Europe

The Czech central bank pledged to keep raising borrowing costs after lifting interest rates by the most in nearly a quarter century, pushing the koruna higher and angering the government with the European Union’s most aggressive anti-inflationary campaign, Bloomberg News reported. Policy makers increased the benchmark rate by 75 basis points to 1.5% on Thursday, exceeding expectations for a half-point increase.
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Britain has temporarily exempted parts of the carbon dioxide (CO2) industry from competition law to help provide further security of the gas's supplies to businesses in the country, Reuters reported. Britain last week warned food producers to prepare for a 400% rise in carbon dioxide prices after extending emergency state support as rising costs of wholesale natural gas led to fears of poultry and meat shortages.
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The European Commission on Thursday proposed extending looser state aid rules for virus-hit companies for six months to June 2022 in a bid to slowly wean them off the billions of euros provided by governments across the European Union, Reuters reported. The EU executive, tasked with ensuring a level playing field in the 27-country bloc, also proposed two new measures to encourage investment support and solvency support for a limited time to help Europe rebound from the impact of the COVID-19 pandemic.
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After 18 months during which it subsidized 11.6 million jobs, Britain’s government-funded furlough program ended on Thursday, along with some other pandemic relief measures, the New York Times reported. While it marked another milestone in Britain’s efforts to put the pandemic in the past, the country is experiencing a slowing economic recovery and increasingly severe supply chain disruptions.
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As a critical shortage of truck drivers has caused gas pumps to run dry across the country and disrupted the lives of thousands, Britons and their leaders in Parliament are delivering a plaintive message to the drivers: We need you, the New York Times reported. The government is sending out a letter to nearly 1 million people who hold a license to drive a heavy goods vehicle, urging them back onto the road. And it is relaxing visa restrictions for thousands of foreign workers, in the hope of luring them into temporary work in Britain.
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Switzerland proposed updated rules to ensure major banks hold enough liquidity to absorb shocks, but the draft changes will cost banks little or nothing in additional capital and liquidity holdings, government documents showed on Thursday, Reuters reported. The proposed revisions, which were sent into consultation on Thursday, aim to ensure that systemically important banks (SIBs) -- which include Credit Suisse and UBS -- remain resilient under various stress scenarios, including in some cases not adequately covered by current rules, the government said.
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A U.S. judge said Germany's Allianz SE must face investor claims it wrongly "abandoned" the investment strategies it promised to use on hedge funds that suffered massive losses as the COVID-19 pandemic shook markets early last year, Reuters reported. In an 81-page decision, U.S. District Judge Katherine Polk Failla in Manhattan said that investors could try to show Allianz was negligent and lacked good faith in managing its Structured Alpha funds. She also dismissed some state law-based claims.
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Insurers operating in the Irish market have paid out €130 million to date on business interruption claims stemming from the Covid-19 crisis, fuelled by a landmark court rulings and pressure from the Central Bank, according to the regulator, the Irish Times reported. The Central Bank wrote to a number of insurers in February pressing them to pay out on valid business interruption claims, following landmark court judgments in Britain and Ireland in favour of companies affected by the economic shock caused by Covid-19.
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Europe’s current burst of inflation is temporary and won’t lead the European Central Bank to “overreact” by withdrawing stimulus or raising interest rates, ECB President Christine Lagarde said on Tuesday, the Associated Press reported. “What we are seeing now is mostly a phase of temporary inflation linked to reopening,” Lagarde said in a speech in Frankfurt, Germany opening the ECB’s annual forum on central banking.
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Italian Prime Minister Mario Draghi is following through on his view that the European Union’s fiscal rules are “obsolete” with a budget that projects deficits well above the bloc’s suspended ceiling for the foreseeable future, Bloomberg News reported. The first annual fiscal plan of his technocratic government unveiled on Wednesday shows that even though officials reckon the shortfall could drop to 2.1% by 2024, they plan to keep exceeding the 3% level that used to trigger EU admonishments before the crisis. “Our budget is fundamentally expansive,” the prime minister told reporters in Rome.
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