Fossil fuel firms may have to share their excess profits to help European households and industries cope with red-hot energy bills, a draft European Union plan showed on Monday as the cost of the West's "energy war" with Russia took a growing toll, Reuters reported. Energy prices and inflation have surged as Moscow slashed gas supplies in response to Western sanctions imposed over its actions in Ukraine, prompting France to tell consumers they would have to share some of the pain while Britain is among countries facing the threat of recession.

Germany is set to use a fund created to help companies cope with the economic hit from the pandemic to provide loan guarantees for struggling energy firms, Reuters reported. State development bank KfW would oversee the mechanism and the volume of loan guarantees available would be around 67 billion euros ($67.9 billion). Chancellor Olaf Scholz’s government is set to approve the plan -- which is designed to help energy companies forced to pay higher prices due to Russian supply cuts -- at a regular cabinet meeting on Wednesday.

Germany's outlook has "dramatically worsened" and the economy could stagnate or contract in the second half of the year, an economy ministry report said on Tuesday, Reuters reported. A rising number of companies are going insolvent but there is no "insolvency wave" as such, the report said, adding that Germany's labour market has defied global uncertainties for the time being and demand remains high. Read more.

A Moscow court on Monday accepted a bankruptcy application by Google's Russian subsidiary and started initial bankruptcy proceedings, placing the company under supervision, Russian news agencies reported, according to Reuters. Alphabet Inc.'s Russian unit filed for bankruptcy this summer after authorities seized its bank account, making it impossible to pay staff and vendors. Free services, including search and YouTube, have continued operating. Read more.

Investors placed orders for over $1 billion of Russian bonds as part of a long-anticipated credit-default swap auction on Monday, more than three months after the Kremlin was ruled in default for failing to pay back creditors, WSJ Pro Bankruptcy reported. The high demand for Russia’s sovereign bonds reflects growing investor appetite for its bonds despite punishing sanctions on the Kremlin. While U.S. investors were forbidden from purchasing Russian debt this summer, the U.S.

Britain's jobless rate hit its lowest since 1974 but the drop was due mostly to a fall in the size of the workforce and there were other signs that the country's jobs boom is petering out, adding to the Bank of England's inflation headache, Reuters reported. The unemployment rate sank to 3.6% in the three months to July, the Office for National Statistics said. Economists polled by Reuters had expected it to hold at 3.8%. However, the fall was not a sign of health in Britain's economy which is at risk of a recession.

Link Fund Solutions, which managed the collapsed LF Woodford Equity Income Fund, could be forced to pay up to 306 million pounds ($358 million) in redress, Britain's Financial Conduct Authority said on Monday, Reuters reported. The FCA was responding to news that Dye and Durham is proposing to take over LFS and six other companies in the Australian share registry firm Link Group, all authorised by the UK financial watchdog.

Germany's justice minister is planning a temporary relaxation of insolvency rules to help keep afloat companies that have fundamentally sound business models but are struggling with debts due to high energy costs, he said on Friday, Reuters reported. Marco Buschmann, whose portfolio includes insolvency rules, said his plan would exempt firms from the obligation to file for insolvency if an expert finds they have a "positive going concern prognosis" for four months, down from 12 months now.

Britain's economy grew by less than expected in July, raising the risk that it is already in a recession, with the sharp climb in energy tariffs hurting demand for electricity and a leap in the cost of materials hitting the construction sector, Reuters reported. With inflation at a 40-year high of more 10%, gross domestic product expanded by 0.2% from June, official data showed on Monday, weaker than a median forecast of 0.4%. In the three months to July, GDP was flat compared with the previous three-month period.

The European Union's securities watchdog said on Monday it was "actively considering" potential measures to ease strains in energy markets where some participants face difficulties in finding enough cash to cover positions, Reuters reported.