Aurelia Butler

Earlier this month, the ECB accelerated its exit from unconventional stimulus, and investors have been ramping up their bets on higher ECB rates.De Guindos told Handelsblatt in an interview published on Sunday that second-round effects and de-anchoring of price expectations would be “deciding factors” for the central bank.”If we see those, then we will act,” he said.Asked about risks to the European financial system due to the war in Ukraine, de Guindos said there were no liquidity bottlenecks, companies were issuing bonds, and that stocks were volatile but without “dramatic developments”.He noted the triggering of margin calls for commodities derivatives that have resulted in increased collateral to cover open positions.”But according to our observations, those facing these margin calls have so far been able to meet them,” he said. More

Hello and welcome to the working week. First the bad news. I’m afraid that this week’s diary is filled with more grim landmarks. Having just passed the second anniversary of Covid-19 being declared a global pandemic at the beginning of March, this Thursday will mark a month since Russian troops invaded Ukraine. Nato heads of state — including US president Joe Biden — will gather that day for an extraordinary meeting to discuss next steps in relation to the conflict. It will coincide with a pre-planned European Council meeting of EU member state leaders to discuss the energy crisis and Covid as well as the Ukrainian war.The UK is facing the sharpest drop in living standards since the 1950s — and possibly two lost decades for the economy. Chancellor Rishi Sunak has the unenviable task on Wednesday of charting a way through this when he presents his Spring Statement to the Westminster parliament. Will he introduce a windfall tax on energy companies? With better than expected public finances, the UK’s treasurer in chief has some wriggle room to offset the financial pain heading towards British households, but it will still be a challenging balancing act to ease the rising cost of living for many. In the last 20 years, a string of economic shocks — from the financial crisis to the pandemic — have exposed structural weaknesses in the UK economy so MBA-graduate Sunak needs fresh ideas to transform the country, and fast.The lights will be going out in cities across the planet on Saturday, but not because of the energy crisis — we hope. It is Earth Hour, the annual show of international kinship on climate change, reminding us that we can do more to tackle global warming by using less power.So what about the good news this week? The US National Park Service has estimated cherry blossoms will reach peak bloom in Washington in the coming days. The Oscars are also back in person with an awards ceremony in Hollywood on Sunday. And also on that day, in the UK and the EU, the clocks go forward by an hour for daylight saving time, ushering in longer evenings for those of us in the northern hemisphere to get out in the open. It could be just what we need to lift the spirits in these dark times. Economic dataThe spending statement will coincide with economic data on the state of the UK economy — inflation, house prices and the Office for Budget Responsibility’s medium term outlook for the economy. Forecasts into the distant future — that is, more than a couple of years — could be taken with a large dose of salt, but observers will be keen to see what current shocks have done to growth forecasts overall.If you are after international comparisons, there is the publication of numerous purchasing managers’ index (PMI) reports on Thursday. If you want yet more UK data, on Friday we will get an update on consumer confidence and retail sales. CompaniesExpect some strong numbers from the British retailers that are reporting earnings this week. Home improvement chain operator Kingfisher — which reports full-year earnings on Tuesday — raised its guidance in December, highlighting that concerns about an end to DIY with the lifting of lockdown restrictions had not come to pass. It was also a good Christmas season for clothing chain Next, which reports its numbers on Thursday, having also raised its guidance in December. The question is whether the sales boom can last given the hit to consumer confidence from rising fuel costs and the war in Ukraine.It will be a nervous week for British restaurateurs, however. The industry is in a parlous state — insolvencies rose 20 per cent during the last quarter of 2021, according to accountancy firm UHY Hacker Young. If that was not enough to contend with, the UK government’s ban on commercial evictions ends on Friday, the same day that the Commercial Rent (Coronavirus) Bill comes into force. While rent arrears from the protected period — which for England means 20 March 2020 to 21 June 2021 — landlords will no longer be barred from taking action on unpaid rent on other occasions. It means that restaurants could be forced to pay rent for the periods in which they were unable to open, putting many into a precarious position. Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayGermany, February producer price index (PPI) figures for industrial productsUK, Rightmove monthly house price dataResults: Nike Q3, Salzgitter FYTuesdayCanada, monthly industrial product and raw materials price indicesUK, CBI monthly industrial trends survey plus public sector net borrowing dataResults: Adobe Q1, Iliad FY, Kingfisher FYWednesdayArgentina, Q4 GDP figuresEU, flash monthly consumer confidence dataSouth Africa, February consumer price index (CPI) dataUK, Spring Statement by chancellor Rishi Sunak, plus February PPI and CPI data, Office for National Statistics house price index and the Office for Budget Responsibility’s economic and fiscal outlookResults: General Mills Q3ThursdayEurozone, France, Germany, Japan, UK, US: IHS Markit composite purchasing managers’ index (PMI) dataEU, European Central Bank’s general council meets in FrankfurtJapan, minutes published of Bank of Japan’s monthly monetary policy meetingSouth Africa, South African Reserve Bank’s monetary policy committee meetingUK, CBI monthly distributive trades survey showing retail industry trendsResults: Next FYFridayGermany, Ifo Institute monthly business confidence indexUK, Gfk consumer confidence figures plus ONS February retail sales dataUS, February pending home salesGovernor of the Bank of England, Andrew Bailey, speaks at an online forum hosted by the CBIResults: Smiths Group FYWorld eventsFinally, here is a rundown of other events and milestones this week. MondayEU, foreign affairs council meets in Brussels with discussions including the Ukrainian crisisUK, a service of thanksgiving for British wartime singer Vera Lynn to be held at London’s Westminster AbbeyTuesdayJordan, gubernatorial and municipal electionsWorld Water Day, organised by the UN Environment Programme to raise awareness of water access and managementWednesdayUK, WikiLeaks founder Julian Assange to marry his fiancé, the lawyer Stella Moris, in Belmarsh prisonUS, Saturday Night Live’s Pete Davidson becomes the latest celebrity to take a ride to the edge of space on Blue Origin’s New ShepardThursdayBelgium, final Covid-19 restrictions lifted plus Brussels hosts summit of EU leaders and an extraordinary meeting of Nato heads of stateUkraine, one calendar month since Russia launched its attackUS, Covid death toll set to pass 1mn mark, according to a Reuters tallyFridayFeast of the Annunciation in the Roman Catholic ChurchGreek National Day, celebrating the country’s 1921 declaration of independenceUK, ban on commercial evictions — introduced during the pandemic — endsSaturdayFrance, Eiffel Tower to switch off its lights as part of Earth Hour, calling for increased action to protect the planet from climate changeGermany, elections in western state of SaarlandMalta, general electionUnited Arab Emirates, the world’s richest day in horseracing, the Dubai World Cup, will be run at the Meydan RacecourseSundayDaylight Saving Time begins in the EU and the UKChina, indirect election of Hong Kong’s chief executive by a 1,500-member Election Committee, criticised for being weighted towards pro-Beijing interestsUK, Mothering SundayUS, the 94th Academy Awards (the Oscars) ceremony returns to the Dolby Theater in Hollywood, Los Angeles More

Three quarters of a century ago, when the cold war with the Soviet Union began, US president Harry Truman put forward what became known as the Truman Doctrine. The goal of US foreign policy, it said, was to “support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures”. This mission defined America’s stance in the world for the next four decades. No one would have wished for a new cold war, but a similar pivot point has been reached today. In his State of the Union address last month, President Joe Biden warned that the world was in the midst of a battle between “democracies and autocracies” in which “freedom will always triumph over tyranny”. It is not yet clear that it actually will. However, the US could do much to impact the direction of the world for the next several decades if the White House is able to use this moment to articulate a new and more coherent foreign policy. In this, Biden has the wind at his back. He was clearly right to move away from Donald Trump’s position that Nato was no longer important. Russia’s aggression is a reminder of how crucial Nato is, and how powerful the US and Europe can be when aligned not only militarily but economically. Germany’s new willingness to increase its own defence spending to 2 per cent of economic output will not only strengthen Nato but be a boost to Biden, since the US has long lobbied for more European countries to pour more money into the alliance.The unity with which Europe and the US have approached financial sanctions on Russia has also underscored the power of the dollar-based financial system. In the 21st century, economic power — particularly in the form of financial, trade, and energy networks — is just as important as military power. Biden should capitalise on this by pounding home the need to work with Europe and other allies more closely on a shared technology and trade framework for the future. In the face of China’s rise, too, this framework should protect the values of liberal democracies, and ensure open markets do not become a winner-take-all game. That might include working with the EU on a joint energy strategy to ensure Europe can pivot away from Russian oil and gas in a safe and sustainable way. It might mean shared industrial strategies and standards in high-growth areas such as clean technology. It should certainly include a common approach to tech regulation, ensuring both privacy and fair market access.The White House also needs to be honest about the inflationary effects of the geopolitical moment. The past 40 years of globalisation lowered prices. A more splintered world will raise them, at least in the short term. But a poll of US consumers conducted at the beginning of March found that 71 per cent said they would be ready to pay more for fuel if they knew it would benefit Ukrainians. This sense of solidarity has been sorely missed in US foreign policy as well as in domestic politics. Americans are paying attention to what is happening in Europe in a way that they have not done for decades. They are also longing for a renewed sense of non-partisan leadership, and of America’s place in the world. This is an ideal time for Biden to articulate not only the strength of US military and economic networks, but the strength of western values — the rule of law, democracy, respect for the individual, property rights, pluralism and open markets. As the war in Ukraine has shown us, these are worth fighting for today, just as they were in Truman’s time. More

The bank started buying crowns in the market on March 4 to halt a drop in the currency caused by investor flight after Russia’s attack on Ukraine. It does not have any target rate nor volumes, and said its action was aimed at unjustified currency weakening. The currency has regained nearly all losses versus the euro since the start of the Russian invasion on February 24.Rusnok, however, said on Sunday the bank may discuss further using its large reserves accumulated in 2013-2017 — when the bank intervened to weaken the currency — to help bring inflation under control.”Now we have to talk further about further steps, whether we perhaps want to temporarily strengthen the crown not only for the reason of stability, but perhaps also to actively use the exchange rate as an anti-inflationary tool,” he said.”But it is necessary to lead a debate on that and it is quite a complicated issue. But I cannot exclude it for myself.” Rusnok also said inflation shocks together with the war in Ukraine may bring Czech economic growth to zero by the end of the year and a European recession cannot be excluded.The central bank has been faster than most others in hiking interest rates since last year, taking the main repo rate to 4.5% and signalling further increase.It held 157.46 billion euros in foreign exchange reserves as of the end of February, equal to about two thirds of the country’s gross domestic product. More