You are here

Business

Business section

EU threatens US over electric car subsidies

By - Nov 07,2022 - Last updated at Nov 07,2022

The EU is seeing red over a US electric car subsidy that favours domestic manufacturers (AFP photo)

BRUSSELS — The European Union threatened on Monday to take retaliatory measures against the United States for electric car subsidies that favour domestic manufacturers.

The 27-nation bloc is upset about Washington's "Inflation Reduction Act", which will see vast spending on green energy initiatives and includes tax breaks for US-made electric cars and batteries.

Brussels says those benefits for American electric vehicle makers would put e-cars made in the EU at an unfair disadvantage on the lucrative US domestic market.

EU finance ministers meeting in Brussels said they believed Washington was not hearing Europe's worries.

"I'm not sure whether they are aware of our concerns," German Finance Minister Christian Lindner said.

He added: "We should do everything to avoid a tit-for-tat scenario or even a trade war."

His French counterpart, Bruno Le Maire, said he expected the European Commission to come up with "a strong response to this US policy".

The US legislation "could harm this level playing field between the European companies and American companies," he said,

He underlined that it was "a matter of deep concern for the French government", which estimates that 10 billion euros in investments are at stake.

The US Inflation Reduction Act opens up a $7,500 tax credit for the purchase of an electric car, but the vehicle has to roll out of a US factory with locally manufactured batteries.

Internal Market Commissioner Thierry Breton early Monday threatened to take "retaliatory measures" against the United States, calling the subsidies "contrary to World Trade Organisation rules".

If Washington doesn't take into account the views of its EU partners the bloc could "go to the WTO" and make its arguments there, he said on French radio and TV station BFM Business.

Last week the EU urged the United States that it grant it the same exemptions it grants cars built in Canada and Mexico.

Brussels and Washington have set up a task force to try to hammer out a solution.

The EU's trade commissioner, Valdis Dombrovskis, said as he arrived for the Brussels meeting that the issue was being discussed "extensively" with US counterparts, as well as through the joint task force.

The US credits have raised particular hackles in Europe's manufacturing powerhouse Germany, which is concerned for its key car industry.

Chancellor Olaf Scholz warned last month that the US measures could trigger "a huge tariff war".

In UK first, nurses vote to strike — media

Strike ballots among more than 300,000 members of RCN

By - Nov 06,2022 - Last updated at Nov 06,2022

Nurses in the UK are campaigning for a pay rise of five per cent above inflation (AFP file photo)

LONDON — Nurses across the UK have voted to strike in their first national action over a pay dispute, a media report said on Sunday.

The strike ballot among more than 300,000 members of the Royal College of Nursing (RCN) was the biggest in the union's 106-year history.

"Our strike action will be as much for patients as it is for nurses — we have their support in doing this," Secretary Pat Cullen said.

Although counting is still underway, the domestic PA news agency reported that RCN officials believed enough members had voted for winter industrial action, which is set to take place within a few weeks, possibly before Christmas.

The RCN is campaigning for a pay rise of five percent above the soaring inflation.

The exact nature of the strike is yet to be determined, but is likely to disrupt operations and appointments even as patients are already facing record waiting lists.

"This will see the majority of services taken out, and picket lines across the country," a union source told the Observer newspaper.

It also comes as Prime Minister Rishi Sunak and Chancellor Jeremy Hunt already face the huge challenge of tackling a 50 billion pound ($57 billion) hole in public finances.

The UK, which is struggling with a cost of living crisis, has seen a wave of industrial action in recent months.

Tens of thousands of staff in various industries — from the postal and legal systems to ports and telecommunications — have gone one strike across Britain since the summer.

The RCN said there were record nursing vacancies as 25,000 nursing staff around the UK left the Nursing and Midwifery Council register in the last year.

Recent analysis showed an experienced nurse's salary has fallen by 20 per cent in real terms since 2010, and the RCN said the goodwill and expertise of nursing staff was being "exploited" by governments across the UK.

Syrian perfumer needs 'one whiff' to mimic luxury brands

By - Nov 06,2022 - Last updated at Nov 06,2022

DAMASCUS — One whiff of a fragrance is all Syrian perfumer Mohammad Al Masri needs to recreate the scent of a luxury brand — without the label and for a fraction of the cost.

Dozens of customers flock daily to his tiny store, nestled in the historic market of Damascus's old city, many flashing photos on their phones of high-end perfumes they want to replicate.

"All I have is my shop, and this nose I've been training since I was 15," the 55-year-old told AFP, pointing at his face. 

"I don't have a big workshop or high-end equipment."

After 11 years of brutal war and economic dislocation, most Syrians struggle to afford life's bare necessities, let alone perfume.

Before the war, Masri would mostly concoct expensive oriental fragrances, with heavy notes of oud, a sweet and woody scent, like his family has done for a century.

But after Syria plunged into conflict, demand for cheap imitations of premium brands skyrocketed and Masri's shop walls are filled with pictures of world-famous perfumes.

"For young women, perfume is essential, it's like food or water," said 24-year-old customer Cham Al Falah.

"I used to buy Western perfumes but I can no longer afford them because imported products are becoming increasingly hard to come by in Syria," she said while ordering a fragrance imitating her favourite Italian perfume.

Although Damascus has been spared the worst destruction of the war, which began after its government repressed peaceful protests, the local currency has lost almost 99 per cent of its value on the parallel market.

Syrian employees and civil servants reportedly make roughly $25 a month on average — a quarter of the price of a bottle of imported perfume. 

Masri sells his fragrances for about six dollars, drawing in a flow of clients from all walks of life.

Ahmad Dorra, 60, travelled from the mountain town of Zabadani, a 50 kilometre drive away, to buy five bottles of perfume for his family.

He watched as Masri lined up dozens of vials on a table — essences of jasmine, Damascus rose, musk and other fragrances used for his concoctions.

"I don't know much about Western brands," the farmer said, "but I trust [his] nose".

US sees strong job gains in October as wages move higher

By - Nov 05,2022 - Last updated at Nov 05,2022

WASHINGTON — US job gains topped expectations in October, according to official data released on Friday, as hiring remained resilient and wages moved ever higher, underscoring the challenges in lowering rampant inflation.

The data comes days ahead of critical midterm elections, where decades-high inflation has propelled economic issues to the top of voters' minds and President Joe Biden faces a battle to avoid losing control of both chambers of Congress.

The figures will provide little comfort to the Federal Reserve (Fed), which has been battling to cool the economy, as policymakers fear high prices will become entrenched and rising pay will create an upward spiral — inflicting more harm on families and businesses.

American employers added 261,000 workers last month, far more than economists had forecast, though the pace was lower than the 315,000 increase in September, which was revised much higher than originally reported by the Labour Department.

The jobless rate rose two-tenths to 3.7 per cent, according to the closely-watched US employment report.

Biden cheered the data which showed 10 million jobs have been created since he took office in January 2020, but he recognised the hardship Americans face due to higher prices.

"Inflation is our top economic challenge... The global inflation that is raging in other countries is hitting us as well," Biden said in a statement on Friday.

He said policymakers will "do what it takes to bring inflation down".

Average hourly earnings for private sector workers jumped another 12 cents or 0.4 per cent last month, to $32.58, the report said.

Wages have increased 4.7 per cent over the last 12 months as firms have had to compete to find and retain workers in the tight labour market. 

That pace is slightly slower than in September, which the Fed will welcome, but many employees are pushing for increases to avoid losing ground to elevated consumer costs.

US markets rallied following the latest data, which raised hopes of a soft landing for the economy. Major indices closed higher on Friday, despite the Fed's pledge that interest rates will need to rise further to quell inflation.

 

'Softening' 

 

"The bottom line here is that the labour market is softening, but has not yet reached the point where the data are screaming at the Fed to stop tightening," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in an analysis.

But if employment trends continue, markets will start to push policymakers to "rethink the idea of continued hikes next year," he added.

The data showed notable job gains in health care, professional and technical services, and manufacturing.

The Fed has raised borrowing rates six times this year to cool demand, but there have been few signs it is having an impact on consumer spending or inflation.

The central bank said this week that it would have to continue hiking rates, although that has raised the risk that the world's biggest economy will suffer a downturn.

But Susan Collins, president of the Boston Fed Bank said she sees a chance to accomplish the task of reining in price increases without completely putting the brakes on growth.

While inflation so far is only slowly drifting down, "I do not believe a significant slowdown is required to accomplish our goal," she said in a speech in Washington on Friday.

But she stressed that the Fed must continue to act as "current levels of inflation are simply too high, and are taking a significant toll on households and firms".

While the policy tightening normally would be expected to lead to job losses, economists say employers are reluctant to shed workers that they struggled to find.

"The data are still showing strong positive momentum in the labor market which is not yet showing much adjustment in response to a rapid tightening of monetary policy," said Rubeela Farooqi of High Frequency Economics. 

"These data will keep the Fed on track to keep raising rates into restrictive territory," she said in an analysis.

German leader calls for equal trade ties in controversial China summit

By - Nov 05,2022 - Last updated at Nov 05,2022

BEIJING — German Chancellor Olaf Scholz told Chinese leaders in Beijing on Friday that Berlin expected equal treatment on trade as he tried to drum up greater economic cooperation despite growing distrust of the Asian superpower in the West.

Scholz is under pressure to push Beijing to get tough on Russia over the war in Ukraine, and he said on Friday that Germany and China had agreed they both opposed any use of nuclear weapons in the conflict.

The German chancellor is the first G-7 leader to visit China since the start of the coronavirus pandemic, which led the world's number two economy to close its borders and President Xi Jinping to largely eschew in-person diplomacy.

But his trip has prompted criticism at home over Berlin's growing economic reliance on Beijing, and sparked controversy for coming so soon after Xi strengthened his hold on power in China just last month.

Tensions are also running high between the West and Beijing on issues ranging from Taiwan to alleged human rights abuses.

Scholz held talks with human rights lawyers critical of the regime in Beijing ahead of the trip, a source in his entourage told AFP.

Received by a smiling Xi at Beijing's Great Hall of the People shortly after arriving, Scholz said he hoped to "further develop" economic cooperation — while alluding to areas of disagreement.

"It is good that we are able to have an exchange here about all questions, including those questions where we have different perspectives — that's what an exchange is for," Scholz said. 

"We also want to talk about how we can further develop our economic cooperation on other topics: Climate change, food security, indebted countries."

"Xi underscored the need for China and Germany, two major countries with great influence, to work together in times of change and instability and contribute more to global peace and development," Beijing's Xinhua News Agency reported.

Scholz also spoke with Chinese Premier Li Keqiang at a meeting in which he called for fair trade between the two countries. 

At a press briefing during which Chinese officials said there was "not enough time" for questions, Scholz urged Beijing to do more to "use its influence" on its ally Russia, currently engaged in a months-long war in Ukraine.

Both sides said they opposed the use of nuclear weapons in the conflict, with Scholz telling reporters: "Everyone says clearly that an escalation via the use of a tactical nuclear weapon is ruled out."

China has steadfastly avoided criticising Russia for invading Ukraine and instead blames the United States and NATO for the war.

 

'Keep doing business' 

 

The German delegation of more than 60 people was met on the tarmac at Beijing airport by a military guard — as well as health workers in white hazmat suits who conducted mandatory PCR tests in buses converted into mobile laboratories. 

Scholz's PCR test was taken in his plane by a German doctor he brought with him and supervised by Chinese health officials, according to the German government.

China's economic importance is seen by some in Berlin as more crucial than ever, as Germany hurtles towards a recession battling an energy crisis triggered by the Ukraine war. 

China is a major market for German goods, from machinery to cars.

But German industry's heavy dependence on China is facing fresh scrutiny after the over-reliance on Russian energy imports left it exposed when Moscow turned off the taps.

Scholz's approach is still underpinned by the idea that "we want to keep doing business with China, no matter what that means for the dependence of our economy, and for our ability to act", opposition lawmaker Norbert Roettgen told the Rheinische Post newspaper.

Concern about China has also come from within Germany's ruling coalition, with Foreign Minister Annalena Baerbock saying past mistakes with Russia must not be repeated.

 

'All the more important' 

 

There are also concerns that the trip — coming on the heels of Xi securing a historic third term at a Communist Party Congress last month — may have unsettled the United States and the European Union.

"For Beijing, this is less about concrete outcomes and more about the symbolism of the German chancellor paying Xi a visit so soon after the party congress," said Noah Barkin, visiting senior fellow in the Asia Programme at the US German Marshall Fund.

"It gives international legitimacy to his leader-for-life status, and it shows that China is not isolated," he added.

Berlin, however, says there have been consultations with key partners, and Scholz has insisted he is visiting China as a "European" as well as the leader of Germany.

In an article published before his departure, he said direct talks with Chinese leaders were "all the more important" after the long hiatus caused by the pandemic.

He promised to raise thorny topics such as respect for civil liberties and the rights of minorities in Xinjiang.

"We strongly agree with what he [Scholz]shared in that op-ed", including "encouraging President Xi to press President Putin on never using a nuclear weapon of any kind", US Secretary of State Antony Blinken said Friday after a meeting of G-7 foreign ministers in Germany.

Stocks, oil prices rally on China hopes

Hiring remains resilient and wages continue to rise

By - Nov 05,2022 - Last updated at Nov 05,2022

Traders work on the floor of the New York Stock Exchange during morning trading on November 2, in New York City (AFP photo)

NEW YORK — Stock markets and oil prices rallied on Friday on hopes China would roll back some of its economically-painful policies surrounding COVID.

Equities also got a boost from the latest US jobs data, which showed that hiring remained resilient and wages continued to rise, though at a slower pace, raising hopes of a soft landing of the economy despite rising interest rates aimed at quelling inflation.

"Asia markets bounced back strongly today on more unsubstantiated reports that the Chinese government is looking at a reopening strategy as it looks to navigate a path out of the straitjacket of its current zero-COVID policy," said CMC Market Analyst Michael Hewson. 

"These reports, which still haven't been confirmed in any official capacity, have prompted a huge relief rally in equity markets, despite concerns that any reopening is unlikely to happen in the immediate future, and the very real risk that it is merely a sucker's rally," he added.

The rally continued into Europe, where London, Paris and Frankfurt all rose at least 2 per cent.

Wall Street stocks climbed as well, with major indices all finishing more than 1 per cent higher after a volatile day of trading.

The optimism lifted oil prices, with Brent crude jumping 4.1 per cent and West Texas Intermediate bouncing 5 per cent as traders eyed rising demand for crude on the news out of China.

The pound also won back some ground against the dollar, rising nearly 2 per cent after tumbling after the Bank of England (BoE) said the UK economy could face a two-year-long recession that it believes has already begun.

The BoE raised its main interest rate by 0.75 percentage point on Thursday, the most in 33 years in efforts to contain runaway inflation.

This came after the US Federal Reserve (Fed) hiked its key rate by the same amount — the sixth increase this year — as central banks try to cool decades-high inflation.

The Fed has pointed to a still-strong labor market as a key reason for not easing up on its aggressive tightening.

The addition of 261,000 US jobs last month — far more than economists had forecast — likely will reinforce the determination of policymakers to continue the hawkish stance, even if they slow the pace of increases.

That would normally see equities tumble as higher interest rates are bad for most businesses.

But the figures are "consistent with achieving a soft landing for the economy", said Market Analyst Patrick O'Hare at Briefing.com, who also cited a "buy-the-dip" dynamic after US stocks fell four straight sessions earlier in the week.

While Fed Chair Jerome Powell said it is premature to think about pausing rate hikes, Boston Fed President Susan Collins added on Friday she sees a chance to achieve the goal of reining in price increases without putting the brakes on growth entirely.

But Chris Beauchamp, chief market analyst at online trading platform IG, pointed to one indicator in the report that suggests a drop of 300,000 jobs was the reason why the unemployment rate inched higher.

"This might be a case of cherry-picking par excellence, but markets have taken it as the first sign that the hitherto-unstoppable US market is weakening, thus perhaps bringing forward the chances of that fabled Fed pivot we keep hearing so much about," said Beauchamp.

Markets have been looking for any data that would help the Fed "pivot" away from its aggressive rate hikes.

Europe could face gas shortage next year — IEA

IEA warns shortfall is possible if Russia stops pipelines deliveries

By - Nov 03,2022 - Last updated at Nov 03,2022

An employee turning a valve of a gas installation during a training exercise for handling emergencies at a gas-pumping station on the gas pipeline in the small town Boyarka in the Kyiv region, Ukraine, April 22, 2015 (AFP photo)

PARIS — Europe must act immediately to prevent a shortage of natural gas next year as Russia slashes deliveries in the wake of the Ukraine war, the International Energy Agency (IEA) warned on Thursday.

The IEA said the shortfall would occur if Russia stops pipelines deliveries completely and China steps up its imports of liquefied natural gas, which Europe has relied upon to replace Russian supplies.

The region could lack 30 billion cubic metres that it needs "to fuel its economy and sufficiently refill storage sites during the summer of 2023, jeopardising its preparations for the winter of 2023-24", the Paris-based agency said in a report.

IEA Executive Director Fatih Birol said he would hold talks on Friday with several European governments.

"We believe Europe needs to take immediate action to avoid risks of natural gas shortage next year," Birol told reporters.

"We're ringing alarm bells for the European governments and for the European Commission for next year," he said.

 

'Danger of complacency' 

 

Russia has drastically cut supplies to Europe in suspected retaliation against Western sanctions over its invasion of Ukraine, but the region was able to fill storage sites for this upcoming winter.

The IEA said Moscow delivered 60 billion cubic metres of gas to Europe this year but that it was "highly unlikely" that Russia would provide the same amount in 2023 and could cease deliveries entirely.

And while Chinese LNG imports were lower in the first 10 months of this year, the world's second biggest economy could grab 85 per cent of the expected increase in global LNG supplies if its purchases recover next year.

European Union governments have urged business and households to conserve energy this winter in efforts to lower demand and scrambled to find alternative suppliers.

Norway has overtaken Russia as Europe's main natural gas supplier. The region has also shipping LNG from other countries at a rate that has caused bottlenecks at ports. Gas prices, meanwhile, have fallen sharply.

But Birol said Europe's gas storage sites may only be 65 per cent full in 2023, compared to 95 per cent this year.

"With the recent mild weather and lower gas prices, there is a danger of complacency creeping into the conversation around Europe's gas supplies, but we are by no means out of the woods yet," Birol said in a separate statement.

Birol warned that Europe will face "an even sterner challenge" next winter.

"This is why governments need to be taking immediate action to speed up improvements in energy efficiency and accelerate the deployment of renewables and heat pumps — and other steps to structurally reduce gas demand," he said.

Lufthansa 'remains interested' in ITA Airways

Italian government signals bidding process

By - Nov 02,2022 - Last updated at Nov 02,2022

FRANKFURT — Germany's Lufthansa said on Wednesday it remained interested in taking over ITA Airways, after the new Italian government signalled the bidding process could be wide open again.

Lufthansa in August lost out in the race to buy Alitalia's successor when the then-government led by Mario Draghi selected a rival bid by US investment fund Certares, Delta Airlines and Air France-KLM.

But a second chance could be looming, after the economy ministry on Monday announced the period of exclusivity talks with Certares and its partners had come to an end and would not be renewed.

The Lufthansa group "remains interested in the Italian market", a spokeswoman told AFP. 

"We are monitoring the further sale process of ITA and remain interested in a true privatisation of the airline."

The new hard-right government in Italy, led by Prime Minister Giorgia Meloni, came to power after elections in September. 

Meloni had previously urged Draghi to pause the ITA Airways negotiations while the new government took shape.

Air France-KLM for its part said it had "taken note" of the economy ministry's announcement that the exclusivity period had ended. 

"The group is evaluating its options in the Italian air transport market and awaits further information from the Italian state," it added. 

According to Italian media, the Certares consortium had proposed buying nearly 56 per cent of ITA for around 600 million euros ($599 million).

The Italian state would retain a 44 per cent stake and have two of the five seats on the future ITA board.

Lufthansa and Swiss-Italian shipping group MSC had proposed to pay 850 million euros for 80 per cent of ITA.

State-owned ITA Airways replaced the loss-making national carrier Alitalia, which was put under state administration in 2017, after years of fruitless attempts to find a buyer.

The Italian state has spent more than 13 billion euros trying get the national airline back on its feet.

Aston Martin losses deepen despite rising car sales

By - Nov 02,2022 - Last updated at Nov 02,2022

A logo on a new Aston Martin (AFP photo)

LONDON — British luxury car maker Aston Martin Lagonda on Wednesday revealed its third-quarter net losses more than doubled on supply-chain disruptions, offsetting accelerating sales.

Losses after tax hit £228 million ($262 million) in the three months to the end of September, after a shortfall of almost £90 million a year earlier, according to the group which is targeting electrification of its range.

Sales of the brand, loved by fictional spy James Bond, zoomed by a third to £315.5 million, but this was propelled by a 28-per cent increase in the average car price, it said in a statement.

Aston Martin faced "supply chain and logistics disruption as well as inflationary pressures impacting the broader automotive industry" which delayed car deliveries and ramped up costs, noted chairman Lawrence Stroll.

The group was hit also by a plunge in the pound that made dollar-denominated debt more expensive.

Aston Martin has been knocked off track also by a collaboration with troubled electric car battery startup Britishvolt.

UK-based Britishvolt on Wednesday said it had secured "necessary near-term investment" after media reported on Monday that the cash-strapped firm was on the brink of collapse.

The startup, which is developing a £3.8-billion electric battery factory in north-eastern England, also warned that the "weakening economic situation is negatively impacting much business investment".

Britishvolt said staff had agreed to a temporary pay cut despite a UK cost-of-living crisis amid sky-high inflation.

Britain is due to ban the sale of new high-polluting diesel and petrol cars from 2030, forcing its car manufacturing sector to increasingly switch production to electric models.

Aston Martin meanwhile suffered vast losses in 2019 as it crashed spectacularly on weak global demand linked to China's economic slowdown and Brexit.

Losses then deepened further as a result of fallout from the coronavirus pandemic.

The automaker was saved from bankruptcy in early 2020 by Canadian billionaire Lawrence Stroll, who is the top shareholder.

Saudi Arabia became the second-biggest investor following a capital injection from its sovereign wealth fund earlier this year.

Aston Martin is looking to shift gear into fully-electric vehicles from 2025.

US, UAE announce clean energy partnership worth $100 billion

By - Nov 01,2022 - Last updated at Nov 01,2022

WASHINGTON — The United States announced a clean energy partnership on Tuesday with the United Arab Emirates worth $100 billion, the White House said.

The Partnership for Accelerating Clean Energy (PACE) will aim to develop low-emission energy sources to distribute 100 gigawatts of clean energy worldwide by 2035, White House spokeswoman Karine Jean-Pierre said in a statement.

The two countries will also invest in managing harmful emissions such as carbon and methane, as well as in developing nuclear technology and de-carbonising industrial and transportation sectors.

Funds will also go toward supporting "emerging economies whose clean development is both underfunded and essential to the global climate effort", the statement said.

"PACE also reflects our unwavering commitment to working closely with allies and partners to accelerate the clean energy transition and deliver the climate action our shared future depends on."

The announcement comes days before world leaders convene in Egypt for the UN COP27 climate summit.

The UAE, a major oil producer, will host the COP28 in 2023.

The head of UAE oil giant ADNOC and the Gulf state's special envoy for climate change, Sultan Al Jaber, said at an oil conference on Monday that oil remains a cornerstone of energy supply but that the UAE was also working to lower emissions and increase production from renewable or less-polluting sources.

Fossil fuels are the largest contributor to climate change, accounting for 75 per cent of the world's greenhouse gas emissions, according to the United Nations.

COP26 last year ended with a pledge to keep global warming at 1.5ºC over pre-industrial levels — a goal the world is set to miss on current emission trends.

Pages

Pages



Newsletter

Get top stories and blog posts emailed to you each day.

PDF