Europe

The governor of the Irish Central Bank has warned the Government that budgetary measures to cushion the impact of inflation need to be temporary and targeted to limit the risk of fueling further price growth, the Irish Times reported. In a pre-budget letter to the Minister for Finance, Gabriel Makhlouf also highlighted the significant budgetary risk posed by corporation tax receipts, suggesting the public finances were now “highly exposed to business decisions of a small number of firms”.
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Euro zone finance ministers agreed on Friday to act together to protect households and companies from soaring energy prices, coordinating their support policies with the European Central Bank to avoid adding to inflationary pressures, Reuters reported. The ministers from the 19 euro zone countries agreed support should focus on providing money to help people and industry cope but that this should be regarded as an emergency measure and be carefully targeted where possible. Support for companies should be coordinated across borders to preserve fair competition.
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Ukraine’s top Cabinet official panned slow progress from the International Monetary Fund in moving ahead with a new assistance package for the war-torn nation, Bloomberg News reported. Prime Minister Denys Shmyhal gave credit to the IMF for its abundant past support of Ukraine, including in 2014-2015 after Russia annexed the Crimean peninsula and fomented military conflict in the country’s east.
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Bankruptcy Judge Michael Wiles on Friday approved a $700 million financing package for SAS AB from Apollo Global Management, though he said features of the deal concern him, Bloomberg News reported. The financing, divided into two $350 million draws, will allow Apollo to convert the debt into stock in the bankrupt airline or participate in an equity raise tied to SAS’s eventual exit from chapter 11 protection under certain circumstances. Judge Wiles called the financing “unusual” and questioned whether it was legally viable.
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French power distributor Electricite de Strasbourg SA oversold large quantities of electricity due to trading errors earlier this week, a mistake that could cost the company 60 million euros ($60.3 million). The utility’s ES Energies Strasbourg unit made quantity errors on transactions on Tuesday and Wednesday amounting to 2.03 gigawatts and 5.75 gigawatts of electricity, the company said in a statement.
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The European Central Bank said it would raise its key interest rate by 0.75 percentage point, the biggest increase since the early days of Europe’s monetary union, moving aggressively to combat record inflation even as an energy crisis puts Europe on the brink of recession, the Wall Street Journal reported. The bank said in a statement that it would increase its key rate to 0.75% from zero—its second hike this year following a 50-basis-point rise in July—and signaled that further rises were likely this year.
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A Swiss court has granted the operating company for the never-opened Nord Stream 2 pipeline, which was built to bring Russian gas to Germany but put on ice shortly before Russia invaded Ukraine, a four-month extension to its “stay of bankruptcy,” the Associated Press reported. The stay for Nord Stream 2 AG was extended from Sept. 10 through Jan. 10 by a regional court in Zug canton (state), according to a notice published Thursday in the Swiss Official Gazette of Commerce. The company, a subsidiary of Russia’s Gazprom, is based in Zug.
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Newly installed U.K. Prime Minister Liz Truss told Parliament on Wednesday that she would tackle Britain’s “very serious” energy crisis while still slashing taxes, ruling out imposing a windfall levy on oil companies to pay for her plans to offset the soaring cost of heating and electricity, the Associated Press reported. Truss rebuffed opposition calls for a new windfall tax, even as she refrained from explaining how she would fund a plan meant to help the public pay energy bills skyrocketing because of Russia’s invasion of Ukraine and the economic aftershocks of COVID-19 and Brexit.
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German Economy Minister Robert Habeck faced a backlash on Wednesday for saying he could imagine parts of the economy stopping production due to rising energy prices that German firms say are threatening their existence, Reuters reported. Asked whether he expected a wave of insolvencies at the end of this winter due to companies' rising energy bills, Habeck said "No, I don't.
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Denmark's central bank raised its key interest rate by 0.75 percentage points to 0.65% on Thursday, ending a nearly decade-long experiment of negative interest rates, Reuters reported. "The interest rate increase is a consequence of the increase by the European Central Bank of its main monetary policy rate" the central bank said in a statement. Earlier on Thursday, the ECB raised its benchmark deposit rate by 75 basis points to 0.75% and signaled further hikes.
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