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Italian Prime Minister Mario Draghi said on Wednesday he was confident Moscow's demand that European buyers pay for Russian gas in roubles will not lead to a disruption of supplies, Reuters reported. The European Commission has warned that complying with Russia's scheme might breach EU sanctions, but Draghi said it was a "grey zone" with no official ruling on the matter. Speaking during a visit to the United States, Draghi said he was "quite confident" about the supply situation for "a silly reason" that there was a lack of clarity on the rules after Russia's invasion of Ukraine in February.
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European judges have postponed a ruling on a Ryanair challenge to Germany’s €320 million bailout of rival airline Condor during the Covid-19 crisis, the Irish Times reported. Ryanair asked the European courts to overturn a European Commission decision to allow the German government to lend Condor €550 million in April 2020 for damage done by Covid flight cancellations. The General Court of the European Union was due to rule on Ryanair’s challenge to the commission’s decision on Wednesday, but postponed its judgment until further notice.
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Ukraine's leading agricultural group, Ukrlandfarming, said on Tuesday Russia's invasion had caused it losses totalling hundreds of millions of dollars, mainly because of the loss of access to land and the destruction of farms, Reuters reported. Ukrlandfarming, which produces grain, meat, eggs and sugar, said in a statement that it had lost control of 40% of its land portfolio. The territory had either been occupied by Russian forces or was located in areas where sowing was impossible because of fighting, it said.
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Britain and the European Union were once again at loggerheads over Brexit on Wednesday, after the U.K. government ramped up threats to scrap parts of its trade treaty with the bloc, saying the rules are blocking the formation of a new government in Northern Ireland, the Associated Press reported. Foreign Secretary Liz Truss said the government would “not shy away from taking action” if it can’t reach agreement with the bloc.
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An abrupt halt of Russian gas exports could see economies in emerging Europe, central Asia and north Africa slide back to pre-pandemic GDP levels, the European Bank for Reconstruction and Development (EBRD) warned on Tuesday, Reuters reported. Many countries in the EBRD's region of operation, which covers some 40 economies stretching from Mongolia to Slovenia and Tunisia, depend on Russian gas and a sudden ceasing of supplies would lower output per capita by 2.3% this year and 2% in 2023, according to the lender's latest report.
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German officials are quietly preparing for any sudden halt in Russian gas supplies with an emergency package that could include taking control of critical firms, Reuters reported. The preparations being led by the Ministry for Economic Affairs show the heightened state of alert about supplies of the gas that powers Europe's biggest economy and is critical for the production of steel, plastics and cars. Russian gas accounted for 55% of Germany's imports last year and Berlin has come under pressure to unwind a business relationship that critics says is helping to fund Russia's war in Ukraine.
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The rise in European bond yields is alarming some economists, who warn that Italy and Greece in particular do not have much wiggle room before their debt servicing burden starts rising, rekindling memories of the 2011-2012 euro debt crisis, Reuters reported. Just five months into the year and even before the European Central Bank tightens policy, French and German 10-year debt yields are up over 120 basis points and set for their biggest annual surge since 1999 - the year the euro was born. Spanish, Italian and Portuguese yields are up more than 155 bps.
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Romania’s central bank raised interest rates more than expected, stepping up the pace of tightening as it struggles to tame the fastest inflation in almost two decades and catch up with regional peers, Bloomberg News reported. The central bank raised the benchmark rate by 75 basis points to 3.75% at its meeting on Tuesday, matching the estimates of only one of the 11 economists surveyed by Bloomberg. The median estimate was for a 50 basis-point increase to 3.5%.
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Italy's government aims to sell state-owned ITA Airways, the successor to Alitalia, by the end of June after setting a deadline for binding offers of May 23, Economy Minister Daniele Franco said on Tuesday, Reuters reported. Under a government decree, Rome plans to privatise ITA through a direct sale while retaining a minority, non-controlling stake in a first stage. Three prospective bidders for ITA Airways have had access to its finance data room, Franco said addressing parliament over the issue. They are shipping group MSC alongside Germany's Lufthansa, the U.S.
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Russia is facing the deepest economic contraction in nearly three decades as pressure from sanctions imposed by the U.S. and its allies mounts, according to an internal forecast by the Finance Ministry, Bloomberg News reported. Gross domestic product is likely to shrink as much as 12% this year, deeper than the 8% decline expected by the Economy Ministry, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations. The government hasn’t released a public forecast since the invasion of Ukraine.
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