Aurelia Butler

Prime Minister Giorgia Meloni’s first budget drives up next year’s deficit to 4.5% of gross domestic product from 3.4% forecast in September, allocating more than 21 billion euros ($22.3 billion) in tax breaks and bonuses to help firms and households cope with the energy crisis.Among numerous other measures, the bill also lowers the retirement age, offers fiscal incentives to encourage hiring on open ended contracts and includes 12 tax amnesties allowing people and firms to catch up with missed payments through reduced penalties.The government won the confidence vote by 109 to 76. This was followed by the formality of a further vote in which the Senate definitively signed off on the package.Economy Minister Giancarlo Giorgetti called the budget’s approval a “mission accomplished”, saying in a statement that the package had won the confidence of the markets, European institutions and finally of parliament.Italian governments often use confidence votes to truncate debate over amendments and push through legislation. If such a vote is lost the government must resign but Meloni, with her ample parliamentary majority, ran no risk of this.A confidence vote was also used to force the budget through the Chamber of Deputies last week.Opposition parties have accused the right-wing ruling coalition of giving parliament insufficient time to review the bill, which was presented by Meloni in November about a month after she took office.The government has rebutted that it had no alternative because Italy’s national election held in September had drastically curtailed the period normally used to draw up and debate the package. More

MOSCOW (Reuters) – The Russian rouble pared losses to gain on Thursday after slumping to an eight-month low against the dollar in early trade, struggling under the weight of expectations that sanctions on Russian oil and gas may limit export revenues.Despite recovering ground in another volatile session, the rouble has still lost more than 13% to the dollar since a Western price cap on Russian oil exports came into force on Dec. 5. By 0957 GMT, the rouble was 0.8% stronger against the dollar at 71.64, having earlier touched 72.9175, its weakest since April 27. It gained 0.6% to trade at 75.95 against the euro and firmed 0.6% against the yuan to 10.31, earlier touching a seven-month low of 10.326.The rouble has now lost the key support of a month-end tax period that usually sees exporters convert foreign currency revenues into roubles to pay domestic liabilities, while recovering imports have combined with falling exports to add more pressure. “The fundamental factor in the form of the change in current account parameters, where exports have decreased and imports risen, is putting noticeable pressure on the rouble’s position,” said Alfa Capital in a note. Brent crude oil, a global benchmark for Russia’s main export, was down 2% at $81.6 a barrel.President Vladimir Putin this week delivered Russia’s long-awaited response to the price cap, signing a decree that bans the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by it. Russia’s economy is also on shaky ground heading into 2023. November economic data on Wednesday gave signs that a labour shortage linked to Putin’s late September partial mobilisation order was hurting growth prospects. Russian stock indexes were higher.The dollar-denominated RTS index was up 1% to 942.7 points. The rouble-based MOEX Russian index was 0.2% higher at 2,144.5 points. More

(Reuters) -European shares inched lower on Thursday, in their penultimate session of 2022, as soaring COVID cases in China dampened risk appetite across global markets. The region-wide STOXX 600 edged 0.2% down. For the year so far, it has fallen 12.5%.After a brief jump this week, global markets are nervous about Beijing’s move to further relax COVID curbs, as surging infections dimmed hopes of a swift recovery in the world’s second-largest economy.The scale of the outbreak and doubts over official data prompted the United States, India, Italy, Taiwan and Japan to impose new travel rules on Chinese visitors. The European Union’s Health Security Committee called an urgent meeting in Brussels to coordinate the bloc’s response.China-exposed luxury firms such as Cartier-owner Richemont and French group Kering (EPA:PRTP) fell 0.9% and 0.3%, respectively.Energy stocks dipped 0.8% and miners fell 0.4%, tracking weakness in crude and base metal prices on concerns of demand recovery in top consumer China.Consumer staples such as Diageo (LON:DGE) and Unilever (L:ULVR) fell 0.8% each.”Not sure consumers in Europe have yet felt the full impact of inflation, so there could be more pain to come, and it may be harder for big brands to keep putting through price rises,” said Derren Nathan, head of equity research at Hargreaves Lansdown.In Spain, data showed retail sales fell 0.6% in November from a year earlier, after rising 1.0% in October. Spanish stocks dipped 0.3%.In Germany, Europe’s largest economy, exporters have modest hopes for next year, anticipating problems at major customers in China because of climbing COVID cases and rising prices making U.S. buyers cautious, the Federation of German Wholesale and Foreign Trade (BGA) said.Miner Antofagasta (LON:ANTO) slid 1.3% on its Los Pelambres operation in Chile’s Coquimbo region being hit by a blockade.Ferrexpo fell 0.7% on the detention of its controlling shareholder, billionaire Kostyantyn Zhevago, by French authorities. The iron pellet producer said the detention was unrelated to matters at the company.Report on Wednesday saying that imported baby formula would be subject to tariffs again after the expiration of exemptions weighed on companies such as Nestle SA (SIX:NESN) and Reckitt Benckiser that shipped millions of cans of emergency supplies. Both their shares fell nearly 1%.Meanwhile, the rate-sensitive tech sector rose helped by a fall in euro zone government bond yields. More

Lending to businesses in the 19-country euro area expanded by 8.4% in November after an 8.9% reading a month earlier while household credit growth slowed to 4.1% from 4.2%.The monthly flow of loans to companies was also sharply lower at minus 1 billion euros after a 24 billion euro reading a month earlier.Growth in the M3 measure of money circulating in the euro zone meanwhile slowed to 4.8% from 5.1%, coming below expectations for 5.0% in a Reuters survey. More

Chinese hospitals and funeral homes were under intense pressure on Wednesday as surging infections drained resources, while the scale of the outbreak and doubts over official data prompted some countries to enact new travel rules on Chinese visitors.Dubai’s main share index dropped 0.4%, hit by a 0.9% fall in sharia-compliant lender Dubai Islamic Bank.In Abu Dhabi, the index lost 0.2%, with the United Arab Emirates’ biggest lender First Abu Dhabi Bank losing 0.6%.MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.78%, as news from China unsettled investors.The Qatari index retreated 0.7%, with most stocks in negative territory, including petrochemical maker Industries Qatar, which was down 1.4%.Oil prices – a key driver for the Gulf’s financial markets – dipped amid dimming hopes of a recovery in fuel demand from China, the world’s largest crude oil importer.Oil markets were also buffeted by expectations of another U.S. interest rate increase as the Federal Reserve tries to limit price rises in a tight labour market.Saudi Arabia’s benchmark index, however, bucked the trend to trade 0.4% higher, on course to extend gains for a second session, helped by a 1.4% rise in the kingdom’s biggest lender Saudi National Bank. More

The United States and China are Germany’s most important trading partners.”There will be no slump in exports in 2023, but we cannot expect a steep rise either,” BGA President Dirk Jandura told Reuters in an interview published on Thursday. “It would already be a success if we manage a ‘black zero’ in real terms.”After Beijing abandoned its zero-COVID policy early this month, the virus is spreading largely unchecked across the country of 1.4 billion. While the Chinese economy is expected to see a sharp rebound later next year, it is in for a rough ride in the coming weeks and months as workers increasingly fall ill. “We are also worried about the U.S.” Jandura said. “We have a stronger euro again because of the ECB interest rate increases. That’s not going to boost exports.” He added that higher interest rates were already having an impact in the United States where they have risen further, especially on the construction industry.To tame soaring inflation, the European Central Bank and the U.S. Federal Reserve have raised interest rates at the fastest pace in decades and both are expected to do more next year.German exporters had not been able to fully process all orders in recent months due to supply shortages, Jandura said. That left them with comfortably filled order books and the anticipated easing of supply bottlenecks should create a catch-up effect.German exports probably have risen at a double-digit percentage rate in 2022, mainly thanks to higher prices, with goods volumes up by “low single digits,” Jandura said.Last year, exports rose 14% and imports grew 17%, reducing Germany’s trade surplus for the fifth year in a row. More

Export tariffs on aluminium and aluminium alloys are to be raised, the ministry said in a statement, citing the tariff commission of China’s state council, or cabinet.The current import tariff will stay on seven types of coal until March 31 next year, with tariffs adopted for most favoured nations from April 1, the finance ministry said in a separate statement. As the world’s second biggest economy battles a surge in COVID-19 infections after Beijing’s abrupt U-turn on stringent curbs, it will set tariffs to zero on ingredients of some anti-COVID drugs, so as to ease the financial burden on patients. Domestic hospitals and funeral homes faced intense pressure as the surge drained resources.Policymakers have pledged steps to expand domestic demand and prioritise a recovery in consumption in the face of pressure from shrinking demand, supply shocks and weakening expectations, according to the annual Central Economic Work Conference.To meet shoppers’ demands, import tariffs will be further lowered on coffee makers and juice extractors, the tariff commission said.As competition grows with the United States on technology issues, China has decided to further reduce the tariffs for most favoured nations on 62 types of information technology products from July 1 next year.That step will cut China’s overall tariffs to 7.3% from 7.4%. More

Central banks are scooping up gold at the fastest pace since 1967, with analysts pinning China and Russia as big buyers in an indication that some nations are keen to diversify their reserves away from the dollar.Data compiled the World Gold Council, an industry-funded group, has shown demand for the precious metal has outstripped any annual amount in the past 55 years. Last month’s estimates are also far larger than central banks’ official reported figures, sparking speculation in the industry over the identity of the buyers and their motivations.The flight of central banks to gold “would suggest the geopolitical backdrop is one of mistrust, doubt and uncertainty” after the US and its allies froze Russia’s dollar reserves, said Adrian Ash, head of research at BullionVault, a gold marketplace.The last time this level of buying was seen marked a historical turning point for the global monetary system. In 1967, European central banks bought massive volumes of gold from the US, leading to a run on the price and the collapse of the London Gold Pool of reserves. That hastened the eventual demise of the Bretton Woods System that tied the value of the US dollar to the precious metal. Last month the WCG estimated the world’s official financial institutions have bought 673 tonnes. And in the third quarter alone central banks bought almost 400 tonnes of gold, the largest three-month binge since quarterly records began in 2000.The conservative estimates from the WGC outstrips the reported purchases to the IMF and by individual central banks, which stands at 333 tonnes in the nine months to September.Officially, the buying in the third quarter was led by Turkey at 31 tonnes, taking gold to about 29 per cent of its total reserves. Uzbekistan followed with 26 tonnes, while in July Qatar made its largest monthly acquisition on record since 1967.The discrepancy between the WGC’s estimates and officially reported figures tracked by the IMF can be partly explained by government agencies besides the central banks in Russia, China and others that can buy and hold gold without reporting them as reserves.Acknowledging its intake — but also possibly trying to signal its limited role — the People’s Bank of China (PBoC) reported earlier this month that in November it made its first increase in gold holdings since 2019, with a 32-tonne bump worth about $1.8bn. Yet the gold industry says Chinese buying is almost certainly higher. Mark Bristow, chief executive of Barrick Gold, the world’s second-largest gold miner, said China had bought tonnes of gold around the high 200s mark, based on his discussions with numerous sources. Nicky Shiels, metals strategist at MKS PAMP, a precious metals trading company, added gold prices would have peaked around $75 lower in November if the PBoC had only purchased 32 tonnes. Gold prices traded as high as $1,787 a troy ounce in November and have since advanced above $1,800.For Russia, sanctions have created significant problems for its gold mining industry — the largest in the world after China — in selling overseas. It produces roughly 300 tonnes each year but has a domestic market for only 50 tonnes, according to MKS PAMP. At the same time, western governments have frozen $300bn of Russia’s foreign currency reserves through sanctions, which Shiels says has prompted nations outside the west to ask: “Should we have exposure to so many dollars when the US and western governments can confiscate that at any time?”Russia’s gold-buying repeats South Africa’s playbook during Apartheid-era sanctions of supporting domestic mining by buying the yellow metal using local currency, says Ash.“With limitations on the export side, it would make sense it’s the Russian central bank,” said Giovanni Staunovo, commodity analyst at UBS.The Central Bank of Russia stopped reporting monthly numbers on its reserves soon after the war began. CBR officials have rejected the suggestion it is buying gold. “Our gold and foreign exchange reserves are sufficient. We don’t have a specific task of accumulating gold and foreign exchange reserves,” said CBR governor Elvira Nabiullina in mid-December. Yet CBR officials have long placed strategic value on boosting gold reserves; in 2006 it said it would be desirable for gold to make up 20-25 per cent of its holdings — in February 2022, the last time CBR published its statistical data, gold accounted for 20.9 per cent. It has reduced its holdings of US Treasuries to only $2bn from more than $150bn in 2012, while increasing gold reserves by more than 1,350 tonnes worth almost $80bn at current prices, according to Julius Baer, a Swiss private bank. Carsten Menke, head of next generation research at Julius Baer, reckons the purchases from Russia and China indicate a growing reluctance for countries to rely on the greenback. “The message these central banks are sending by putting a larger share of their reserves in gold is that they don’t want to be reliant on the US dollar as their main reserve asset,” Menke said. Some in the industry speculate Middle Eastern governments are using fossil fuel export revenues to buy gold, most likely through sovereign wealth funds.The coming months will test whether record central bank buying was an opportunistic spurt as gold prices fell, or a more structural shift.Even with prices having since recovered to about $1,800 per troy ounce, few are willing to bet the trend towards diversification of central bank reserves will change course any time soon. Bernard Dahdah, senior commodities analyst at Natixis, the French investment bank, said deglobalisation and geopolitical tensions meant the drive by central banks outside of the west to diversify away from the US dollar was “a trend that won’t change for a decade at least”.Additional reporting by Anastasia Stognei in Riga More