A deputy German finance minister warned of “permanent inflation risks” over the longer term, a contrast with the European Central Bank’s position that such pressures probably won’t endure, Bloomberg News reported. Florian Toncar, a deputy to new Finance Minister Christian Lindner, said inflation will likely moderate to 2% or 3% after the Covid-19 surge subsides, easing a once-in-a-generation cost-of-living squeeze in Europe’s largest economy. But supply shortfalls, rising wages and spending on Germany’s ambitious climate agenda will contribute to price pressures.

Ireland may benefit from another surge in corporation tax despite having to give up its prized 12.5 per cent rate, the chairman of the Irish Fiscal Advisory Council (Ifac) has said, the Irish Times reported. Instead of losing €2 billion a year as the Government has forecast, Ireland could benefit directly from the recent global agreement on tax, which will involve a new minimum rate of 15 per cent, Ifac chairman Sebastian Barnes.

Germany’s soon-to-be finance minister, Christian Lindner, suggested that the euro region should be careful to prevent swelling government debt burdens from dictating the path of monetary policy, Bloomberg News reported. “Debts in the European Economic and Monetary Union have increased sharply due to the pandemic,” Lindner, the chairman of the pro-business Free Democrats, said at news conference in Berlin on Tuesday. “That’s why we are sensitive to avoiding a situation of fiscal dominance in the future,” he added.

Polish Prime Minister Mateusz Morawiecki said his government would present a new package of pandemic restrictions this week in response to the new Omicron coronavirus variant and was considering how to handle the approaching Christmas holidays, Reuters reported. "Tomorrow, or the day after tomorrow at the latest, we will present a second (package) related to the Christmas situation, and as reaction to the virus' Omicron mutation because the situation is indeed not looking good... We have many deaths," Morawiecki told a news conference.

President Biden warned Russian President Vladimir Putin that the U.S. and its allies would meet a military escalation into Ukraine with a series of actions, including strong economic measures, bolstering Ukrainian defenses and fortifying support for Eastern European nations, as allies work together to prevent renewed conflict in Eastern Europe, the Wall Street Journal reported. For more than two hours on Tuesday, the leaders held a secure video call to address what the U.S. has described as large and unusual troop movement near Russia’s border with Ukraine in recent weeks. The U.S.

Iceland is confronting the trouble that comes with having a pension system so successful in amassing savings for future retirees that it was recently rated the best in the world, Bloomberg News reported. With assets now at about double the size of the north Atlantic island’s economy, the government is considering allowing investment managers to diversify by buying up more securities abroad, prompting the central bank to urge caution. The rules currently limit the share of overseas holdings in pension assets at 50%.

Eurozone governments should continue to spend to support the COVID-19 economic recovery, though in an increasingly focused way, and consolidate public finances only when it is firmly under way, the International Monetary Fund said on Monday, Reuters reported. In a regular report on the euro zone economy presented to the group's finance ministers, the IMF noted, however, that while consolidation itself could wait, a credible way of how it would be done in the future should be announced already now.

U.K. households, already bracing for their energy bills to rise by “several hundred pounds,” will see a further jump following the collapse of Bulb Energy Ltd. and other suppliers, the regulator said, Bloomberg News reported. The U.K.’s energy crisis has led to the collapse of more than 24 suppliers and the first forced nationalization since 2008. That will cost the average household an extra 85 pounds ($112) next year. Ofgem said the collapse of Bulb Energy Ltd.

The U.K.’s biggest business lobby cut its forecasts for growth this year and next as it warned rising costs and shortages are hampering the nation’s recovery, Bloomberg News reported. The Confederation of British Industry said Monday it now expects an expansion of 6.9% in 2021 and 5.1% in 2022, down from 8.2% and 6.1% previously. It expects U.K. business investment to lag behind other advanced economies, and sees it remaining 3% below its pre-Covid level by the end of 2023. The emergence of the omicron variant poses a further downside risk, it said.

The U.K. Treasury has appointed David Miles, a former Morgan Stanley economist and Bank of England rate-setter, to the government’s independent budget watchdog, Bloomberg News reported. Miles, who served on the BOE’s monetary policy committee from 2009 to 2015, will take over from Charles Bean, whose five-year term ends on Jan. 1. The OBR draws up the economic forecasts as well as borrowing and debt projections for the budget. The independent body was set up in 2010 to stop the Treasury fiddling the figures for political purpose.