates by another half a percentage point in early February. “With underlying price pressures still rising, tight monetary policy will become an increasing drag on the economy this year”, said Franziska Palmas, senior Europe economist at Capital Economics. After more than a decade of aggressive easing, the ECB increased borrowing costs by 2.5 percentage points in 2022 to combat record-high inflation in the eurozone, ending the year with the fourth successive rise of its benchmark deposit rate, which now stands at 2 per cent. The ECB is expected to raise rates on multiple occasions during the first half of this year, before pausing during the summer. The ZEW indicator measuring current conditions remained negative in January, although it improved slightly, rising to minus 58.6 from minus 61.4 in the previous month. More

“Today, Ukraine received the first EUR 3 billion tranche of EUR 18 billion for 2023. The funds are provided on unprecedentedly concessional terms for Ukraine. Grateful to EU partners for the support in ensuring financial stability of Ukraine,” he wrote on Twitter.($1 = 0.9213 euros) More

(Reuters) – EY Global expects favourable market conditions by the end of this year or early 2024 to list its consulting and a part of the tax business if a proposed split of its accounting and consultancy arms is approved, a company official said on Tuesday.”(The split) will involve a debt raise, and a form of capital transaction – both of those are influenced by market conditions,” said Andy Baldwin, global managing partner-client service at EY.EY Global was on track to put the proposed split to a partner vote in March or April, Baldwin told the Reuters Global Markets Forum (GMF) on the sidelines of the World Economic Forum’s annual meeting in Davos.In September 2022, the “Big Four” auditor proposed splitting itself into separate accounting and consultancy businesses to ease regulatory concerns and help pay rising technology bills in what would mark the biggest shake-up in the sector in more than two decades.The vote, which will take place in around 77 countries, is “probably one of the most complex in corporate history”, Baldwin said. “We’re effectively doing a demerger.”He also said that the exchanges to list the business were still under consideration, adding that it was expected to be a “$25 billion plus start-up from the get go”. More

DAVOS, Switzerland (Reuters) – The European Union responded on Tuesday to U.S. moves to boost its energy transition with plans to make life easier for the bloc’s green industry, saying it would mobilize state aid and a fund to keep firms from moving to the United States.European Commission head Ursula von der Leyen told the World Economic Forum (WEF) annual meeting in Davos that the moves would be part of the EU’s Green Deal industrial plan to make Europe a centre for clean technology and innovation.”To help make this happen, we will put forward a new Net-Zero Industry Act,” she said. “The aim will be to focus investment on strategic projects along the entire supply chain. We will especially look at how to simplify and fast-track permitting for new clean tech production sites,” she said.”To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” von der Leyen added.Earlier, International Energy Agency (IEA) executive director Fatih Birol told a WEF panel that energy security was now the biggest driver of climate investment, as countries seek to ensure their supplies.Birol said the U.S. Inflation Reduction Act (IRA), which was signed by President Joe Biden last year, would drive investment into cleaner energy and represented the most important climate deal since the landmark 2015 Paris Agreement.’MONEY, MONEY, MONEY’U.S. climate envoy John Kerry told a separate panel on financing the transition to a low carbon economy that the only way to avoid catastrophic damage caused by climate change was for governments and companies to spend big.”How do we get there? The lesson I have learned in the last years … is money, money, money, money, money, money, money,” Kerry said of what was needed for the world to stand any chance of meeting the Paris agreement goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels. While European countries have welcomed the new commitment to energy transition by Biden’s administration, some have said they fear it may disadvantage their companies.”I understand the importance of the Act from a U.S. perspective but on the other side I should also think about European interests,” Jozef Sikela, the Czech minister of industry and trade, said on the same WEF panel as Birol. Sikela said European households and industries were paying the biggest bill for the global energy crisis, while the new U.S. legislation would pull away investors and force governments to compete on the level of subsidies. “When we start a rally of subsidies, this is dangerous,” he said, adding that Europe should be lobbying for exemptions.’TARGETED SUPPORT’Europe’s energy crisis, triggered by Russia’s invasion of Ukraine 11 months ago, has been felt across the 27-member EU, with gas prices almost 90% higher last year than the year before.Von der Leyen did not give any details of the proposed fund, an idea she first raised in September, which does not yet have the support of all EU governments, notably Germany.”As this will take some time, we will look at a bridging solution to provide fast and targeted support where it is most needed,” she said, without giving any details, adding that the Commission was pinning down the needs of the green industry.Vicki Hollub, chief executive of U.S. oil producer Occidental Petroleum Corp (NYSE:OXY), earlier called the U.S. legislation one of the most transformative bills ever signed.But she rounded on European governments for taxing fossil fuel firms that were also developing renewable energy. “With all due respect to Europe, I hate to say it but I have to say it, imposing windfall profit tax on the oil companies that are doing their best to grow wind and solar in Europe was not the smartest move, in my opinion,” Hollub said.Subsidies are very important for the development of new technologies, she told the WEF panel with Birol and Sikela. More