Economy

“My hope was always that we would not use the full amount,” Lindner said in an interview with the Westfalen-Blatt newspaper published on his ministry’s website on Tuesday.    Germany’s spending on gas and electricity price caps, designed to help households and businesses shoulder soaring energy bills, could be lower than expected due to falling energy prices.    Lindner said in the interview the relief measures could cost “significantly less than feared”.The 200-billion-euro fund is not part of the general federal budget. “As a result this means loans not needed for the crisis measures will lead to an overall reduction in state debt – and so these funds cannot be reallocated,” he said.”We must now ensure that the state budget grows out of the current deficit and that the state’s debt ratio falls again,” the finance minister said on Twitter.Germany first suspended its constitutionally enshrined debt brake in 2020 to fund spending in response to the COVID-19 pandemic. The government hopes to comply again this year with the debt brake, which limits the budget deficit to 0.35% of gross domestic product.($1 = 0.9195 euros) More

NEW DELH/COLOMBO (Reuters) -The Export-Import Bank of China has offered Sri Lanka a two-year moratorium on its debt and said it will support the country’s efforts to secure a $2.9 billion loan from the International Monetary Fund, according to a letter reviewed by Reuters.India wrote to the IMF earlier this month, saying it would commit to supporting Sri Lanka with financing and debt relief, but the island nation also needs the backing of China in order to reach a final agreement with the global lender.China’s Jan. 19 letter, sent to the finance ministry, however, may not be enough for Sri Lanka to immediately gain the IMF’s approval for the critical loan, a Sri Lankan source with knowledge of the matter said. Regional rivals China and India are the biggest bilateral lenders to Sri Lanka, a country of 22 million people that is facing its worst economic crisis in seven decades.According to the letter, the Export-Import Bank of China said it was going to provide “an extension on the debt service due in 2022 and 2023 as an immediate contingency measure” based on Sri Lanka’s request.At the end of 2020, China EXIM bank had loaned Sri Lanka $2.83 billion which is 3.5% of the island’s debt, according to an IMF report released in March last year.”…you will not have to repay the principal and interest due of the bank’s loans during the above-mentioned period,” the letter said.”Meanwhile, we would like to expedite the negotiation process with your side regarding medium and long-term debt treatment in this window period.”Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of its public external debt, by the end of last year, calculations by the China Africa Research Initiative showed.”The bank will support Sri Lanka in your application for the IMF Extended Fund Facility (EFF) to help relieve the liquidity strain,” the letter said.The Sri Lankan source, who asked not to be identified because of the sensitivity of the confidential discussions, said the island nation had hoped for a clear assurance from Beijing on the lines of what India provided to the IMF.    “China was expected to do more,” the source said, “This is much less than what is required and expected of them.”Sri Lanka’s foreign and finance ministries and China’s foreign ministry did not immediately respond to questions from Reuters. Sri Lanka’s central bank chief P. Nandalal Weerasinghe said on Tuesday that the country hoped for assurances from China and Japan, another major bilateral lender, soon and complete debt restructuring in six months. More

LONDON/JOHANNESBURG (Reuters) -Loans committed by China’s two main trade policy banks fell to a 13-year low of $3.7 billion in 2021 due to Beijing curtailing funding for large-scale oil projects, a study from Boston University Global Development Policy Center showed. Commitments made to 100 developing nations by the Export-Import Bank of China (China EximBank) and the China Development Bank (CDB) have fallen every year since hitting a record in 2016 as the lenders scaled back financing even before the COVID-19 pandemic hit in 2020.”We expect an overall shift toward lower volume, higher quality investment from China,” Kevin Gallagher, director of the university’s Global Development Policy Center, told Reuters. “China’s domestic priorities beyond COVID-19 are still significant, given the large amounts of debt and the swings in renminbi that may necessitate the need to be conservative with dollar holdings so they can serve as insurance on the home front.”China is the world’s largest bilateral lender, according to the World Bank data. Western countries such as the United States and multilateral lenders are pressing Beijing to offer debt relief to emerging economies in distress, such as Zambia and Sri Lanka. China tends to disclose little on lending conditions and how it renegotiates with borrowers.China EximBank and CBD made $498 billion in loan commitments globally between 2008-2021 as part of Beijing’s “Belt and Road” infrastructure initiative.General purpose lending to state-owned oil companies, for example in Angola, Brazil, Ecuador, Russia and Venezuela, reached $60 billion between 2009 and 2017.Since then, lending has been less focused on petroleum producers, with Bangladesh and Sri Lanka among top recipients. The average size of loan pledges has also fallen, from $534 million between 2013-2017, to $378 million from 2018-2021.Russia was the top recipient, with $58 billion in loans in the 2008-2021 period, followed by Venezuela with $55 billion mostly for extraction and pipelines projects, but lending to the South American oil giant halted in 2015, two years before it defaulted on its overseas debt.Angola was the third largest recipient with $33 billion for projects in transport, agriculture, water and oil, with Kenya, Ethiopia and Egypt being other top African borrowers. WORLD BANK STEPS INWhile Chinese lending has been waning, World Bank lending has ramped up, the study found. The Washington-based lender financed projects in developing countries worth an average of $40 billion annually between 2016-2019, before scaling up its response to the pandemic in 2020 when it stepped in with $67 billion, its largest annual commitment since 2008. The following year, commitments were almost $62 billion – 17 times more than Chinese financing. “The World Bank had a fixed amount of lending capacity, but this was accelerated as part of the COVID-19 response,” Gallagher said, adding this might return to trend post-pandemic.Overall, China’s commitments were 83% of the $601 billion lent by the World Bank from 2008-2021. Reuters reported this month that the World Bank was seeking to vastly expand its lending capacity to address climate change and other global crises and would negotiate with shareholders ahead of April meetings on proposals including a capital increase and new lending tools.Looking into 2022, the general trend away from supporting finance for large-scale hydrocarbon projects continues, the study added.”It is telling that Chinese development finance institutions opted not to support Russia’s recent Arctic LNG 2 mega-project, even though they lent over $11 billion to a similar Russian project (Yamal LNG) just a few years ago,” said Rebecca Ray, senior academic researcher for the policy center.”Given this change of heart, it seems unlikely that China returns to major Russian lending in the near-term,” she added. More

UK public sector borrowing more than doubled last month to hit the highest December figure on record, driven up by higher debt interest payments and the government’s measures to help households and businesses with soaring energy prices. Public sector net borrowing hit £27.4bn last month, up from a revised £10.7bn in the same month in 2021 and the highest December borrowing since monthly records began in 1993, according to data published by the Office for National Statistics on Tuesday.Public borrowing rose “largely because of a sharp rise in spending on energy support schemes and an increase in debt interest,” said the ONS.Ruth Gregory, senior UK economist at Capital Economics, said December’s public finances figures “provided more evidence that the government’s fiscal position is deteriorating fast”. She added that this would embolden chancellor Jeremy Hunt to keep “a tight grip” on the public finances in his Budget on March 15, and might mean “he waits until closer to the next general election, perhaps in 2024, before announcing any significant tax cuts”.The public sector borrowing figure was much higher than the £17.7bn forecast by economists polled by Reuters and well above the £17.6bn forecast in November by the Office for Budget Responsibility, the UK fiscal watchdog.However, the ONS noted that borrowing exceeded the official forecast “largely” because of an assumption the OBR made about the impact of changes to the terms of student loans that the ONS was yet to factor into its data.A year ago, the Department for Education announced it was making the student loan scheme less generous in a move that would force students to pay back more of their loans. This is classified in the public finances as reducing the effective grant paid by the government to students when the loans are issued and therefore reduces government borrowing. The OBR thought the ONS would implement the classification change, which amounts to some £8.6bn, in the December figures. But the statistical agency said it wanted to wait until “more definite estimates become available” before applying the change of policy to the public finances. Higher interest on government debt cost £17.3bn last month, about three times the figure in the same month of 2021 and the highest December figure since monthly records began in April 1997.The cost of servicing government debt has risen sharply since mid-2021 largely as a result of higher inflation, with the interest payable on index-linked gilts rising in line with the retail prices index.Spending rose on the government’s policies to help households and businesses deal with high energy prices, including the energy bills support scheme. In December, government expenditures rose to £91.2bn, up from £71.8bn in the same month of 2021.“Right now we are helping millions of families with the cost of living, but we must also ensure that our level of debt is fair for future generations,” said Hunt.The increase in public spending was not compensated by public revenues, which rose only by £3.9bn over the same period. The rise was largely due to tax revenues on employment, reflecting continued strength in the labour market.Public sector borrowing in the financial year to December was £128.1bn, £5.1bn more than that borrowed in the same period last year. Helped by downward revisions for earlier months, the figure was £2.7bn less than forecast by the OBR. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said borrowing in the coming months would benefit from lower wholesale gas prices and lower interest rate expectations, which impact debt service payments. “The recent fall in wholesale natural gas prices suggests that the Energy Price Guarantee will cost the government only a tiny fraction of the £13bn assumed in November,” said Tombs. At the end of December, public sector debt — or borrowing accumulated over time — was 99.5 per cent of gross domestic product, the highest since the early 1960s. More

Economic officials from several US states have stepped up efforts to lure European clean energy businesses across the Atlantic, touting deep tax breaks available to foreign developers despite a backlash from EU leaders.Delegations from Michigan, Georgia, Ohio and other states have toured Europe armed with details of subsidies offered by the Inflation Reduction Act, the Joe Biden administration’s landmark climate legislation passed in August.“I don’t think we’ve actively recruited companies as intensely as we are now,” said Justin Kocher, director of international business for JobsOhio. Ohio officials met with clean tech companies in Germany, Italy and Belgium in the past four months.The IRA will provide about $370bn of subsidies for clean energy, marking America’s most ambitious effort to tackle climate change, but has triggered furious criticism in Brussels and allegations that the US is discriminating against EU companies.Valdis Dombrovskis, Europe’s trade commissioner, said last week that the fight against climate change should be done by “building transatlantic value chains, not breaking them apart”.But the campaign by US states and localities has intensified, including visits to the World Economic Forum in Davos last week by the governors of Michigan, Georgia and Illinois, as well as West Virginia senator Joe Manchin, a Democrat who was one of the IRA’s architects. Georgia governor Brian Kemp, a Republican, was seen pitching his state as a clean-tech investment destination at a lunch hosted by the forum.“I have been astonished by the many activities from state governments, from business development agencies, state-owned business development agencies, which have been trying hard to lure us in,” said Gunter Erfurt, chief executive of Meyer Burger, a Switzerland-based solar modules manufacturer.“If the EU does not come up with something similar [to the IRA] then we may continue growing outside, in the US in particular, as opposed to continuing to invest in Europe,” Erfurt added. The company has one US site in Arizona.But European politicians have been less impressed. Germany and France have expressed unease with the IRA. Belgian prime minister Alexander De Croo complained about the “very aggressive way” the US had pitched it to EU businesses.European Commission president Ursula von der Leyen told delegates in Davos that the “need to be competitive with offers and incentives that are currently available outside the European Union” could lead the EU to loosen its own restrictions on subsidies.Since the IRA’s passage at least 20 new or expanded clean energy manufacturing plants have been announced in the US, according to the American Clean Power Association. More than half are from foreign companies.In October, BMW said it would spend $1.7bn on new EV and battery manufacturing capacity in South Carolina. South Korea’s Hanwha Q-Cells this month announced a $2.5bn solar factory expansion in Georgia.The US sales pitch shows little sign of ending.Chris Camacho, chief executive at the Greater Phoenix Economic Council in Arizona, said “every state in the union” was now competing to draw in European business.“We’re working with a number of European clean tech companies that are building into their model and expectation that they will have access to these [IRA] funds,” he said.Gretchen Whitmer, governor of Michigan, an emerging hub for clean energy investments, led a delegation from the state on her first economic investment mission to Europe this month, including stops in Switzerland and Norway.Whitmer urged investors to “come to Michigan”, adding that alongside the recently passed Chips and Science Act — designed to spur semiconductor production in the US — the IRA would mean “we’re going to see onshoring of manufacturing from the whole value chain”.Tom Jensen, chief executive of Freyr, a Norwegian battery company that announced a planned $2.6bn battery factory in Georgia in November, said Europe should implement its own subsidies package if it wanted to remain competitive.

“Europe has criticised the US for being too slow” on climate and clean energy policy, Jensen said. “When they finally put the best climate mitigation policy on the table, they’re criticised for doing that.”The IRA passed on party lines, with no votes from congressional Republicans. New clean energy investments announced since the act have been in states led by both Democratic and Republican governors.Georgia governor Kemp’s press secretary said of his trip to Europe: “If there was any mention of the Inflation Reduction Act, it would have been in regards to the troubling provisions that the governor continues to advocate for changes on.” He added that Kemp travelled to Davos and Germany on an economic development mission to pitch Georgia to European companies.In Georgia, “clean energy has never quite been . . . at the forefront of [Governor] Kemp’s platform”, said Jason Shepherd, a professor of political science at Kennesaw State University and a former chair of the Cobb County Republicans. “But Republican governors who are looking to increase investment in their states see where the future is going, see where the business is going.” More

FTSE 100 companies handed their staff average pay increases of about 6 per cent last year, failing to match the surge in inflation, according to an analysis by the Financial Times into how the UK’s largest businesses have helped employees through the cost of living crisis.Telecoms companies BT and Vodafone and DIY group Kingfisher were among the only companies to hand rises to their lowest-paid staff that outpaced soaring costs. Inflation exceeded 9 per cent in the final months of 2022 as food and energy bills rose sharply. Of the 71 top-100 companies that responded to the FT’s questions on pay, 30 said they had offered pay rises that averaged around 6 per cent, roughly in line with wage growth across the UK private sector.“That’s probably more disappointing than I think we would have expected,” said Andrew Speke, a researcher at the High Pay Centre think-tank. “The FTSE 100 is diverse. There are some companies that are making big profits, there are some companies that have much higher-paid employees . . . We’d have thought some of those companies might have had bigger pay increases.”The FT research covered pay rises offered to workers after April, when the cost of living crisis intensified. The percentage figures exclude one-off cost of living payments which — among the 38 companies that said they had given them — were typically £1,000 per employee.

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Many executives across Britain are now locked in tense disputes with employees and unions as they hash out pay deals for the next fiscal year. The discussions take place as the UK faces its largest wave of industrial action for 30 years.BT, which was hit by 10 days of strike action last year led by the Communication Workers Union, offered one of the most generous increases among FTSE 100 companies, according to the results of the survey. It awarded all staff earning less than £50,000 a £1,500 pay rise this month, on top of £1,500 offered last April. That meant eligible staff received pay rises of 6-15 per cent, averaging at about 9 per cent.Rival telecoms group Vodafone offered staff earning £25,000 or less a 10 per cent pay rise.Kingfisher also ranked among the top payers, offering store workers at its B&Q retail chain a 9.8 per cent pay rise after increases in April and December.But even those higher salary rises were eclipsed by the average boost to FTSE 100 chief executive pay, which hit 23 per cent last year as a result of bonuses.Many companies — including Vodafone, banks Lloyds Banking Group and HSBC, insurers Legal & General and Aviva, fund manager M&G, exhibitions company Informa and warehouse group Segro — attempted to relieve some pressure on staff by offering one-off payments.The average cost of living payment was £1,000, according to the survey. The biggest was awarded by miner Anglo American, which said it handed £2,500 to the lowest 40 per cent of earners in the UK. Harbour Energy, which was nudged out of the FTSE 100 last month, also said UK-based employees would receive £2,500.

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Banks were among the FTSE 100 constituents offering lower pay increases. Barclays offered a £1,200 pay rise, targeted at lower-paid employees, which equated to a salary bump of 4.7-5.5 per cent, while NatWest offered a 4 per cent pay rise for workers earning less than £32,000 a year. Lloyds offered a £1,000 one-off payment in August to 99.5 per cent of staff, excluding senior executives, and an April pay rise of 3.6 per cent.Supermarkets were more generous, with hourly rates at Tesco increasing by nearly 8 per cent in 2022. At Sainsbury’s, basic pay for 127,000 staff grew by 7.9 per cent.Other companies said they increased staff pay but did not indicate by how much; these included insurer Admiral and property company British Land.Glencore, British American Tobacco, DS Smith, National Grid, London Stock Exchange Group and Pearson declined to respond to the FT’s survey. A further 29 failed to respond.Since the FT’s survey, Harbour Energy, Dechra Pharmaceuticals, and Intermediate Capital Group have been replaced in the FTSE 100 by Abrdn, Beazley Group, and Weir Group, which have not been included in the analysis. More

The lawsuit would be the second federal antitrust complaint filed against Google, alleging violations of antitrust law in how the tech giant acquires or maintains its dominance. The Justice Department lawsuit filed against Google in 2020 focuses on its monopoly in search and is scheduled to go to trial in September.The Justice Department did not immediately respond to a Reuters request for comment, while Google declined to comment on the report.The lawsuit is expected to take an aim at Google’s advertising business, which is responsible for some 80% of its revenue. In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses, which connect advertisers with newspapers, websites and other firms looking to host them.Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google.The tech giant made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a dominant player in online advertising.Google had previously argued that the ad tech ecosystem was competitive with Facebook Inc (NASDAQ:META), AT&T (NYSE:T), Comcast (NASDAQ:CMCSA) and others. While Google remains the market leader by a long shot, its share of the U.S. digital ad revenue has been eroding, falling from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence. More

Joyner will become the chief of the pharmacy services segment, which also includes the company’s pharmacy benefits management business Caremark, effective Jan. 30. He will succeed Alan Lotvin, who plans to retire in April, CVS said. Bricker will start in the newly created role in February after serving as president of Express Scripts (NASDAQ:ESRX), rival Cigna Corp’s pharmacy benefits unit.The appointments follow some setbacks CVS faced in recent months in its businesses. Its largest health insurance plan for Medicare recipients received a lower performance rating from the U.S. Centers for Medicare and Medicaid Services in October. The lower rating could affect payments from the government for 2024, the company said.In the same month, Centene (NYSE:CNC) Corp replaced Caremark with Express Scripts to manage the insurer’s annual pharmacy spend of around $40 billion.The loss of the account, along with the ratings decline, will likely reduce 2024 revenue by $2 billion, CVS said in November. More