Economy

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The risk premium investors demand to hold French debt rather than German Bunds dropped on Thursday after the widely expected collapse of the French government.”We follow very closely what is gong on in France,” Commission spokesman Balazs Ujavri told the briefing. “What we see for now is that the economic effect is rather contained and limited. The macroeconomic situation in France remains stable.”Far-right and left-wing lawmakers joined forces early this week to back a no-confidence motion against Prime Minister Michel Barnier.Analysts fear France would enter a slow-burning crisis that could lead to a deterioration of sovereign creditworthiness and less economic growth.”We know that in the French constitution there are measures for scenarios in which we get to the end of the year and there is no budget,” Ujvari said, referring to the roll-over of the 2024 tax and spending structure being rolled over to 2025. More

Cambridge Realty Capital has reported key findings from the senior housing capital markets in 2024, noting operational improvements despite enduring financial challenges. The industry has experienced growth in occupancy and labor market stability, but these positive trends are offset by persistent margin compression and high financing costs.Operational advancements have been achieved with steady increases in occupancy rates, suggesting a gradual recovery. The labor market has also reached a level of stability, providing operators with more predictable workforce management. Rental rates have risen by over 5% compared to the previous year, yet disparities remain, with market leaders commanding significantly higher rents.Despite these improvements, operating margins are still under pressure, with many facilities operating below the nearly 30% margins seen in earlier years. This ongoing trend reflects a structural shift in the industry, with rent increasingly covering service costs rather than real estate expenses. Rising labor and insurance costs continue to consume a large portion of revenue, although inflation-driven rent hikes are aiding communities in maintaining dollar levels sufficient for debt service.The cost of debt remains high, with banks focusing on existing customers and extending loan maturities. Private lenders are active but selective, and while HUD loans are reliable, they come with longer closing timelines due to high demand. Agencies are re-entering the market but offering lower loan-to-value ratios.A significant increase in distressed sales has been a notable trend in 2024, with record-breaking transaction volumes. These sales often result in lower-than-expected prices per unit, allowing new buyers to enter the market with less financial pressure from real estate costs, potentially leading to innovative operating models.Looking forward, Cambridge Realty Capital remains cautiously optimistic for 2025, anticipating more stable margins and improved access to capital. This outlook is based on the groundwork laid in 2024, despite the headwinds the industry continues to face.Cambridge Realty Capital, established in 1983, specializes in providing FHA-insured HUD loans and conventional mortgage financing. As a seasoned HUD lender, the company has completed over 500 transactions totaling more than $6.5 billion.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

PARIS (Reuters) -French President Emmanuel Macron was meeting allies and senior politicians on Thursday as he sought to swiftly appoint a new prime minister, a day after far-right and leftist lawmakers toppled Michel Barnier’s minority government.Francois Bayrou, whose name is often cited by French media as a possible successor to Barnier, was due to have lunch with Macron, Le Parisien newspaper and other media reported. Bayrou is a veteran centrist politician and a close Macron ally.Outgoing defence minister Sebastien Lecornu is also cited as a possible candidate for prime minister. There was no word yet of a possible Macron meeting with him.Three sources told Reuters on Wednesday that Macron aimed to appoint a replacement swiftly, with one saying he wanted to do so before a ceremony on Saturday to reopen Notre-Dame Cathedral – renovated after a devastating fire. U.S. President-elect Donald Trump is among world leaders expected to attend.Allies in Macron’s own camp joined the chorus urging swift action. After the late June and early July snap elections, it took Macron nearly two months to appoint Barnier.”I recommend that he proceed quickly to the appointment of a prime minister, it’s important, we must not leave things up in the air,” National Assembly president Yael Braun-Pivet told France Inter radio before meeting Macron around noon.Macron, who is due to give a televised address to the nation at 8pm (1900 GMT), will also meet the head of the Senate at 1400 GMT, French media said. Barnier, a veteran conservative who became prime minister barely three months ago, will become the shortest-serving prime minister in modern French history when Macron approves his resignation. The two men met for over an hour on Thursday morning, French media said. Barnier had been due to hand in his resignation during that meeting but there was still no official confirmation after he left the Elysee presidential palace.TURMOILThe political turmoil in France further weakens a European Union already reeling from the implosion of Germany’s coalition government, and comes just weeks before Trump returns to the White House.Any new prime minister will face the same challenges that led to Barnier’s downfall, notably pushing the 2025 budget through a deeply divided parliament at a time when France needs to fix ailing public finances.”This is the logical conclusion of what France and its lawmakers are at the moment: a mess,” 75-year old Parisian Paulo told Reuters, commenting on the latest developments.Macron precipitated the current crisis with an ill-fated decision to call the snap election in June. He has a mandate until 2027 but faces growing calls to resign.”The main culprit for the current situation is Emmanuel Macron,” Marine Le Pen of the far-right National Rally (RN) told TF1 TV late on Wednesday.A French president cannot be pushed out unless two thirds of lawmakers decide he has gravely failed to fulfil his role, according to a never-yet-invoked article of the constitution.Some 64% of voters want Macron to resign, according to the Toluna Harris Interactive poll for RTL broadcaster. A small majority of voters approve of parliament bringing down Barnier, but many are worried about its economic and political consequences, the poll showed. Under French constitutional rules, there can be no new parliamentary election before July.”Until potential new elections, ongoing political uncertainty is likely to keep the risk premium on French assets elevated,” SocGen analysts said in a note. “Political uncertainty is likely to dampen both investment and consumer spending.”The political uncertainty has been unnerving investors in French sovereign bonds and stocks for weeks.French bonds and stocks rallied on Thursday on what some traders said was profit-taking following the widely expected outcome of the no-confidence vote. But the relief rally is unlikely to last, given the scale of political uncertainty.The fall of France’s government leaves the country without a clear path towards reducing its fiscal deficit and the most likely outcome is less belt-tightening than previously planned, credit rating agency Standard and Poor’s (NYSE:SPY) (S&P) said. More

BENGALURU (Reuters) – The European Central Bank will trim 25 basis points (bps) from its deposit rate on Dec. 12, according to all but two of 75 economists polled by Reuters, and at least 100 bps more next year as the economy slows and fears mount about U.S. tariffs.For now, the ECB is unlikely to react to heightened political turmoil in Europe – the French government collapsed as expected on Wednesday.U.S. President-elect Donald Trump’s proposed tariffs, and whether they trigger a wider trade war, raise further questions for ECB policy next year.Most ECB watchers have kept their rate views, including end-2025 forecasts, unchanged from a survey taken last month, as they await further developments before making big changes.All 75 economists barring two in the Dec. 2-5 Reuters poll predicted another 25 bps cut next week, the fourth such move this year. The other two expected a 50 bps cut.”A 25 bps move remains our baseline, and comments from most Governing Council members appear to back such a step as well. Even in the case of a 25 bps cut, the big uncertainties involved in the outlook will likely keep the overall message rather soft and open-minded,” said Jan von Gerich, chief analyst at Nordea.”Trump’s capability to increase uncertainty in the euro area is large…(and) the fact both Germany and France lack a strong government with a lot of political influence makes it very challenging for Europe to make rapid and well-defined decisions.”There had been some speculation in markets recently about a larger half-point move, but comments from ECB officials suggest that is unlikely. “As the data currently stands, I think a reduction of 0.25 percentage points is conceivable, not more,” Robert Holzmann, one of the most hawkish Governing Council members, said earlier this week.An 80% majority of respondents, 60 of 75, predicted two more deposit rate cuts next quarter, a bigger majority than around 70% in November. Just over half, 39, predicted another two quarter-point reductions in the second quarter, taking the rate to 2.00%.An over 75% majority of economists expected rates at 2.00% or lower by end-2025, up from about 70% in November and around 60% in October, suggesting risks are skewed towards more cuts than fewer.Interest rate futures are pricing in over 150 bps of ECB rate reductions by end-2025, twice what is priced in for the U.S. Federal Reserve, meaning an already retreating euro could remain weak in the near term, a separate Reuters survey showed.TRADE THREAT TRUMPS DOMESTIC POLITICSAn overwhelming majority of the same panel of economists surveyed last month said Trump’s tariffs would significantly affect Europe’s economy in coming years.”We downgraded our growth forecast materially for 2025, as a result of the Trump tariffs. We don’t think Trump is very sympathetic to the EU and will not hold back,” said James Rossiter, head of global macro strategy at TD Securities.”If you look at the geopolitical risks around the coming year with France, Germany, Trump, all these things really skew to the downside. If you get one of these or multiple of these geopolitical risks materialising in a big way, then it’s easy to see a scenario where the ECB has to cut to 1.5%.”The euro zone economy is forecast to grow 1.0% in 2025 and 1.2% in 2026, poll medians showed, a slight downgrade from last month.Inflation, at 2.3% in November, is expected to fall back to the 2% target in the second quarter of 2025 and stay around there at least until 2027, according to median poll forecasts.ECB staff will update their own economic forecasts at the December meeting.(Other stories from the Reuters global economic poll) More

GDP for 2024 is now expected to grow by 3.0%, up from 1.9% seen in August, while the projection for 2025 was raised to 2.9% from 2.2% previously, the new forecasts showed.”Especially the pharmaceutical industry’s production and exports are fueling growth,” the ministry said in a statement.The Nordic country of 6 million people has benefited from the rapid expansion of Novo Nordisk, maker of the Wegovy weight loss drug and the Ozempic diabetes treatment, at a time when much of Europe has seen slow growth or stagnation.Around one fifth of Denmark’s employment growth was attributed to an increase in staffing at Novo Nordisk, which currently employs some 30,000 people, according to the economy ministry.”Although Novo Nordisk is of great and increasing importance to the Danish economy, we don’t envision a scenario where it’s so extensive that it (growth) all comes down to Novo Nordisk,” economy minister Stephanie Lose told a press conference.The ministry expected GDP growth to ease to 1.7% in 2026. More

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Elon Musk is set to visit the Capitol this Thursday to fuel congressional support for his bold initiative aimed at reducing the federal budget by a minimum of $2 trillion, Bloomberg News reported.This level of budget reduction would be the most significant the United States has seen since the post-World War II era.Musk, in collaboration with Vivek Ramaswamy, a former Republican presidential candidate, has scheduled meetings with various lawmaker groups. Furthermore, they will hold a session open to all Republican House members, as announced by GOP Representative Marjorie Taylor Greene. Greene is also leading a newly formed House subcommittee dedicated to this fiscal endeavor.As the world’s wealthiest individual and a prominent supporter of President-elect Donald Trump, Musk has utilized his influence to promote what he has termed the “Department of Government Efficiency,” or “DOGE.” The acronym humorously references the cryptocurrency Dogecoin, which Musk occasionally endorses. Despite the official-sounding name, the “DOGE” does not exist within the government framework, positioning Musk and Ramaswamy as external advisers.Efforts by past presidents to curtail federal expenditures often hit roadblocks due to the diverse local interests represented by Congress members. However, many Republican legislators appear aligned with this major campaign promise of Trump’s.On Wednesday, Greene expressed optimism about the initiative, framing it as a significant achievement for American citizens.Musk, who has increasingly become a close confidant of Trump, participates in discussions with foreign leaders, contributes to cabinet selections, and holds considerable sway with Republican members of Congress. His goal to slash $2 trillion from the budget surpasses the total annual congressional spending on government operations, including defense. Achieving such a target would likely necessitate substantial reductions to well-supported entitlement programs like Social Security, Medicare, Medicaid, and veterans’ benefits.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More