Aurelia Butler

Good morning and welcome to Europe Express.A year after tightening the bloc’s foreign investment screening regime, the European Commission put out some numbers yesterday that show most deals are still getting through. We’ll unpack the findings and what the challenges are when Chinese companies are changing their tactics in acquiring European assets.In economic news, the commission today is publishing its assessments of each member state’s budget plan for next year under the so-called European Semester. Later tonight, the largest group in the European parliament, the European People’s party, will vote in a secret ballot on who should succeed Manfred Weber as group chair next year. In the run are Roberta Metsola from Malta, Othmar Karas from Austria and Esther de Lange from the Netherlands. Meanwhile, Austria’s upcoming mandatory vaccination strategy is gathering support in neighbouring Germany — at least in some parts of the country. We’ll examine the pros and cons and what further Covid-19 restrictions kick in as of today.And Ireland’s data protection commissioner, Helen Dixon, tells Europe Express what her strategy for 2022 is when it comes to cases against large tech companies.Eye on Chinese investmentsNot too long ago, western countries boasted of the amount of foreign domestic investment they attracted. Now they brag about how much they have rejected, writes Andy Bounds in Brussels. Yesterday the European Commission published its first report on the FDI screening regulation, which came into force in October 2020. The report also examines actions by member states to rein in on what is seen as hostile takeovers of sensitive technology or strategic assets by companies from outside the EU. Both the bloc as such and at a national level, Europeans have followed the US and tightened their scrutiny over fears that Chinese groups could be plundering local technology from companies or using them to further Beijing’s foreign policy aims.Some 18 countries now have an FDI screening system and six more are planning one. The holdouts are Bulgaria, Croatia and Cyprus.The commission only examines sensitive deals that affect more than one member state or community programmes such as the Galileo satellite system. It cannot block deals itself but can ask national regulators to do so.Over the past year, the commission looked at 265 projects and put conditions or tried to block only eight. Officials confirmed to Europe Express that they included the purchase of Italian semiconductor company LPE by Shenzhen Investment Holdings.On the national side, member states’ regulators looked at a total of 1,793 cases and 80 per cent of FDI projects were approved without screening. Of those screened, just 2 per cent were blocked and 7 per cent aborted by one of the parties. Some 45 per cent of cases involved US purchasers, and just 8 per cent Chinese (though the Chinese share of FDI was just 2 per cent).But the regulation might already need adapting, warned Noah Barkin, an expert in Chinese-EU investment at Rhodium Group, a US consultancy.“China is shifting its approach,” he said. Chinese companies prefer to build their own factories in the EU rather than gain access by buying EU ones, which tends to attract scrutiny. “Greenfield investment has hit levels last seen in 2016,” Barkin told Europe Express. Chinese companies also look for smaller deals and use offshore structures to avoid attention, he added. “The EU needs to remain vigilant to track the shift in how Chinese firms approach the EU market,” Barkin said.The Wall Street Journal reported this month that Italian authorities have discovered that the 75 per cent stake in drone maker Alpi Aviation was sold via offshore vehicles to China Railway Rolling Stock Corp — a state-owned rail company — and an investment group controlled by the Wuxi municipal government.Scrutinising deals that are structured through offshore companies would require a whole different level of resources, both at a national and EU level, however. And that is unlikely to happen anytime soon, with commission officials admitting they are already struggling with the volume of cases.Vax muss seinGerman officials long ruled out mandatory vaccinations. But with the rate of vaccine hesitancy still stubbornly high and new infections climbing, they are changing their tune, writes Guy Chazan in Berlin.The leaders of a number of German states — Bavaria, Baden-Württemberg and Schleswig-Holstein — have now called for the imposition of a universal vaccine mandate, similar to the one that Austria is to introduce.The prime minister of Hesse, Volker Bouffier, yesterday became the latest regional governor to come out in favour of obligatory jabs. “I think that it has to happen to permanently break these waves,” he said. All previous attempts to increase the vaccination rate had failed, he said. “Either we go from wave to wave and each time impose restrictions, or we succeed in raising the vaccination status,” he said.Others, though, are more sceptical. “Mandated vaccinations would come too late to stop the fourth wave of coronavirus,” said Andreas Bovenschulte, mayor of the northern port city of Bremen. Jens Spahn, the federal health minister, is also opposed.Even without a mandate, pressure is building on the vaccine holdouts.From today, employees will have to show either a vaccination certificate, proof that they have recovered from Covid-19, or a negative test result to attend their place of work. The same goes for passengers on Germany’s buses and trains.Some states are going further. Bavaria is today introducing contact restrictions for the unvaccinated, decreeing that only five people from two households can meet, not counting children under the age of 12, vaccinated people and those who have recovered from Covid-19. Thuringia, which has been hit particularly hard by the new wave, is to close all clubs, bars and discos, as well as Christmas markets, while restaurants will not be allowed to stay open beyond 10pm.Meanwhile, the case numbers keep rising. Germany recorded 45,326 new infections yesterday and 309 deaths from Covid-19. The number of cases per 100,000 over seven days reached 399.8 and the number of free beds in intensive care wards dropped about 300 to 2,400. Chart du jour: Against all oddsBusiness activity in the eurozone picked up this month despite rising inflation driven by supply chain disruptions, rising energy costs and a rebound in Covid-19 cases. The survey showed services outperformed manufacturing for a third straight month, recording the strongest growth in activity for three months. (More here)Going after big fishThe head of the Irish data privacy watchdog says her office will focus on high-risk cases next year, rather than pursuing every small complaint — in an attempt to stave off criticism about her alleged reluctance to go after Big Tech, writes Javier Espinoza in Brussels.A recent analysis showed how the Irish Data Protection Commission (IDPC) had a huge number of complaints against large online platforms still unresolved. (Read about it here).Dublin has even received harsh criticism from its peers. Ulrich Kelber, head of Germany’s data protection watchdog, recently complained that his country alone had “sent more than 50 complaints about WhatsApp” to the Irish authorities, “none of which had been closed to date”. Now the IDPC is fighting back. Helen Dixon, the Irish data protection commissioner, told Europe Express that she will make the enforcement of big tech cases a higher priority.She said her office often gets bogged down with individual complaints that amount to not much as she seeks to dedicate resources to go after cases that involve the likes of Facebook or TikTok.“Some of the complaints we deal with can take up a lot of time but they don’t expose any systemic risks and there is no significant risk to the individual,” she said, adding that the watchdog will “push back” more on such cases.Dixon said pursuing cases on data breaches by Big Tech is “certainly one of the sub priorities” but rejected accusations that she’s not doing enough. She argued that the Irish authority became the lead enforcer only after the passing of privacy laws three years ago and that the system can only move at a certain pace.Dixon continues to face fresh criticism, however. Yesterday, Austrian privacy activist Max Schrems accused the IDPC of trying to prohibit him from publishing material in relation to a complaint against Facebook.“They basically deny us all our rights to a fair procedure unless we agree to shut up,” he said.The IDPC said: “As a matter of fairness to all parties, the integrity of the inquiry process should be respected and the confidentiality of information exchanged between the parties upheld.”What to watch today EU commission publishes ‘European Semester’ on member states’ 2022 budgetsBelarus opposition leader Sviatlana Tsikhanouskaya speaks in the European parliamentEuropean People’s party group in the EU parliament elects its new leaderNotable, Quotable

Wirecard fallout: Germany’s financial regulator BaFin is set to have to cut its ties to banking lobbyists and ensure it does not take orders from the finance ministry under rules being proposed by Brussels in the wake of the group’s scandal. Political ads rules: The EU will unveil draft legislation aimed at curtailing the use of social media practices such as microtargeting and user profiling by forcing tech companies to share information on how they disseminate ads and target people online, or face fines of up to 5 per cent of their turnover.Turkish rollercoaster: The lira suffered a historic retreat after President Recep Tayyip Erdogan praised a recent interest rate cut and declared that his country was fighting an “economic war of independence”. (Full explainer here .)UK booster boost: An early booster campaign and broad immunity acquired during earlier Covid-19 waves has put the UK on a different trajectory from its continental neighbours. Recommended newsletters for you More

Patients in north Africa and the Middle East are using antibiotics in sharply rising quantities far beyond the global average, raising concerns over the escalating risks of resistance to medicines to treat bacterial infections, according to a new analysis.The data — mapped by the FT from work led by a team at the University of Oxford and published in Lancet Planetary Health — estimates antibiotic consumption for 204 countries between 2000 and 2018. It shows a 46 per cent increase in global antibiotic usage, with a surge in nations including Sudan, India and Vietnam.While many poorer countries have inadequate access to antibiotics, leading to unnecessary deaths through lack of adequate treatments, other middle and higher income countries are using volumes far beyond global norms.The study, based on a combination of prescription data and statistical modelling, shows that the highest rate of consumption in a single country — measured as a defined daily dose per 1,000 people per day — is in Greece, at nearly 45.9, compared with a global average of 14.3 and an average of 21.1 in Western Europe. There has also been a sharp rise in the Middle East, where antibiotics are often provided without prescriptions, which risks the development of bacterial strains resistant to drugs.These figures are included in an FT data dashboard designed to track the emerging trends in the “silent pandemic” of antimicrobial resistance, which causes hundreds of thousands of annual deaths. The dashboard aims to plot the growth in disease, medicine usage and efforts to respond by companies, governments and others.The Center for Disease Dynamics, Economics & Policy has also attempted to calculate the extent of antibiotic usage, and fresh studies are under way to link consumption to overall estimates of the burden of antimicrobial resistance.Compared with the funding and level of research and development activity devoted to other disease categories, such as cancer, the pipeline is thin for new antibiotics, for diagnostics to help their targeted use, and for vaccines to prevent infection.An annual benchmarking conducted by the Access to Medicine Foundation highlights variable efforts by both innovative and generic pharmaceutical companies in a range of activities — including research, surveillance and manufacturing — to tackle antimicrobial resistance.An analysis by Farm Animal Investment Risk & Return — a think-tank designed in part to mobilise activist investors to reduce the extent of antibiotics in animals — highlights the variable response of the agro-food and restaurant sector.Governments and other funders have stepped up support into research around the topic, but with a wide range of different approaches and levels of commitment, as illustrated by the Global AMR R&d Hub.Broader efforts by countries to improve stewardship, through measures such as improved diagnosis and infection control, are also highly variable, as measured by the Global Coalition on Aging’s Global AMR Preparedness index. More

This is the third part of an FT series analysing how the Covid-19 pandemic has transformed the labour market and changed the way millions of people think about workAubérie Zaro left her Paris-based Big Four consultancy job in January determined to take some time off to ponder what she really “wanted to do”. After a nine-month pause from the job market, the 30-year-old started looking for a new position. Much to her surprise, she found one that matched her goals within a month. “I thought with the pandemic all hiring might be frozen, but it was really fast,” she said.Zaro’s swift and successful job search is one that thousands of French workers have experienced in recent months. As in most developed countries, they have benefited from generous government support for businesses and a sharp economic recovery, which have helped bring the unemployment rate — those out of work but actively searching for jobs — back to pre-pandemic levels of 8 per cent.But unlike the UK and US, where record numbers of people have left the labour force, France and some other EU countries have also avoided the trend known as the “Big Quit”: the proportion of French working-age people employed or seeking work has risen to 74 per cent, a record high. Such trends have raised hopes that the post-pandemic economic boom could mark a step-change for countries such as France that have long suffered high levels of structural unemployment. “Perhaps the conditions have finally been met to reduce the unemployment rate,” said Stefano Scarpetta, director of employment, labour and social affairs at the OECD. “The pick-up in the French economy has been stronger than I expected.”Direct state support to companies and their staff during the pandemic partly explains why workers in France and some European countries — such as the Netherlands, Norway and Sweden — are either rejoining the labour force or leaving it in lower numbers than in other developed economies.As part of France’s €100bn Plan de Relance, or Recovery Plan, thousands of companies received financial aid to help them retain existing staff and, in some cases, hire more people. By contrast, the US supported workers’ income by providing extra benefits directly to them.This system of aid has enabled Nicolas Sordet, head of Lyon-based chemicals start-up Afyren, to add 45 new staff. The €7m it was promised from the state was a “catalyst” to invest in the development of a new factory in northern France that will produce fertilisers from agricultural waste, he said.Reforms predating the pandemic by over a decade — and continued by President Emmanuel Macron — also played a role. Measures such as a €10bn reduction in business taxes and lower firing costs have made it more appealing for businesses to hire staff, economists say.Macron policies that targeted the young also had an impact, including a scheme that gave financial incentives to businesses to hire apprentices. Among 15-24-year-olds, employment is now at its highest level since 2003, when records began — although in absolute terms it remains low, at 33 per cent. Macron, who early in his premiership pledged to slash France’s unemployment rate to 7 per cent from 9.5 per cent, used a national address this month to justify his Quoi qu’il en coûte, or “Whatever it takes”, pandemic strategy, arguing this made it possible “not only to resist the crisis but to bounce back more strongly”. But economists are divided on how much credit Macron can take for the labour market’s recovery, and concerns persist about its underlying health.France’s unemployment — 8.1 per cent in the third quarter — is still much higher than in the UK — 4.3 per cent for the same period — or Germany — 3.4 per cent. French companies also report they have difficulty finding staff — although this is a longstanding structural issue that predates the pandemic.Philippe Martin, professor of economics and deputy chair of the French Economic Analysis Council, said: “Among people aged 25 to 55, the employment rate in France is very standard and comparable to other countries. Where France is doing very badly is for young people and for old people, and that’s a relatively structural problem, which is here to stay.” Employment among older workers has improved in recent years. Yet although around two-thirds of 50 to 64-year-olds are in work — up by around 10 percentage points compared with a decade ago — France still has one of the youngest effective retirement ages in the world, at an average age of 60.8.This partially explains why France’s workforce has not shrunk in the same way as in other countries when their economies reopened. Many of the people that made up the US and UK’s ‘Great Resignation’ were middle aged or older and simply decided to retire earlier than they had planned. In France, the number of ageing people in the workforce who could take the plunge early was smaller as more had already retired. Martin remains concerned about a persistent lack of technical skills among the young and that France’s early retirement age deters companies from investing in older workers. “There’s clearly a need for a wake-up call and a big reform of technical and mathematical skills, because we’re going to pay dearly,” he said.Another worry is that French employment is rising faster than the economy is growing, which could signal a declining productivity. “It’s not good news that we’re creating a lot of new jobs but with low levels of productivity. It means the average quality of jobs is going down,” said Patrick Artus, chief economist at Natixis. “The big problem we face is skills and I don’t think that has improved under Macron”. More

The Reserve Bank of New Zealand on Wednesday raised interest rates by 25 basis points to 0.75 per cent as it moved to take the heat out of the economy and rein in surging house prices.In announcing its second rate rise in two months, the central bank also gave hawkish guidance on future moves, saying interest rates would probably need to rise above their neutral level.The RBNZ’s aggressive campaign of rate increases will be closely watched by central banks around the world as they consider how to react to a global rise in prices.The RBNZ thinks the neutral level of interest rates — at which monetary policy would neither stimulate or restrict the economy — is about 2 per cent. Its new forecasts suggest rates will have to rise to 2.6 per cent by December 2023, compared with the 2.1 per cent it forecast in August.That suggests the bank thinks the economy will run too hot for a period and it will have to use restrictive policy to get inflation back on track.Capacity pressures in New Zealand have become more severe. The RBNZ expects the consumer price index to rise above 5 per cent in the near term before returning towards the 2 per cent midpoint of its target range by the end of 2023.New Zealand’s central bank is unusual among its peers in that both inflation and employment are running at or above target levels, which has put pressure on the central bank to reduce monetary stimulus.The RBNZ judged that the near-term rise in inflation was accentuated by higher oil prices, rising transport costs and the impact of supply shortfalls. There is a risk that those shocks would generate wider price rises given domestic capacity constraints, it noted.The bank also cited climate change for the first time as a contributing factor for inflation.“In the near term, climate-change-related price movements could be large and generally positive,” the RBNZ said.

At the board meeting, the RBNZ discussed the case for a bigger rate rise because of capacity pressures, the higher starting point for inflation and the risk that near-term inflation would become embedded in price-setting behaviour.But it chose not to do so because of uncertainty about the resilience of consumer spending and business investment as New Zealand adapts to living with the Covid-19 virus. Until recently, Wellington pursued a zero-Covid policy.Another reason was the tightening in monetary conditions that has already taken place as banks raise interest rates to households and businesses.The RBNZ discussed the stimulus being provided by the lingering impact of its asset purchase programme and said it expects to reduce its bond holdings. It will provide details early next year.In its forward guidance the RBNZ said: “Further removal of monetary policy stimulus is expected over time given the medium term outlook for inflation and employment.” More

WASHINGTON (Reuters) – Four groups of influential Democratic lawmakers urged U.S. Treasury Secretary Janet Yellen on Tuesday to back the issuance of $2 trillion in additional emergency reserves by the International Monetary Fund to help poor countries still struggling with the COVID-19 pandemic.The chairs of the Congressional Progressive, Black, Hispanic, and Asian Pacific American Caucuses told Yellen in a letter seen by Reuters that U.S. backing for a new allocation of IMF reserves would provide needed support for hundreds of millions of people in developing countries, where vaccination rates lag far behind those in advanced economies, while underpinning global growth.In the letter the lawmakers welcomed Yellen’s support for a $650 billion allocation of IMF Special Drawing Rights (SDRs) in August, and asked her to support a measure passed by the House of Representatives in July that called for issuance of 1.5 trillion more SDRs, valued at around $2 trillion. “A new issuance of 1.5 trillion SDRs remains a vital tool for this administration’s efforts to crush the coronavirus and build back better, both at home and abroad,” they wrote.A congressional aide said “aggressive action” was needed to address the pandemic’s global impacts, particularly for low-income countries, and the caucuses want to ensure support from President Joe Biden’s administration for additional SDRs, given “the potential to advance racial justice.”The lawmakers’ letter said that this year’s IMF SDR allocation had been used in full by many of the world’s most vulnerable countries, including Chad, Lebanon, Ecuador, Malawi, Tunisia and Ethiopia.The amount of SDRs used in the three months since the issuance was 21 times greater than what had been used in the first three months after the last issuance in 2009, they said.Lawmakers are seeking Yellen’s support as they work to finalize appropriations for the coming fiscal year. The House measure must still be passed by the Senate.The IMF has estimated that developing countries will need some $2.5 trillion to cover their financing needs in the wake of the pandemic and the economic disruption it has caused.The August issuance was the IMF’s largest-ever distribution of monetary reserves, providing additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on external debt. More

Activity in the services sector also accelerated, expanding at the fastest pace in more than two years as economic conditions stabilised after a sharp decline in COVID-19 cases and deaths thanks to soaring vaccinations.The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 54.2, its fastest pace of expansion since January 2018.The reading, which was lifted by a pickup in overall output and new orders, compared to a final 53.2 in the previous month.”Activity at Japanese private sector businesses rose for the second month running in November,” said Usamah Bhatti, economist at IHS Markit, which compiles the survey.Manufacturers’ optimism for the year ahead eased slightly from the previous month, according to the survey, which also showed firms across sectors faced soaring price pressures. “Input prices across the private sector rose at the fastest pace for over 13 years with businesses attributing the rise to higher raw material, freight and staff costs amid shortages and deteriorating supplier performance,” Bhatti said.The au Jibun Bank Flash Services PMI Index improved to a seasonally adjusted 52.1 from the previous month’s final of 50.7, putting it more firmly into expansion territory.The reading marked the fastest pace of growth since September 2019, which was just before a sales tax hike hit consumer confidence.The au Jibun Bank Flash Japan Composite PMI, which is calculated by using both manufacturing and services, rose to 52.5 from October’s final of 50.7. More

The development comes after the telecommunications company earlier https://reut.rs/3ChYKOY this month reinstated ousted Chairman Edward Rogers after a court backed his petition to constitute a new board.The company said https://refini.tv/3wUZgBx Natale has left the company, effective Tuesday, and the search for a permanent chief executive officer is on.Natale’s exit delivered another twist to the turbulent few weeks at Canada’s biggest wireless carrier, after a messy feud in the founding family spilled into the public and sparked a bitter battle for the control of the board.A rare public fight to rock the Canadian corporate world was triggered over the question of who should lead the company and had weighed on the stock. Some analysts flagged doubts whether the uncertainty would impact Rogers’ proposed C$20 billion ($16.1 billion) bid for rival Shaw Communications (NYSE:SJR) – its biggest takeover.The dispute started in September after Edward Rogers, the only son of late founder Ted Rogers, tried to drop Natale from the position of the CEO, saying he had lost confidence in Natale’s ability to lead the company through the Shaw merger.Edward Rogers wanted to replace Natale with Staffieri, the company’s then chief financial officer, but he failed to win board support and that resulted in Staffieri leaving the company. But Edward Rogers’ attempt to replace the CEO put him at odds with his mother and two sisters, who are company directors.Edward Rogers lost out in the power struggle and was removed as the chairman of Rogers. But he petitioned https://reut.rs/3FsevVz the British Columbia Supreme Court to validate the new slate of directors he had appointed, and the court ruled in his favour.”Tony is amongst the most highly regarded and seasoned telecommunications executives in the industry and was a key part of the Shaw deal,” Edward Rogers said in a statement.Staffieri has more than 30 years of experience in the telecoms, media, sports and financial sectors, including nine years as the chief financial officer of Rogers. Prior to joining Rogers, Staffieri held senior positions at BCE (NYSE:BCE) Inc.Rogers Communications director Robert Gemmell said in a statement that following the court ruling, the board had worked to establish a “constructive working relationship” to see Natale remain CEO through the closing of the Shaw merger. But a mutually agreeable arrangement could not be reached, resulting in Natale’s departure, the statement added.The boardroom battle has weighed on the company’s shares, which gained just 2% so far this year, compared with a 17.6% jump in BCE and 14.5% rise in Telus (NYSE:TU) Corp, both rivals of Rogers.The unique ownership structure in Rogers gives the chairman enormous power. Under the structure, 10 people close to the late founder, including his four children and widow, and several longtime family friends, sit on an advisory committee of the Rogers Control Trust. The trust owns 97.5% of Class A voting shares in Rogers.The company said the merger process with Shaw continues to move forward, and the teams of Rogers and Shaw will meet Canada’s telecoms regulator and attend a public hearing on Nov. 22.The news was earlier reported by The Globe and Mail.($1 = 1.2557 Canadian dollars) More