German Finance Minister Christian Lindner defended on Friday his supplementary budget for 2023 which suspends Germany’s cap on borrowing this year after a top court ruling tore up the government’s spending plans. Lindner, leader of the fiscally conservative Free Democrats, has been a staunch defender of the constitutionally-enshrined debt break in the past and is reluctant to agree another suspension in 2024 as Germany tries to find a way out of its budget crisis. “We are now creating legal certainty,” Lindner told lawmakers at Germany’s parliament. Germany’s constitutional court ruled ...

Headline inflation to close in on 2% from the second quarter The UK inflation story is finally heading in the right direction and headline CPI should be very close to target by May. The bulk of that fall from the latest 4.6% figure is down to food – where producer prices point to prospective discounting – and core goods, aided by improved supply chains and higher inventory levels. We expect headline CPI to sit in the 2%-2.5% range for the latter half of next year, before dipping below target in ...

Euro zone inflation is going in the right direction but risks are skewed towards more negative outcomes, so a further rate hike cannot be taken off the table and cuts should not even be discussed, Bundesbank President Joachim Nagel said on Thursday. Euro zone inflation tumbled to 2.4% this month, coming well below expectations for the third straight month, fuelling market bets that European Central Bank interest rates will come down much quicker than the bank now guides. Investors see the first cut in April and a total of 115 ...

The European Commission has approved the re-introduction of a Greek scheme (known as ‘Hercules’) aimed at supporting the reduction of non-performing loans of Greek banks, as it does not involve State aid. ‘Hercules’ scheme The scheme is a re-introduction of a measure that the Commission initially approved in October 2019 (SA.53519), for a duration of 18 months and prolonged in April 2021 (SA.62242), which expired on 9 October 2022. Greece notified its plans to re-introduce the scheme, which will run until the end of December 2024. The scheme aims at ...

Jobs market is cooling, not collapsing We have had quite a lot of US data today, starting with initial jobless claims, which rose to 218k last week, from an upwardly revised 211k (initially reported as 209k). Continuing claims surged though to 1927k up from 1841k. There have been questions over seasonal adjustment issues and data volatility, but the trend is certainly towards higher continuing claims while initial claims remain low. Essentially, the message is that firms are reluctant to fire workers, but they are less inclined to hire new workers. ...

I’ve heard this a lot this year, especially when talking about Europe. To some, 2023 has been better than feared as the US economy, in particular, has shown an almost magical resilience, and Europe has at least avoided a severe energy crisis. But maybe you’re in the other camp that mostly sees a stuttering Chinese economy and stagnation in Europe amid a backdrop of a new war in the Middle East, an older one in Ukraine. High rates and higher-still inflation have marked another turbulent year with very few positive ...

Asia’s factory activity remained weak in November on soft global demand, surveys showed on Friday, with mixed signs on the strength of China’s economy clouding the outlook for the region’s fragile recovery. China’s private Caixin/S&P Global manufacturing purchasing managers’ index (PMI) unexpectedly rose to 50.7 in November from a 49.5 reading in October, exceeding the 50 mark separating growth from contraction and surpassing analysts’ forecasts. The reading came a day after official survey that showed a contraction in both manufacturers’ and non-manufacturers’ activity, underscoring deepening troubles in the world’s second ...

Russia is working on the assumption that sanctions against it by the United States and its allies will last for many years, but that U.S. influence on the world economy is waning, Kremlin spokesman Dmitry Peskov said on Friday. Peskov was commenting on an interview in which U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt told the Financial Times that Washington was aiming to halve Russia’s oil and gas revenues by the end of the decade. “We have no doubt that these sanctions will last for many years. ...

US experiences a sharp slowdown and slow recovery After stellar third-quarter GDP growth of 5%, the US economy is set to experience slower, albeit still solid, growth in the fourth quarter with legacy household savings helping to maintain consumer spending. However, we are concerned that 2024 will be much weaker as stagnant real household incomes and tighter credit conditions weigh down and pandemic-era accrued excess savings are exhausted for many. Credit card delinquencies are on the rise while student loan repayments are only adding to the financial pressure on millions ...

Germany: Still bedridden The narrative for Germany should be well-known by now. As a result of cyclical headwinds and a long list of structural challenges, its economy was stuck between recession and stagnation in 2023. Admittedly, due to enormous efforts and mild winter weather, the country managed to avoid an even worse energy crisis. However, avoiding the worst never automatically leads to a brighter economic outlook. In fact, the recent fiscal woes are set to bring new policy uncertainty – and more paralysis to the economy as a result. The ...

The downturn in Germany’s manufacturing sector, which accounts for about a fifth of the country’s economy, eased in November, a survey showed on Friday. The HCOB final Purchasing Managers’ Index (PMI) for manufacturing rose to 42.6 in November from 40.8 in October, increasing for the fourth month in a row but still far below the 50 level that separates growth from contraction. “Even though the November data still places the sector in the recession arena, the rate of output decline is tapping the brakes compared to the previous month,” said ...

Turkish factory activity contracted for a fifth consecutive month in November as purchasing activity moderated along with a slowdown in output, new orders and employment, a survey showed on Friday. The Purchasing Managers’ Index (PMI) for manufacturing fell to 47.2 from 48.4 in October, according to a survey by the Istanbul Chamber of Industry and S&P Global, moving further below the 50-point mark that separates growth from contraction. Subdued market conditions both at home and abroad meant that new orders eased to the greatest extent since November 2022, the survey ...

The Indian economy is projected to grow at a 6.7% -7% rate in the fiscal year ending March 31, 2024, several economists said, upping their projections after the country blew past growth estimates for the July-September quarter. The country’s economy expanded 7.6% in the July-September quarter, trouncing estimates of a 6.8% rise, data released on Thursday showed. Stronger-than-expected growth in the first half of the year, along with continued government spending and some revival in private investment has prompted economists to raise their growth forecast to higher than the government’s ...

U.S. Treasury Secretary Janet Yellen said on Thursday she believes the U.S. economy does not need further drastic monetary policy tightening to stamp out inflationary expectations andwas on track to achieve a “soft landing” with strong employment. Yellen told reporters after a speech at a lithium processing plant in North Carolina that in the past, the Federal Reserve sometimes had to tighten monetary policy so much to prevent inflation from becoming ingrained in the economy thatit caused recessions. “We don’t need that now,” Yellen said. “I believe the signs are ...

China’s factory activity unexpectedly expanded in November, driven by rising orders, a private survey showed on Friday, but sluggish external demand continues to weigh on manufacturers. The Caixin/S&P Global manufacturing PMI rose to 50.7 in November from a 49.5 reading in October, marking the fastest expansion in three months and surpassinganalysts’ forecasts of 49.8. The 50-pointmark separates growth from contraction. The manufacturing sector is struggling to recover with the official purchasing managers’ index (PMI) falling for the second month on Thursday, despite China’s better-than-expected economic growth in the third quarter. ...