Economy

Inflation rebounded in France and Spain in February, sending European governments’ borrowing costs up as doubts increased over how quickly the European Central Bank will stop raising interest rates.French consumer prices rose 7.2 per cent in the year to February, driven to the highest rate since the euro was launched in 1999 by faster increases in food and services prices. Economists polled by Reuters had expected French inflation to stagnate at January’s 7 per cent level.Spanish consumer price growth in February accelerated to 6.1 per cent, up from 5.9 per cent in January and above economists’ expectations for a fall to 5.5 per cent, despite the government cutting food taxes in January. European government bond prices fell in response on Tuesday, sending the yield on Germany’s rate-sensitive two-year bond up 0.08 percentage points to 3.15 per cent, its highest level since the 2008 financial crisis.The figures suggest eurozone inflation may prove more persistent than hoped, ahead of the publication of February price growth data for the bloc on Thursday, which economists expect to show a slowdown to 8.1 per cent, from 8.6 per cent in January. “There are clear upside risks for euro inflation in February,” said Jörg Krämer, chief economist at German lender Commerzbank.Sharp drops in wholesale energy prices after a mild winter and reduced fuel consumption have helped eurozone inflation to fall rapidly from its October record of 10.6 per cent. However, it is unclear how quickly price growth will slow to the ECB’s 2 per cent target.The ECB has committed to a further half percentage point increase in its deposit rate at its meeting on March 16. That would take the benchmark rate to 3 per cent, up from minus 0.5 per cent last July, and swap markets are pricing in further increases to just below 4 per cent by the end of the year.ECB chief economist Philip Lane said on Tuesday there was still a strong case for another half percentage point rate rise in March even though “there’s significant evidence that monetary policy is kicking in” and forward-looking indicators show price pressures cooling.“We’re all signed up to the criterion that sufficient progress in underlying inflation is important,” Lane told Reuters, suggesting the ECB will need to see slowing price growth in goods and services as well as energy and food before it stops raising rates. Even then, he said, it would be “quite a long-lasting period, a fair number of quarters” before it cut rates.French inflation was mainly driven up by faster growth in food and services prices, while energy inflation fell despite a 15 per cent rise in the regulated electricity tariff this year. The country’s core inflation rate, which includes processed foods, rose from 5.6 per cent to 5.8 per cent. The month-on-month growth in French consumer prices accelerated to 0.9 per cent, up from 0.4 per cent in January.Melanie Debono, an economist at research group Pantheon Macroeconomics, said higher Spanish inflation was “surprising” after Madrid introduced a €10bn package of temporary tax cuts on staples, including bread, pasta, dairy products, fruit and vegetables.Luis Planas, Spain’s agriculture minister, said he saw signs that food prices would start falling before too long. “We are looking at all the costs that influence food production and we’re seeing that those costs are progressively going down.” The government has urged participants ranging from farmers to supermarkets to act “responsibly” by passing savings on to consumers.A measure of underlying Spanish inflation, which excludes energy and fresh food, rose 0.7 per cent month on month and hit a record high of 7.7 per cent in the year to February. “The chance that the eurozone figures come in even higher than our above-consensus forecast on Thursday and, in turn, of a 50 basis-point ECB rate hike in May, is rising,” Debono added.Additional reporting by Barney Jopson in Madrid More

China’s economy grew 3% last year – one of its feeblest rates in nearly half a century – weakened by ultra-strict COVID-19 policies championed by President Xi, but the measures were lifted in December, after which the highly transmissible Omicron strain rapidly spread across the country.China’s development still faces triple pressures including demand contraction, supply shock and weakened expectations, the Communist Party’s Central Committee said in a communique after a major three-day gathering, according to the official Xinhua News Agency. China’s “rejuvenation” must be guided by Xi and the Central Committee as national governance is being “modernised”, the committee said in the communique but it offered no details. “It is necessary to fully, accurately and comprehensively implement a new development concept,” the committee, the largest of the party’s top decision-making bodies, said.More than 200 members of the Central Committee discussed a draft of reforms to party and state organisations that will be examined at an upcoming session of the National People’s Congress, China’s legislature.The Central Committee also approved a proposed list of leadership candidates to be recommended at the annual meeting of the largely rubber-stamp parliament, due to open at the Great Hall of the People in the heart of Beijing on Sunday.At the parliamentary meeting, lawmakers are expected to endorse the next line-up of top government posts in the Cabinet to be headed by a new premier for the next five years. Xi is also widely expected to secure his third five-year term as president, after clinching a precedent-breaking third party leadership term in October last year. Xinhua on Sunday praised Xi’s attention to the masses and their livelihoods.”The leader of the people does not fail the people, and hundreds of millions of people love their leader!” the news agency declared in an article. More

CHICAGO (Reuters) – Crews in central Oklahoma on Monday were assessing the damage and clearing debris left behind by a string of rare February tornadoes that roared through the area overnight, knocking out power to thousands of customers and injuring a dozen people.In Norman, 12 people were taken to the hospital after suffering minor injuries in the storms that rolled through and near the city at around 11 p.m. local time on Sunday. None of the injuries were life-threatening, Norman Chief of Police Kevin Foster said during a news conference on Monday.The twister was one of seven that touched down in Oklahoma and two more were reported in Kansas overnight, the National Weather Service said. Several homes, businesses and schools in Norman, which has about 128,000 residents, were damaged in the storms, he said. Some 13,000 homes and businesses were without power across Oklahoma, Poweroutage.us reported. Video footage and photographs of the destruction on local news and social media showed power lines lying in the middle of roadways, debris strewn across neighborhoods and roofs ripped off buildings. One photo showed a red sedan flipped over and resting on top of another vehicle. “A lot of real strong wind,” George Reich, a homeowner in Shawnee, a town east of Oklahoma City, told an ABC affiliate. “Wood and debris started flying. I jumped in the backseat of a car in the garage real quick.” Experts say the growing frequency and intensity of such storms, interspersed with extreme heat and dry spells, are symptoms of climate change. “It was pretty rare, historic in the amount” of wind shear, said Bruce Thoren, a National Weather Service meteorologist in Norman, regarding the Oklahoma twisters, noting that the state has seen only 51 tornadoes in February since 1950. Four additional twisters were reported in Illinois on Monday morning but none caused significant damage, according to online reports by the National Weather Service.By Monday afternoon, the service had issued several additional tornado advisories for parts of Indiana, where they warned of strong storms and damaging winds throughout the day. “TAKE COVER NOW! Move to a basement or an interior room on the lowest floor of a sturdy building,” the weather service said in one tornado warning for the Indianapolis area on Monday afternoon.The rough weather comes after days of a winter storm clobbered the U.S. Plains, Midwest and Great Lakes regions. More than 155,000 homes and businesses in Michigan remained without power on Monday, Poweroutage.us reported. Parts of California spent the weekend dealing with heavy snows in higher elevations, rain and hail in the flatlands and frigid temperatures in parts of the state that are known of its mild weather. More

US chipmakers must agree not to expand capacity in China for a decade if they are to receive money from a $39bn federal fund designed to build a leading-edge domestic semiconductor industry, according to new commerce department rules.The department on Tuesday called for applications for funds from the Chips Act passed by Congress last year, as it launched a landmark industrial policy programme designed to counter China.In announcing the move, commerce secretary Gina Raimondo stressed that the department would be implementing safeguards to ensure the programme was not abused.“Recipients will be required to enter into an agreement restricting their ability to expand semiconductor manufacturing capacity in foreign countries of concern for a period of 10 years after taking the money,” said Raimondo, who did not mention China by name.She added that companies that received funding must also not “knowingly engage in any joint research or technology licensing effort with a foreign entity of concern that involves sensitive technologies or products”.Congress passed the Chips Act in an effort to create an industry capable of mass-producing leading-edge semiconductors, which are mostly made in Taiwan at present. In addition to measures to help American companies, the commerce department has taken measures to slow China’s chipmaking industry, including the imposition of sweeping export control regulations last October that will make it hard for Beijing to obtain advanced chips.“Our goal is to make sure that the United States . . . is the only country in the world where every company capable of producing leading-edge chips will be doing that in the United States at scale,” said Raimondo.A commerce department official said companies that received more than $150mn would have to return some money to the government when they made returns that surpassed original projections by an agreed threshold.The official said the $39bn could potentially be leveraged to provide another $75bn in federally supported funding. “Total possible programme outlays . . . could be well over $100bn.”

Raimondo said companies would have to agree to other restrictions, including a prohibition on using the money for share buybacks or dividend payments.“I also want to be clear that no chips dollars can be spent on stock buybacks,” Raimondo said. “This is about investing in our national security, not enabling these companies to use our money to increase their profits.”Raimondo added that companies applying for more than $150mn would also have to outline in advance how they would provide affordable childcare for workers — a move that reflects concern that the US does not have enough skilled workers to ensure the goal of the Chips Act is met.“This is a math problem. We need more people in the labour force. We right now lack affordable childcare, which is the single most significant factor keeping people, especially women, out of the labour force,” said Raimondo.Follow Demetri Sevastopulo on Twitter More

BANGKOK (Reuters) – Thailand’s economy is seen growing between 3%-4% this year as it follows a sustained recovery path despite a global slowdown, with tourism and private consumption key drivers, the central bank said on Tuesday. Headline inflation, above target at 5.02% in January, should return to within the targeted 1%-3% in the second half of 2023, the Bank of Thailand said, citing a speech on Monday by its governor, Sethaput Suthiwartnarueput.”Supply-side (inflationary) pressures have gradually eased but demand-side pressures could increase due to a fast recovery in the tourism sector,” the BOT said in a statement. The BOT would continue monetary policy normalisation in a measured way but was ready to adjust as appropriate, it said, adding Thailand’s financial system was stable and its external position strong.The BOT will next review policy on March 29, when economists expect a further rate hike. The BOT also said this month the tightening cycle was not over yet.The BOT has raised the key interest rate by a total of 100 basis points since August to 1.50%, a pace less aggressive than many of its regional peers, with Thailand’s economic recovery lagging much of Southeast Asia.In November, the BOT predicted economic growth of 3.7% this year. It will offer a new projection next month.Southeast Asia’s second-largest economy grew 2.6% in 2022, less than expected but is now gathering steam as tourismrebounds, helped by the return of Chinese visitors. The BOT expects 25.5 million foreign arrivals this year, compared with nearly 40 million in pre-pandemic 2019.Exports, another key driver of growth, however, were seen rising just 1% this year, with a possible contraction ahead, the BOT said, blaming the global economic slowdown.In January, the economy improved from December, helped by improved service sector activities and government stimulus measures, the BOT said in a separate statement.But exports fell 3.4% in January from a year earlier and could see another year-on-year drop in February, Assistant Governor Chayawadee Chai-Anant told a news conference on Tuesday.Weakness or strength in the baht has had a little impact on shipments, but the BOT will ensure the currency is not too volatile to hurt the economy, she added.Thailand posted a current account deficit of $2 billion in January, with a trade deficit at $2.7 billion as imports rose in the month, the BOT said. More

“From the current perspective I would not expect a recession,” Eric Scheidegger, the Head of the Economic Policy Directorate at the State Secretariat for Economic Affairs, told reporters.He cited the mild winter, which had helped Europe avoid an energy crisis, and recent data on economic activity which he said was encouraging. More

Investment in green technology in the EU is being held back by a lack of skilled workers, a European Investment Bank poll of more than 12,500 businesses and 685 authorities has found. The warning comes as the EU prepares to increase support for clean technology amid mounting competition from the US for green investment. More than four-fifths of companies and 60 per cent of local authorities polled by the EIB said that a skills shortage, particularly in the engineering and digital sectors, was preventing projects that target climate change from going ahead, according to the multilateral bank’s annual investment report, published later on Tuesday. “Investments to limit climate change are increasing but are still well below what is needed to meet Europe’s target of net zero emissions by 2050,” added the report, which is based on surveys conducted in 2022. The European Commission is set to present plans to boost the competitiveness of Europe’s clean technology industries on March 14, after Germany and France warned the region was at risk of falling further behind rivals in the race to secure investment. The EIB, the world’s largest multilateral bank by assets, found that investment into “productive” industries in Europe had lagged the US by the equivalent of 2 per cent of gross domestic product a year for the past decade. The Biden administration’s Inflation Reduction Act, a $369bn package that includes extensive tax credits and subsidies designed to boost green industries, has sparked concerns that the gulf with the US could widen further. France and Germany have both called for Brussels to relax state aid rules — a move that would enable member states to pump funds directly into industries — in response to the IRA. But Werner Hoyer, the EIB’s president, said the EU did not need “large scale subsidies” to compete. Instead, it should reform “cumbersome administrative procedures”, he said in a speech in Luxembourg on Monday. “I speak from experience: our bankers have a huge pipeline of green industrial projects, but our clients are waiting for permits, stuck in bureaucracy.” Odile Renaud-Basso, president of the European Bank for Reconstruction and Development, told the Financial Times that a lack of projects to finance was “the first missing block” in funding the climate transition.“What we see in reality on the ground is that first you need to have projects,” Renaud-Basso said. “You may have trillions, but to invest them you need to have a project.”Both the EU and the US want to pivot away from reliance on China, which dominates global supply chains for the critical materials needed for electric vehicles, solar and wind power. However, Dries Acke, policy director at SolarPower Europe, a trade body, said that even with the “crazy export hiccup” for solar panels sparked by Beijing’s stringent Covid lockdowns, the EU still had more photovoltaic cells than it could install owing to the lack of trained electricians.SolarPower Europe has estimated that the number of workers in the solar sector will need to increase from 500,000 in 2021 to more than 1mn by 2030 for the commission to meet its target for 45 per cent of the bloc’s energy to come from renewable sources by 2030 — a figure that has yet to be agreed by the EU’s member states.The commission’s March proposals will also include “net zero industry academies” to help retrain workers and ways to smooth access of workers from outside the EU that have experience in “priority sectors”. More

The first thing you hear after entering the animal sanctuary in Znesinnya Park near the center of Lviv are the dogs. There are scores of them barking and howling, members of a raucous makeshift orchestra sounding out a discordant opera.They are orphans of war, rescued from bombed-out cities or left by refugees who were uprooted from their homes and unable to care for their pets anymore.Their residence now is a hulking shed, previously abandoned, that has been hastily outfitted with rows of wooden and metal cages, castoff blankets and towers of bagged pet food.Orest Zalypskyi started Domivka: Home of Rescued Animals five years ago primarily to care for endangered and injured wild creatures: foxes that were used to train hunting dogs and had their claws and teeth removed, a circus monkey about to be euthanized, an owl with a clipped wing.But since the Russians invaded last year, Domivka has also become a center for rescued pets — dogs, cats, rabbits, horses, lambs and birds. Before the war, the sanctuary contained roughly 200 animals. Now, it has more than 500.Domivka housed about 200 animals before the war and now is sheltering more than 500.Maciek Nabrdalik for The New York Times“We didn’t have any place for them,” said Viktoria Stasiv, a volunteer. “It was crazy.” They rushed to put together the dog kennel in an old brick and concrete shed that had been used for trash.At a different site, about an hour away, are 170 sheep, goats and llamas that Domivka volunteers are caring for on a plot of donated land. The animals belonged to a petting zoo in Zaporizhzhia that had to be abandoned.Over the past year, the group has hosted thousands of animals, Mr. Zalypskyi said.There was a brief period last spring, after the war began, when animal owners and rescuers were allowed to take animals across the border into other European countries without the usual requirements for things like vaccinations. Busloads of volunteers from Germany and Poland came and took dogs, rabbits and cats back with them. Nearly 5,500 pets were rescued and found new homes outside Ukraine; another 1,500 were adopted inside the country.Oksana Prykhodka, an employee at the shelter.Maciek Nabrdalik for The New York TimesBut now, adoptions have slowed. Anyone outside Ukraine who wants to liberate a pet from the misery of war has to pay about 200 euros and pick it up. When it comes to dogs, most people want puppies, Ms. Stasiv said, but most of the abandoned dogs are older and bigger. Some are injured.Chip, a sweet-faced mutt, arrived from Kherson, a heavily besieged city 560 miles away, where he was blinded during an attack. Bonie, a large black dog with tan paws and snout, has a steel rod in his back after his spine was broken in a shelling. Lina Brithna, a rehabilitation worker, is helping him learn to walk again. Zubik, a black and white part-malamute, lost one of his front legs.There are a couple of puppies that were found in a trash can in Lviv. They are kept in a small indoor shelter along with other injured animals and recent arrivals that are quarantined for their first two weeks. They scamper around Ms. Brithna as she cleans their cages. The cats watch, occasionally poking their paws through holes in the plexiglass doors, and wait their turn.Foxes at the Domivka shelter, which was primarily a sanctuary for endangered or injured wild animals before the war.Maciek Nabrdalik for The New York TimesAll the dogs are taken for walks three times a day along the snowy grounds — by volunteers, visiting families and sometimes former owners, who would love to keep their pets but are themselves refugees and can’t provide a home.Domivka did not previously have a website, but with so many more animals under its care, the nonprofit is now fund-raising on Facebook and Instagram. Over Christmas it sold branded calendars that featured longtime residents and war evacuees, including a white-tipped eagle named Galya.This small shelter in a Lviv park is one of several domestic and international organizations, like U-Hearts Foundation, UAnimals and the International Fund for Animal Welfare, working to help feed and care for animals during the war.The shelter needs more staff, enclosures and food, Mr. Zalypskyi said through a translator. “The needs are growing every day as the number of animals increase.”A shelter worker walking Zubik, who lost a foreleg in shelling.Maciek Nabrdalik for The New York TimesYurii Shyvala contributed reporting. More