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The EU commissioner has warned that Joe Biden’s environmental subsidies could backfire

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A senior EU policymaker has warned that America’s massive green subsidies plan could backfire by driving European companies closer to China, as he said talks with the Biden administration are unlikely to resolve all of the issues Europe faces with legislation.

This was said by Valdis Dombrovskis, EU Trade Commissioner The $369 billion Inflation Reduction Act It was an attempt by the United States to partly reduce its dependence on China, and it could have the opposite effect in Europe by making Beijing’s “suggestions and suggestions” more interesting. This, he said, “may work against the stated goal of the Inflation Reduction Act.”

Dombrowskis spoke ahead of directives released from Washington on Thursday suggesting that EU companies could benefit from a tax credit scheme for clean commercial vehicles — a move Brussels sees as a welcome first step but which does not assuage all of its concerns.

The US legislation includes hundreds of billions of dollars worth of subsidies and tax breaks for green technologies, including batteries and hydrogen. It is trying to boost US investment in such sectors while reducing America’s dependence on Chinese products and know-how.

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The European Commission has warned that the law discriminates against companies based in the EU and threatens the bloc’s industrial base. It formed a working group with the White House to try to resolve the dispute.

Dombrovskis said in an interview that while there are indications of a Biden administration moving in the key areas of electric cars and batteries, this will only mitigate some of the problems. “If there are those results, it will solve part of our problems, not all of our problems,” he said, stressing that the IRA includes a “much broader” range of sectors.

“When this work is done, we will need to take stock of where we stand and figure out our options . . . we will need to look at more elements.” [on] How to bring balance back to the playing field.

US President Joe Biden said this this month during French President Emmanuel Macron’s visit to Washington “Tweaks” on the bases It can make it easier for European companies to participate in the system.

Dombrovskis identified two main areas in which the transatlantic debates focus. US legislation requires electric cars to be assembled in North America to be eligible for a $7,500 consumer tax credit — to the chagrin of automakers in Europe, South Korea and elsewhere. However, this provision does not apply to commercial electric vehicles.

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On Thursday night, the Commission welcomed new US guidance suggesting EU companies could benefit from clean commercial vehicle credits under an IRA, saying it reflected “constructive engagement” on both sides. But Brussels stressed that it remains concerned about discriminatory provisions affecting other clean vehicles.

Responding to the new US directives, Dombrovskis said: “We welcome this important first step, which is the result of our fruitful discussions with the US. EU companies should now be able to benefit from US commercial clean car credits. However, we will continue conversations within the working group. our joint venture in relation to other aspects of the IRA where we have important concerns.”

Another focus is the requirement to source battery components from the United States or its trading partners. While the EU does not have a trade deal with the United States, Dombrovskis hopes the geographic scope of that can be mapped out broadly enough to include the bloc.

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“There are some opportunities, there is some work going on but we’re not quite there yet,” Dombrovskis said.

At the same time, the EU needed to examine its subsidy scheme as part of addressing the imbalance created by the US legislation. Part of this is likely to entail further changes to the EU’s anti-subsidy rules regarding state aid.

The commissioner stressed that he did not want to see a trade war between the two economies, but said it would be possible to target EU support more effectively.

“We have to be careful not to get involved in a kind of subsidy race that could be costly and ineffective,” Dombrovskis said. So obviously support will be part of the response. But we need to calibrate properly.”

While there have been calls to “buy European” in the EU that reflects commitments to source green products in the US under the legislation, Dombrovskis stressed that the Commission does not see this as advisable, as it could “lead to more trade restrictions across the world if we were to go In this way.”

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Biden touts US infrastructure spending in bipartisan Kentucky visit By Reuters

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2/2

© Reuters. FILE PHOTO: US President Barack Obama speaks in front of the crumbling Brent Spence Bridge during a visit to Cincinnati, Ohio, on September 22, 2011. REUTERS/John Somers II

2/2

(Adds the dropped word in the fifth paragraph.)

By David Shepardson

WASHINGTON (Reuters) – Democratic U.S. President Joe Biden will join Republican Senate Minority Leader Mitch McConnell at an event on Wednesday in Kentucky aimed at highlighting the implications of the $1 trillion 2021 infrastructure bill, a White House official said on Sunday. .

The couple, along with Republican Ohio Governor Mike DeWine and Democratic Kentucky Governor Andy Beshear, will appear at a ceremony highlighting the $1.64 billion in funding awarded to the Spence Bridge Corridor project that connects the two states across the Ohio River.

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Funding for the crossing includes a new bridge and rehabilitation of the 60-year-old and overcrowded bridge.

The new bridge aims to rehabilitate a 60-year-old congested area and add a second crossing.

McConnell, R-Kentucky, was among Republicans who voted in favor of the infrastructure law, which passed in November 2021, while several House Republicans including Representative Kevin McCarthy opposed it.

“The construction of a new utility bridge over the Brent-Spence Bridge Corridor will be one of the bill’s major accomplishments,” McConnell said last week in a statement.

The event is scheduled to take place the day after Republicans take McCarthy’s majority in the House of Representatives, breaking Democrats’ control of Congress and ushering in a period of divided government.

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Kentucky and Ohio have sought funding for the project for years.

“Not only will this project alleviate a traffic nightmare that drivers have endured for years, but it will also help ensure that supply chain traffic in this nationally important corridor does not come to a standstill,” said DeWine.

Then President Barack Obama visited the crossing in 2011 and urged Congress to pass a multibillion-dollar jobs bill that he said could include rebuilding the bridge, which at the time had been declared functionally obsolete.

During his run for the White House in 2016, Donald Trump supported funding for the project, but during his four years in office failed to secure the money for it or pass the big infrastructure bill he repeatedly promised.

The Infrastructure Act of 2021 includes $27 billion over five years to repair and replace thousands of aging American bridges.

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Other administration officials including Vice President Kamala Harris will also be promoting the Infrastructure Awards at other events this week.

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Manufacturing in China in December fell sharply as coronavirus cases surged by Reuters

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© Reuters. FILE PHOTO: A man walks inside a steel plant of Delong Steel in Xingtai, Hebei Province, China, June 20, 2019. Picture taken June 20, 2019. (Reuters) / Muyu Xu / File Photo

BEIJING (Reuters) – Factory activity in China shrank for the third month in December and at the sharpest pace in nearly three years as coronavirus infections spread to production lines across the country after Beijing abruptly rolled back anti-virus measures.

The National Bureau of Statistics (NBS) said on Saturday that its official Purchasing Managers’ Index (PMI) fell to 47.0 from 48.0 in November. Economists polled by Reuters had expected the PMI to come in at 48.0. The 50-point mark separates contraction from growth on a monthly basis.

The decline was the largest since the early days of the pandemic in February 2020.

The data provided the first official snapshot of the manufacturing sector after China removed the world’s toughest COVID restrictions in early December. UK-based health data company Airfinity estimated that cumulative infections likely reached 18.6 million in December.

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Analysts said the rise in infections could cause temporary labor shortages and increase supply chain disruptions. Reuters reported on Wednesday that Tesla plans to run a reduced production schedule at its Shanghai plant in January, extending the reduced production it began this month into next year.

Weakening external demand on the back of growing fears of a global recession amid rising interest rates, inflation and the war in Ukraine could further slow China’s exports, hurting its huge manufacturing sector and hampering economic recovery.

“Most of the plants I know are well below what they could be at this time of year for next year’s orders. A lot of the plants I’ve talked to are at 50%, some are less than 20%,” said Cameron Johnson, partner at Tidalwave. Solutions, a supply chain consulting firm.

“So even though China is opening up, manufacturing is still slowing because the rest of the global economy is slowing. Factories will have workers, but they won’t have orders.”

NBS said 56.3% of manufacturers surveyed reported being significantly affected by the pandemic in December, up 15.5 percentage points from the previous month, although most also said they expected the situation to gradually improve.

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Hopes of recovery

“While it (factory PMI) was lower than expected, it is difficult for analysts to make a reasonable forecast given the uncertainty related to the virus over the past month,” said Zhou Hao, chief economist at brokerage Guotai Junan International.

“Overall, we believe that the worst for the Chinese economy is behind us, and there is a strong economic recovery ahead.”

The country’s Banking and Insurance Supervisory Authority pledged this week to step up financial support for small and private businesses in the catering and tourism sectors that have been hit hard by the COVID-19 pandemic, stressing that recovery of consumption will be a priority.

NBS data showed that the non-manufacturing PMI, which looks at service sector activity, fell to 41.6 from 46.7 in November, the lowest reading since February 2020.

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The official composite PMI, which combines manufacturing and services, fell to 42.6 from 47.1.

“The weeks leading up to Chinese New Year will continue to be challenging for the services sector, as people will not want to go out and spend more than necessary for fear of infection,” said Mark Williams, chief Asia economist at Capital Economics.

“But the outlook has to shine by the time people come back from the Chinese New Year holidays — infections will go down again and a significant proportion of people will have recently had COVID and feel they have some degree of immunity.”

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The Year Ahead: expect the unexpected

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This article is an on-site version of our The Week Ahead newsletter. Sign up here to get the newsletter sent straight to your inbox every Sunday

Hello and welcome to the first working week of the year. It is now an annual tradition (well, I did it last year) to use this edition to take a long look forward to the year ahead.

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The one thing that 2022 made obvious was the stupidity of trying to predict the future. Russia’s invasion of Ukraine and the (related) energy crisis being just two examples. The death of Queen Elizabeth II was a possibility this time last year but I focused instead on her platinum jubilee celebrations, which (thankfully) she and the nation still managed to enjoy. I was pleased to have sufficiently caveated my US midterm prediction to say that the Republicans might only win control of one of the chambers of Congress.

What we do know going into 2023 is that all these happenings from 2022 will provide news lines to look out for in the coming weeks and months.

The cost and supply of gas and electricity will continue to challenge governments and complicate politics and economics in 2023. Governments became key players in energy in 2022 and they will continue in this role in the coming 12 months, as my colleagues on the Energy Source team explain.

What will happen with the war in Ukraine? Russia will launch further counter-attacks, though doubts have been raised about its ability to arm its troops. Will the US, by far the biggest external provider of military and financial support, provide enough new weaponry for the Ukrainian forces to reclaim more land? What impact will Sweden — as a born-again Nato fan — have on the EU’s position now that it is taking up the revolving EU presidency?

2022 was the year that workers took to the picket lines again, raising industrial disputes in the UK to levels last seen in the 1980s and encouraging workers not formally unionised in the US at Starbucks and (to a limited extent) Amazon to band together for increased rights.

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But so far there are few signs that this has achieved much — UK households face the steepest decline in living standards in six decades over the next two years, according to official figures from the Office for Budget Responsibility. Worker remuneration is weakening across the world with global wages falling for the first time on record in 2022, according to the International Labour Organization. Will this encourage the industrial unrest to spread?

2023 will begin in the UK with more rail strikes, with RMT union members walking out on January 3, 4, 6 and 7, while members of rival Aslef — representing drivers at 15 train companies — are due to strike on January 5.

Ballots will close in January for the NASUWT and Fire Brigades Union to decide whether teachers in England and Wales and firefighters strike over pay. Further action has been planned by the nurses union and airport staff.

Behind the British labour disputes is a broader concern that not enough is being spent to maintain and repair the UK’s infrastructure, with crumbling courts in England and Wales as well as inadequate staffing for rail services. The zeal of the austerity drive started by the 2010 coalition government is to blame, according to the FT’s John Burn-Murdoch — and he has the data to prove it. This may well be a significant theme of British politics in 2023.

Rishi Sunak’s government has so far refused to give an inch in pay demands and the unions are short of cash to maintain their industrial action, but FT political columnist Stephen Bush believes the UK prime minister will be forced to fold in 2023. This can only be bad for the Conservative party’s electoral chances (already extremely weak), but if 2022 is anything to go by, British politics is never easy to predict.

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Thanks to all of you who have shared your support and comments about The Week Ahead over the past year. I will be back with the regular format on January 8. Here is the rest of the 2023 corporate and economic round-up.

Economic data

The big macroeconomic themes of 2023 are going to be (much like 2022) inflation and recession, in particular whether the former can be tamed without exacerbating the latter. There is little consensus on where rates will end for different countries, or indeed what pivots will be made to cut rates as 2023 draws to a close — US markets are discounting 50 basis points of cuts by year end.

There is also uncertainty about when individual countries will enter recession — the UK probably already has, but the US has not yet — and how long the period of negative growth will last. My colleague Rob Armstrong, writer of the excellent Unhedged newsletter, has predicted that the US recession will not begin until later in the year, but that this will then drag down the markets such that US stocks end the year down.

Interest rates will remain high throughout the year, according to Rob. He also heavily caveats such forecasts. Click here to read his 2023 market predictions in full.

Companies

The new year brings a changing of the guard at several major companies.

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Shell lifer Wael Sawan takes the helm of the oil and gas business in January with the London-based company in rude health but with some challenging decisions to make in the transition to a low-carbon economy.

In the same month, Héctor Grisi will be promoted from head of Santander’s North America operations to group chief executive. Grisi joined Santander in 2015 from Credit Suisse, where he was an investment banker. His promotion draws a line under the failed appointment of Andrea Orcel more than three years ago.

Last but not least, Robert Kyncl becomes chief executive of Warner Music. The former chief business officer at YouTube joins as the music industry is riding a wave of streaming revenues. It is clearly hoped that Kyncl’s grasp of the tech sector will help Warner further profit from the digitisation of tunes.

Expect more headlines about the exploits of Elon Musk — not a difficult prediction given that this is the business journalism gift that keeps on giving.

Key world, economic and corporate events

Here is a more complete list of what to expect in terms of world events, company reports and economic data in the year ahead.

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January

  • The eurozone expands with Croatia becoming the 20th member of the currency union on January 1.

  • On the same day, Sweden takes over the EU’s six-month rotating presidency.

  • The newly Republican-controlled US House of Representatives convenes for its first session of the year on January 3.

  • Czech presidential elections take place on January 13-14.

  • India’s Supreme Court has given the national government until January 6 to provide its response to petitions to legalise same-sex marriage in the country.

  • The Trump Organization’s former chief financial officer Allen Weisselberg is scheduled to be sentenced in New York in January after pleading guilty to tax fraud and testifying against the former president’s real estate company at trial.

  • US president Joe Biden travels to Mexico City for a North American leaders summit with his Mexican counterpart Andrés Manuel López Obrador and Canadian prime minister Justin Trudeau.

  • The World Economic Forum summit returns to Davos with the theme “Cooperation in a Fragmented World”. FT Live will host a number of in-person and digital events alongside the event, with leaders in policy, business and finance sharing insights into the issues being debated. Register for free here.

February

  • An EU ban on Russian petroleum products comes into force on February 5, having already banned Russian crude oil on December 5 2022, backed by the UK and other G7 countries.

  • The 65th Grammy Awards will be held in Los Angeles on February 5.

  • Biden announces his Budget for the US fiscal year 2024 on February 6.

  • The Super Bowl, the climax of the American football league calendar, is played on February 12.

  • February 24 is the first anniversary of Russia’s invasion of Ukraine.

  • The annual Mobile World Congress in Barcelona kicks off at the end of the month, bringing together key players in the telecoms and tech sector.

March

  • March 1 is the 50th anniversary of the release of Pink Floyd’s The Dark Side of the Moon, one of the bestselling albums worldwide with estimated sales of more than 50mn.

  • The National People’s Congress annual session for China’s top legislature opens on March 4.

  • The 95th Academy Awards — the Oscars — are held in Hollywood on March 12.

  • UK chancellor Jeremy Hunt must beware the Ides of March as he has set March 15 as the date for his annual Budget speech, outlining tax and spending plans.

April

  • This month sees the 20th anniversary of the launch of the iTunes Store. It now carries over 26mn tracks, selling an average of 15,000 songs per minute in 119 countries.

  • The UK tax year begins on April 1 when the main rate of corporation tax rises from 19 per cent to 25 per cent on profits over £250,000.

  • Easter Sunday falls on April 9.

  • The next day is the 25th anniversary of the signing of the Belfast Agreement, better known as the Good Friday Agreement, which outlined plans for a Northern Ireland Assembly that shared power between Unionists and Nationalists after 30 years of conflict.

May

  • Local elections across district councils in England, plus unitary authorities and directly elected mayors, and all local councils across Northern Ireland will be held on May 4.

  • The Coronation of King Charles III will be held at Westminster Abbey on May 6, with a public holiday for the UK on May 8.

  • The Eurovision Song Contest will take place in Liverpool, UK, on May 13. Ukraine won last year’s contest but was considered too dangerous to host the event.

  • Japan hosts the G7 Summit in Hiroshima this year, running from May 19-21.

  • The US edition of the FTWeekend Festival returns to Washington, DC, on May 20 with speakers including Ta-Nehisi Coates, Alice Waters, Darren Walker and several FT writers. Register as a newsletter subscriber and save $20 using promo code NewslettersxFestival at ft.com/festival-us.

June

  • The Ashes cricket test match series between England and Australia starts on June 16 with the hosts hoping to regain the prize the team last won in 2015.

  • Turkey will hold presidential and parliamentary elections on June 18.

July

  • Spain takes over the revolving EU presidency on July 1.

  • The Nato summit begins in Vilnius, Lithuania, on July 11.

  • UK chancellor Jeremy Hunt and Bank of England governor Andrew Bailey are due to make their annual Mansion House speeches in the City of London on July 18.

  • The Fifa Women’s World Cup, staged in Australia and New Zealand, kicks off on July 20 at Eden Park in Auckland.

August

  • The 80th Venice International Film Festival begins on August 30.

  • The final of the Fifa Women’s World Cup will be played on August 20 in Sydney, Australia.

  • The Jackson Hole economic policy symposium begins on August 24.

September

  • Nato secretary-general Jens Stoltenberg’s term of office ends on September 1, having already been extended by a year after Russia’s invasion of Ukraine.

  • The G20 Leaders’ Summit begins in New Delhi on September 9.

October

  • The annual meetings of the IMF and the World Bank Group begin on October 13, bringing together central bankers, ministers of finance and development, private sector executives and academics.

  • Two big international sporting events happen this month. The ICC Cricket World Cup begins in India on October 1 and the Rugby World Cup comes to France, with the final to be played in Paris on October 28.

  • October 19 was Scottish first minister Nicola Sturgeon’s desired date to hold an independence referendum, as announced at Holyrood in June.

  • The 50th anniversary of the Sydney Opera House opening will be marked on October 20 with a performance of Beethoven’s Ninth Symphony.

  • October 22 is the 60th anniversary of the National Theatre in London’s first performance under the leadership of its first artistic director Laurence Olivier.

November

  • UK prime minister Rishi Sunak is due to set out his foreign policy in the annual Lord Mayor’s Banquet speech in the City of London on November 13.

  • November 22 will be the 60th anniversary of the assassination of US president John F Kennedy.

  • The 28th session of the Conference of the Parties to the UN Framework Convention on Climate Change, aka Cop28, begins in the United Arab Emirates on November 30.

December

  • Brazil takes over the one-year presidency of the G20 from India and will host 2024’s summit.

  • December 2023 will be a month of significant anniversaries. December 5 is the 10th anniversary of Nelson Mandela’s death. December 10 is the 75th anniversary of the UN General Assembly adopting the Universal Declaration of Human Rights. December 13 will be 20 years since Saddam Hussein was captured. December 16 is the 75th anniversary of board game Scrabble.

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