Olaf Scholz, vice-chancellor and leader of the SPD, the German Social Democrats, won the German elections yesterday with 25.7% of the vote. He came in ahead of Armin Laschet, Merkel’s successor in the CDU, who won 24.1% of the vote. Annalena Baerbock’s Greens, with 14.8%, will be the third force, and have already shown their preference for a government with the SPD. But it is Christian Lindner’s Liberals, with 11.5%…
Nick Ottens (Atlantic Sentinel) | The continent faces a perfect storm involving accidents, depleted reserves and decreased Russian supply. Electricity prices are hitting records across Europe. In Portugal and Spain, wholesale energy prices have tripled from half a year ago to €178 per megawatt-hour. Italy is not far behind at €176. Dutch households without a fixed-price contract could end up paying €500 more this year. In the UK, prices peaked…
Michael Bradshow ( The Conversation) | The UK government has been in emergency talks with leaders from the energy industry as gas prices (and with them, electricity prices) have soared to more than four times the level they were at the same time in 2020. Concerns are growing about the security of winter gas supplies, and industries reliant on gas, such as the fertiliser industry, are curtailing production, threatening various…
Francisco Vidal (Intermoney) | For yet another day, the spotlight is on the words of ECB members. They give their views on their particular vision of the course of inflation, with the consequent impact on the markets. And the latter react by interpreting the statements in terms of the central bank’s speed in withdrawing its stimuli. On Thursday, the Financial Times reported Philip Lane had said privately that they expect…
JP Marín-Arrese | All was quiet on the ECB front for too long. Suddenly, last week it announced its intention to scale down the emergency asset-buying programme starting next month. While falling short of the tapering heralded weeks ago by Jerome Powell, it represents indeed a shift in the dull do-nothing approach followed for months and years. Once embracing quantitative easing, much later than other central banks, it proved unable…
Annalisa Piazza (MFS) | ECB “recalibrates policy”: Nothing else has changed. Indeed, the rest of the policy announcement was a carbon copy of what we heard back in July. Forward guidance on both rates and QE was confirmed, along with the re-investment programmes. The slower pace of PEPP had been widely flagged by ECB officials over the past few weeks so the announcement was hardly a surprise. That said, the…
The Conversation | Boris Johnson has unveiled an additional 1.25% levy on national insurance paid by wage earners and employers, which will raise £14 billion a year to help pay for the NHS and reforms to social care. Coming on the back of rises to income tax and corporation tax that were announced in the budget in March, it is the latest example of the government using tax rises rather than austerity to rein in public finances that have been hit by the cost of the pandemic. We asked Alex de Ruyter, a Professor of Economics at Birmingham City University, to explain how it would affect different parts of society.
Fernando Rodriguez | The percentage of European companies linking executive compensation plans to ESG targets has increased more than eightfold in the last decade, from 4% in 2008 to 34% in 2020. This is according to a survey conducted by the Diligent Institute of nearly 2,000 companies in 15 European countries, including Spain, which is in the high end of the range for most indicators. According to the survey, the…
ASE Group | Gas has risen so much that coal-fired plants are now competitive. In recent months, Germany has reduced its gas-fired power generation by 36% while doubling its coal-fired generation. Similar developments have occurred in the UK and the Netherlands. This pull in coal demand has driven up the price of coal by 1000% in the last year.
Bruno Cavalier (ODDO BHF) | In a few weeks’ time, Angela Merkel will cease to be Chancellor, a position she has held since 2005. Polls show that the three main contenders to succeed her are tied. Despite Germany’s good performance in the first Covid-19 wave, successive waves of contagions brought new restrictions in early 2021, delaying the recovery. Also, Germany clearly suffers from its overexposure to the automotive industry, which is 25 points below normal.