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The French government will nationalize its financially-struggling nuclear giant Electricite de France SA to help it ride out Europe’s worst energy crisis in a generation, Bloomberg News reported. “The climate emergency requires strong, radical decisions. We need to have full control of the production and our energy future. We must ensure our sovereignty faced with the consequences of the war and the colossal challenges ahead,” Prime Minister Elisabeth Borne said during her policy speech in parliament in Paris on Wednesday.
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Power prices in Europe surged on fears that Germany may soon start to limit gas-fired generation and concerns about limited availability of Electricite de France SA’s nuclear fleet, Bloomberg News reported. The German parliament will vote on legislation on Thursday allowing the government to curtail generation from gas plants not deemed to be essential for security of supply to conserve fuel. EDF warned this week that it may have to reduce output at some of its French nuclear reactors during the summer as a drought reduces the amount of river water available for cooling.
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British finance minister Rishi Sunak resigned on Tuesday, saying he had reluctantly come to the conclusion that "we cannot continue like this," Reuters reported. "The public rightly expect government to be conducted properly, competently and seriously. I recognise this may be my last ministerial job, but I believe these standards are worth fighting for and that is why I am resigning," he said on Twitter.
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Rising interest rates in Europe are making investors worry about an old ghost haunting Italy’s banks: the “doom loop,” the Wall Street Journal reported. The European Central Bank is expected to unveil a special bond buying program later this month to shield highly indebted eurozone economies—and their banks—from rising borrowing costs. The “anti-fragmentation” program is a response to a widening of bond yields in Italy in particular and a punishing selloff in bank stocks in the eurozone’s third largest economy.
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Telecom Italia (TIM) is looking to fetch a valuation of at least 25 billion euros ($26 billion) including debt for its grid under a plan to separate its fixed-line assets from its services arm, Reuters reported. The price tag is closer to the 31 billion euro figure sought by TIM's top shareholder Vivendi in any potential network deal than initial estimates provided by two sources in line with analysts estimates. In May sources had told Reuters TIM has started looking at a valuation of around 20 billion euros, including debt and before any synergies, in a potential network deal.
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A day after its pilots went on strike, SAS, the Scandinavian airline, said on Tuesday that it had filed for chapter 11 bankruptcy protection in the United States, the latest reverberation in a summer of turmoil for European airlines, the New York Times reported. SAS described the filing, made in the U.S. Bankruptcy Court for the Southern District of New York, as the “next step” in a reorganization that would address the money-losing airline’s financial difficulties, including cost reductions of more than $700 million.
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An international conference to support Ukraine after the devastating Russian invasion has outlined a series of principles to steer Kyiv's recovery and condemned Moscow's actions, Reuters reported. Representatives from more than 40 countries and international organisations like the European Investment Bank and the Organisation for Economic Cooperation and Development (OECD) signed up to the Lugano Declaration at the two-day conference in Switzerland.
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Germany's government will have the power to bail out utilities under proposed legislative changes approved by the cabinet on Tuesday, according to the economy ministry, Reuters reported. "The situation on the gas market is tense and unfortunately we cannot rule out a deterioration in the situation," Economy Minister Robert Habeck said in a statement. New amendments to the Energy Security Act will give the government additional tools to help utilities if they falter under rising energy prices as Russian gas imports decline.
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For the first time in more than three decades, Germany has posted a monthly trade deficit, the most recent sign that Europe’s largest economy is facing stress because of interrupted supply chains and record energy prices linked to Russia’s war in Ukraine, the New York Times reported. Exports have been the economic engine in Germany for years, but the steep rise in the price of energy, driven by Russia’s moves to restrict the amount of natural gas it is delivering to Europe, has driven up the price of products made in Germany.
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The Bank of England warned on Tuesday that the economic prospects for Britain and the world had darkened since the start of the year and told banks to ramp up capital buffers to ensure they could weather the storm, Reuters reported. International institutions, such as the International Monetary Fund and OECD say Britain is more susceptible to recession and persistently high inflation than other Western economies, which are all grappling with global energy and commodity market shocks. "The global economic outlook has deteriorated markedly.
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