Europe

Russian policymakers believe the nation’s economy has adapted to the costs of the war on Ukraine and international sanctions and will continue to grow over the next few years, Bloomberg News reported. The Economy Ministry sees Russian gross domestic product slowing to 2.3% over the next two years from 2.8% in 2023, according to its macroeconomic forecast through 2026, which was discussed at a government meeting led by Prime Minister Mikhail Mishustin Friday and seen by Bloomberg News. GDP growth is expected to further decline to 2.2% in 2026.
Read more
Direct lending, a key but expensive source of credit for riskier European firms that banks often shy away from, is running out of steam, a fresh sign that aggressive interest rate rises may be starting to cause funding stress and exacerbate economic pain, Reuters reported. Fundraising and deal-making have dropped sharply at European private debt funds, new data shows.
Read more

Germany’s Economic Rut Gets Deeper

Germany’s embattled economy, once Europe’s main engine of growth, looks set for a fresh contraction as its all-important manufacturing sector continues to weaken, the Wall Street Journal reported. After stagnating since the end of last year, Germany’s output is likely to contract this quarter as its factories face higher energy costs, a less welcoming global marketplace and intense competition from China in key sectors, recent data shows. The country was hit hard by Russia’s invasion of Ukraine, which caused a surge in energy and food prices.
Read more
The governor of Poland's central bank said Thursday that its large interest rate cut was justified despite high inflation because prices are stabilizing and the era of high inflation is ending, the Associated Press reported. Adam Glapinski spoke a day after the bank's monetary council announced that it was cutting interest rates by 75 basis points, a much larger reduction than had been expected.
Read more
Local government bodies have warned that more councils across the UK could declare themselves in financial dire straits, after the country’s second biggest city said it could not balance its books, Agence France-Presse reported. In a statement on Tuesday, Birmingham City Council in central England said it had issued a Section 114 Notice under the Local Government Finance Act 1988, effectively declaring itself bankrupt. The statutory trigger blocks spending on all but essential services, and forces councillors to come up with an action plan within 21 days to tackle the shortfall.
Read more
The new owners of steel maker Celsa, Spain's largest private industrial group, said on Wednesday they will appoint former Gas Natural Fenosa CEO Rafael Villaseca as chairman of its board of directors, Reuters reported. On Monday, a local court in Barcelona approved a multibillion-euro restructuring plan presented by Celsa's creditors, handing over control of the firm to a group that includes Deutsche Bank, Attestor, Anchorage, GoldenTree and SVP.
Read more
Birmingham City Council has declared itself effectively bankrupt, the BBC reported. The largest local authority in Europe, it has issued a Section 114 notice preventing all but essential spending to protect core services. The pressures have been linked to a £760m bill to settle equal pay claims. In a joint statement, the leader and deputy leader of the Labour authority said the move was a "necessary step as we seek to get our city back on a sound financial footing".
Read more
B&M has sealed a deal to buy up to 51 Wilko stores from administrators following the collapse of the rival discount chain, PA Media reported. Wilko fell into administration last month, with insolvency experts from PwC spending recent weeks seeking to hammer out a rescue deal for the historic retailer. Administrators have held talks with a raft of suitors, including HMV owner Doug Putman, in order to save Wilko’s 400 stores and 12,500 jobs. On Tuesday, B&M European Value Retail said it has agreed to acquire up to 51 Wilko sites from the administrators in a deal worth up to £13 million.
Read more
Credit Suisse clients withdrawing their money as the bank headed for collapse likely accounts for the first significant balance sheet contraction in a decade for all banks in Switzerland, a report by the Swiss Bankers Association on Tuesday said, Reuters reported. In Switzerland, the balance sheet of banks fell 6.9% to 3,339.7 billion Swiss francs ($3.76 trillion) in 2022, said the Banking Barometer, an annual report on banking industry trends. "The downturn among the big banks was especially large and probably driven mainly by shifts in customer funds at Credit Suisse," the report said.
Read more
Consumer expectations for euro-area inflation inched up in July, remaining above the European Central Bank’s 2% target as officials ponder whether to hike or hold interest rates next week, Bloomberg News reported. Expectations for the next 12 months failed to slow, staying at 3.4%, the ECB said Tuesday in its monthly survey. For three years ahead, they rose to 2.4% from 2.3%. The results are the last major piece of price data before a Sept. 14 announcement that President Christine Lagarde has said will either extend or pause the ECB’s unprecedented campaign of monetary tightening.
Read more