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European business confidence hits rock bottom

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Business confidence in Europe hits rock bottom in the second half of 2022, as a third of the region’s largest industrial firms expect to halt or scale back operations in the bloc due to record energy prices and slowing demand.

US business leaders are equally pessimistic about Europe’s prospects, predicting a deep recession in the European Union over the next 12-18 months, versus a short-lived and shallow downturn at home, according to a survey of major firms by the European lobbying group Industry Roundtable. And the Conference Board, an American think tank.

The findings add to growing evidence that the war in Ukraine is taking a heavy toll on industry in the European Union. Earlier this month, S&P Global’s purchasing managers’ indices showed the sharpest decline in private sector activity since November 2020. Industrial sectors from chemicals to fertilizers to ceramics were forced to suspend production due to rising energy costs, while others increased imports.

Martin Brodermüller, chair of the competitiveness committee at ERT and head of the German chemicals group BASF, said he was not surprised by the responses. “I have already seen firsthand the impact of the energy crisis on energy-intensive industries in Europe and the multiplier effect throughout the value chain. We remain at real risk from a wave of deindustrialization, as persistently high energy costs undermine the global competitiveness of European production sites.”

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The twice-yearly survey of European business leaders found that a measure of confidence in Europe dropped from 37 in the first half of 2022 to 24 in October, the lowest level since the start of the pandemic. Confidence of US business leaders fell to its lowest levels since the 2007-2009 recessions, from 42 to 32. A score above 50 reflects more positive responses than negative responses.

“The outlook for the eurozone is cloudy amid higher energy prices discouraging manufacturing, and a rise in inflation affecting real income and consumption,” Riccardo Marcelli Fabiani, economist at Oxford Economics, said in a recent briefing note.

The industry also warns of the danger that A pioneering green technology initiative worth $369 billion In the United States, known as the Inflation Act, it could divert more investment away from Europe.

About 50 members of the ERT met French President Emmanuel Macron and European Commissioner for the Single Market Thierry Breton this week to demand a “disguised European response to the IRA”. Without it, there could be “another wave of deindustrialization, as the United States attracts the latest waves of investment in new processes and research and development.”

The EU said this would have “potentially catastrophic repercussions” for the small and medium-sized businesses that dominate industrial ecosystems across the EU.

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Like their large peers, smaller companies are feeling the pain of rising energy prices, inflation and volatile supply chains. A recent survey of 42,000 companies in 25 countries by Eurochambres, which represents more than 20 million companies across the European Union, found that confidence for the coming year was “even lower than it was during the 2008-2009 financial crisis and the height of the pandemic”. All indications showed that companies expected the situation to “worse”, she said.

This view was supported by an ERT/Conference Board survey in which nine out of 10 respondents expect the economic outlook to worsen over the next six months.

However, the study found that more than 90 percent of respondents intend to maintain or increase investment in green energy.

Meanwhile, Chinese business leaders emerged as the outliers in the survey as the overall measure of their business confidence improved in the second half of 2022, although it remains negative overall.

Noting that China is succeeding in its ambition to move up the value chain, nearly a third of European business leaders said that China was an important R&D and innovation engine for their companies.

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Global central banks extend November rate hike push by Reuters

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© Reuters. FILE PHOTO: The Federal Reserve building is seen in front of the Federal Reserve Board and is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, US, January 26, 2022. REUTERS/Joshua Roberts/File Photo

Written by Karen Stroeker and Vincent Flasser

LONDON (Reuters) – The pace and scope of interest rate hikes by central banks in November accelerated again as policymakers around the world grappled with decade-long high inflation.

Central banks that oversee six of the 10 most traded currencies delivered 350 basis points of rate increases between them last month.

The US Federal Reserve, the Bank of England, the Reserve Bank of Australia, the Norwegian Bank of Norway, Sweden’s Riksbank and the Reserve Bank of New Zealand all raised interest rates in November.

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The European Central Bank, Bank of Canada, Swiss National Bank and Bank of Japan did not hold rate-setting meetings in November.

The recent moves raised the total interest rates in 2022 from the G10 central banks to 2,400 basis points.

Interest rates will continue to rise, said Alexandra Dimitrijevic of global agency Standard & Poor’s (NYSE:) in Standard & Poor’s (NYSE:) ratings, looking forward to 2023. “Central banks’ determination to lower inflation suggests that interest rates should continue to rise. “.

Interest rates in developed markets https://www.reuters.com/graphics/GLOBAL-MARKETS/klpygkyzepg/G10CEN1.2.gif

Global financial markets have been in a tailspin in recent weeks as investors try to gauge how quickly and to what extent the US Federal Reserve and other major central banks will raise interest rates to combat inflationary pressures, while fears of a slowdown in global growth linger. spread out.

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Some nascent signs that US inflation may be slowing have cheered markets in recent days, as Federal Reserve officials are scheduled to meet on December 13-14.

On Wednesday, Federal Reserve Chairman Jerome Powell said the US central bank may lower the pace of interest rate hikes “as early as December.”

Data from central banks in emerging markets showed a similar pattern. Eight of the 18 central banks delivered a total of 400 basis points to raise interest rates in November – from 325 basis points in October, but somehow less than 800 basis points per month in both June and July.

Emerging market interest rates https://www.reuters.com/graphics/GLOBAL-MARKET/lbvggnegavq/EMCEN1.1.gif

Indonesia, South Korea, Mexico, Thailand, Malaysia, the Philippines, Israel and South Africa all raised interest rates in November, indicating the wave of policy tightening towards Asia and a shift away from emerging Latin America and Europe, as the cycle draws to a close.

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Nafez Zouk said Aviva (LON:) Investors.

Outside Turkey, where President Recep Tayyip Erdogan is pushing for lower interest rates, it made another record cut of 150 basis points to bring rates down to single digits, even though inflation has soared to more than 80%.

Not all EM central banks in the sample held rate-setting meetings last month.

Calculations showed that central banks in emerging markets raised interest rates by a total of 7,165 basis points year-to-date, more than double the 2,745 basis points for the full year of 2021.

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FirstFT: CBI warns of a one-year recession in the UK

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good morning. This article is an in situ version of our website FirstFT the news. Subscribe to our site AsiaAnd the Europe/Africa or The Americas A release to send straight to your inbox every weekday morning

The United Kingdom will fall into recession for a year in 2023 As “stagflation” the combination of high inflation, negative growth and declining business investment affects the economy, according to Britain’s largest business group.

The Central Bank of Iraq warned that the gross domestic product will decline by 0.4 percent in 2023, which is a decrease from its previous forecast for growth of 1 percent set in June. She said consumer spending would decline throughout the year as inflation remained above the BoE’s target.

The lobbyist gave its own gloomy forecasts for business investment, which it said would start to decline from the middle of next year when the current “super-deductible” tax break scheme designed to boost investment ends.

Business investment is expected to be 9 per cent below pre-Covid pandemic levels by the end of 2024 – the equivalent of around £5 billion.

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CBI Director General Tony Danker warned:[Companies] Seeing potential growth opportunities, but not having ‘reasons to believe’ in the face of headwinds causes investment to pause.”

The UK’s economic outlook is among the weakest of the developed countries covered in the CBI report, with only Germany’s GDP set to decline at a slightly faster pace next year.

1. Europe cuts gas demand by a quarter Interim data from commodity analytics firm ICIS showed that gas demand in the European Union was 24 percent lower than the five-year average last month, after a similar decline in October, in the latest evidence of the bloc’s success in reduce its dependence on Russian energy Since Moscow’s invasion of Ukraine.

2. War and weather to keep food prices high Bad weather and war events are set in Ukraine Keep food prices high Despite signs of moderation in global commodity markets, economists and agriculture experts have warned. Costs are likely to remain well above pre-pandemic levels because wars and droughts limit producers’ ability to increase supply.

The line graph of annual percentage change shows that the moderation in food prices in world markets has not yet interfered with the decline in consumer inflation.

3. The European Union is pledging to simplify aid rules to compete with Biden’s climate package The European Union should “Simplify and adapt” its rules On government aid to counter the US $369 billion climate package, European Commission President Ursula von der Leyen said yesterday in her first public response to Washington’s support for green energy. EU leaders said the plan risked “dividing” the transatlantic union by enticing European companies to relocate.

4. The court paves the way for the sale of the Belgian steel mills in Gupta Can Sanjeev Gupta He loses control of his steel mills in Belgium After a court in Liège last week upheld a request from workers at its Liberty Steel subsidiary to begin restructuring. The court appointed a legal representative to supervise the sale of two factories at Flémalle and Tilleur.

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5. A report calling for the suppression of asylum seekers in the UK Britain’s Home Secretary, Soyla Braverman, has welcomed a report by a centre-right think tank calling for an amendment Great repression of asylum seekers who come to Britain using illegal routes. The report says that “if necessary” the UK should withdraw from the European Convention on Human Rights to address the problem.

next day

economic indicators S&P Global released the November Composite PMI for the European Union, the Services PMI for Russia, and the Composite PMI with Cips for the United Kingdom. In the US, ISM publishes the Non-Manufacturing PMI.

WHO meeting The World Health Organization is meeting in Geneva to review the new pandemic control convention.

Brussels bombing trial Belgium’s largest criminal case against suspects in the 2016 Brussels attacks that killed 32 people and left hundreds injured has been brought to court.

Saint Nicholas Ev Holland celebrates the pre-Sinterklaas night.

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cricket England and Pakistan face off on the final day of their first Test match in Rawalpindi.

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Instead of “perfectly” renovating the house, bring it back to imperfection. Maiden outdated – and there A fresh and sustainable aesthetic It displays the scars of the past while preserving the building’s history and collective memory.

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Philippines Cuts 2023 GDP Growth Target to 6.0-7.0% By Reuters

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© Reuters. A vendor settles into a public market in Quezon City, Philippines, August 9, 2022. REUTERS/Eloisa Lopez/Files

MANILA (Reuters) – The Philippines cut its growth target for 2023 to 6.0%-7.0% from 6.5%-8.0%, an interagency government panel said on Monday, taking into account the impact of a weaker peso and higher inflation.

The government has also revised its foreign exchange rate assumptions for the period 2022-2024. It now expects the peso to trade against the US dollar at 54-55 in 2022 compared to a previous forecast of 51-53, at 55-59 in 2023, and at 53-57 in 2024, compared to a previous forecast of 51-55 for 2023. onwards.

The Development Budget Coordination Committee (DBCC) said in a briefing that the growth target for 2024-2028 has been maintained at 6.5%-8.0%.

The peso has recovered slightly against the dollar after falling to a record low of 59 in recent weeks, thanks to a series of interest rate increases by the Bangko Sentral ng Pilpinas (BSP) to keep pace with the US Federal Reserve’s aggressive tightening.

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It was trading at 55.73-55.88 on Monday.

Officials said the economy is on track to meet this year’s growth target of 6.5%-7.5%, faster than the 5.6% expansion in 2021, after the government removed nearly all COVID-19 restrictions and allowed more business activities to resume.

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