The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Unions call for a 10.5% increase for federal and local government before collective bargaining round
The trade unions in the public sector are demanding 10.5 percent more money for the upcoming collective bargaining round for two and a half million employees from the federal and local governments, but at least 500 euros a month. In view of the high inflation, it is above all about securing lower incomes, said Verdi federal boss Frank Werneke on Tuesday in Berlin after a joint meeting of the collective bargaining committees of Verdi and the German Association of Civil Servants.
The cabinet initiates the financing of the defense shield
The federal government has introduced the law that regulates the financing of the 200 billion euro protective shield against high energy prices. “The cabinet is launching the economic stabilization fund today,” said Federal Finance Minister Christian Lindner (FDP) via the short message service Twitter. The 200 billion euros are “strictly earmarked for the electricity and gas price brake and necessary economic aid,” he emphasized. “This is how we deploy our defense shield to protect people and businesses in this energy war.”
Habeck warns Lindner in the nuclear power plant dispute
Federal Economics Minister Robert Habeck (Greens) is urging the FDP to move on the question of an operational reserve for two of the three remaining nuclear power plants in Germany. “If you want the nuclear power plants to be able to produce electricity after December 31, you have to clear the way now,” Habeck told Der Spiegel and warned: “Time is of the essence.”
ECB/Lane: Exact effects of a balance sheet reduction are uncertain
According to ECB chief economist Philip Lane, a reduction in the balance sheet of the European Central Bank (ECB) does not necessarily have to lead to a symmetrical reversal of the effects of a balance sheet expansion. In a conference entitled “EU and US Perspectives: New Directions for Economic Policy,” according to the published speech, Lane said some effects may be weaker while others may be stronger.
Berenberg: Euro area GDP falls by 2 percent in winter
Berenberg chief economist Holger Schmieding expects the gross domestic product (GDP) of the euro area to shrink by 2 percent in the fourth quarter of 2022 and in the first quarter of 2023 combined. “High energy prices are depressing consumers’ real disposable income and raising costs for companies, forcing some of them to cut production,” writes Schmieding in an outlook. However, he is optimistic for next year: “If the Putin shock wears off at least somewhat, we would expect the European economies to recover in a V-shape. In spring 2024, economic activity could be back to where it was in spring 2022, and after that it could be further significant increases will follow.”
G7 accuses Russia of war crimes and threatens consequences
After a video conference, the group of seven leading democracies (G7) branded the recent Russian airstrikes on Ukrainian civilians as war crimes and pledged financial and military support to Ukraine “for as long as necessary”. The seven heads of state and government threatened Russia with “serious consequences” if the country used chemical, biological or nuclear weapons. The G7 also threatened Russia with further economic punitive measures and promised each other close cooperation to deal with the consequences of Russia’s war of aggression on global economies. The G7 also wants to work together on the issue of energy security and energy prices.
IMF: Rising interest rates exacerbate risks for financial stability
According to the International Monetary Fund (IMF), the risks to global financial stability have increased significantly since the spring. Because of the very high inflation, the central banks are tightening their monetary policy at a record pace – above all the US Federal Reserve, issuer of the world reserve currency. At the same time, the prospects for growth are clouding over.
Ukraine and inflation at center of IMF meeting – circles
According to estimates in German government circles, the escalation in the Ukraine war, the global inflation trend and the monetary policy reaction to it should be the focus of the autumn conference of the International Monetary Fund (IMF) and the deliberations of the 20 leading industrial and emerging countries (G20). “There is certainly a shift in emphasis for my terms compared to April,” said a senior government official in Berlin. “Ukraine will perhaps become more acute after the latest developments in Kyiv. The G7 will once again place a somewhat stronger emphasis on it.”
IMF: Ukraine war, inflation and China burden global economy
The International Monetary Fund (IMF) has lowered its forecast for next year’s global growth and sees the global economy in the grip of three drag forces: Russia’s war against Ukraine, inflation and the economic slowdown in China. As indicated in the World Economic Outlook, the IMF advises central banks to raise interest rates quickly above neutral levels.
NATO presence doubled in the Baltic and North Seas because of Nord Stream
According to Secretary General Jens Stoltenberg, NATO has doubled its presence in the Baltic and North Seas after the “sabotage” of the Nord Stream pipelines. “We have doubled our presence in the Baltic Sea and North Sea to more than 30 ships,” said Stoltenberg in Brussels on Tuesday. The ships would be supported from the air and from “underwater capacities”.
Fed/Mester warns against hesitant rate hikes
Cleveland Federal Reserve Chair Loretta Mester does not anticipate a pause in interest rate hikes or a reversal of the Federal Reserve’s current stance. “Given the current economic conditions and outlook, I think the bigger risk comes from not tightening enough monetary policy, which would allow inflation to stay high and take root in the economy,” she said in a speech in New, according to the manuscript York.
Despite a US warning, Saudi Arabia decided to cut OPEC subsidies – circles
Days ahead of an oil production cut by the Saudi-led Opec+ cartel, US officials called their counterparts in Saudi Arabia and other major Gulf producers with an urgent appeal to delay the decision by another month. US officials warned the Saudi leadership that a cut would be seen as a clear decision by Riyadh to side with Russia in the Ukraine war, people familiar with the talks said. Saudi Arabia dismissed the demands, which were seen as a political move by the Biden administration to avoid bad news ahead of the US midterm elections.
+++ economic data +++
US/Redbook: Retail Sales first week Oct +8.3% yoy
Brazil Consumer Prices Sep -0.29% (Aug: -0.36%)
Brazil CPI 12-month rate Sep +7.17% (Aug: +8.73%)
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(END) Dow Jones Newswires
October 11, 2022 13:00 ET (17:00 GMT)