Remix News

Category: Economy

  • Hungary suspends fuel price cap, blames new EU sanctions for rising fuel costs

    Hungary suspends fuel price cap, blames new EU sanctions for rising fuel costs

    The Hungarian government has been forced to suspend its price cap on automotive fuels, the country’s cabinet minister Gergely Gulyás announced at a press conference on Tuesday evening.

    The move became a necessity following the introduction of new EU sanctions on Russian oil which came into effect on Monday, with Hungary’s leading energy company, MOL Group, informing the government that it can no longer guarantee a consistent fuel supply without imports, according to the cabinet office spokesperson Zoltan Kovacs.

    Hungary introduced the price cap on Nov. 15, 2021, and Gulyás announced it would end at 11:00 p.m. on Tuesday on MOL’s recommendation. The price cap was set to expire at the end of December.

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    Gulyás said that Hungary fought effectively against the sanctions and received a waiver, but “what we feared has happened,” Gulyás said. There are disruptions in Hungary’s fuel supply, and without imports the country’s supply cannot be ensured. The 480 forint (€1.16) per liter price of petrol is no longer affordable for Hungarian families, he said.

    An unprecedented crisis situation has emerged in the country in recent days, Zsolt Hernádi, chief executive of MOL Group, said at the same press conference. According to Hernádi, gas and diesel fuel was unavailable at a quarter of its filling stations on Tuesday. This has never happened before, he added. So far this year, 2.2 billion liters of fuel have been sold, compared to 1.5 billion last year, and more than 500 million liters of fuel have been sold in recent days.

    “The situation has become critical, demand has skyrocketed and panic has set in,” Hernádi told reporters. “MOL has held up so far,” he said, adding that they were doing their utmost to secure supplies and were also working to ensure that the Danube refinery, which is currently for routine maintenance, could operate at full capacity again.

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    “It has now become clear that the solution for a normal supply balance is to restore imports as soon as possible,” Hernádi said, explaining the role of the price freeze was clear: to contain the spiraling energy prices.

    “It’s not good if something is expensive,” Hernádi acknowledged, but insisted that Hungary’s supply cannot be interrupted and while MOL will work to calm the chaos, it may take up to six weeks to reach normal stability.

    “The market will normalize, there may still be disruptions, but the shockwave of buying will not be repeated,” Hernádi said.

    After the price cap was discontinued, gas prices rose from an average of 480 forints (€1.16) to 641 forints (€1.59) per liter and diesel to hit 699 forints (€1.70) per liter.

  • German gas companies sue Russia’s Gazprom for breach of contract

    German gas companies sue Russia’s Gazprom for breach of contract

    Two German natural gas importers are demanding compensation from Russian state energy company Gazprom for the non-delivery of natural gas, the German daily Handelsblatt reported on Monday.

    According to the German business daily, the country’s largest natural gas importer Uniper and another energy major, RWE, have initiated arbitration proceedings against the Russian energy giant to recover damages. Both companies have signed gas purchase contracts with Gazprom, which has been increasingly cutting back its gas supplies to Germany following Russia’s war against Ukraine began in February. Since the end of August, the company has completely halted gas deliveries to Germany, even though the EU’s punitive measures against Russia over the war do not affect gas trade.

    Uniper and RWE have been forced to buy gas on the world market at very high prices and resell it to their customers, including many local utilities, at much lower prices than originally agreed in the original contracts. Uniper has so far suffered losses of €11.6 billion, while RWE has suffered losses of around €1 billion.

    Gazprom considers the financial claims from RWE and Uniper to be unfounded.

    According to the business paper, both companies have agreed on gas supplies with their Russian partner in a way that includes a clause in the contracts that any disputes will be settled through arbitration. In Uniper’s case, the competent body is the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), whose rules state that the absence of the defendant does not prevent the proceedings from being conducted.

    This means that a claim for damages can be brought before the SCC even if Gazprom refuses to participate in the proceedings. Before the war in Ukraine, Germany used Russian imports for over 50 percent of its natural gas consumption. However, with the closure of the Nord Stream 1 pipeline, which connected Russia directly to Germany, at the end of August, imports stopped completely, making September 2022 the first month since the start of Russian gas imports in 1972 that no gas has been imported from Russia to Germany.

    A number of developments are underway to replace Russian pipeline imports, including the construction of seven offshore terminals to receive liquefied natural gas (LNG). Construction of the first terminal, in Wilhelmshaven, has already been completed and is scheduled to come on stream in January.

    According to the Federal Network Agency, for the time being, the loss of Russian imports has been compensated for. The agency reported on Monday that “gas supply in Germany is stable” and “security of supply remains guaranteed,” with storage facilities at 96.98 percent of capacity.

  • Doom and gloom: Consumers pessimistic about 2023; expect inflation, taxes, and unemployment to rise

    Doom and gloom: Consumers pessimistic about 2023; expect inflation, taxes, and unemployment to rise

    Consumers across the globe are pessimistic about both their country’s and their own aspirations over the forthcoming calendar year, with a majority expecting their personal financial circumstances to deteriorate, according to a recent Ipsos survey conducted across 36 countries.

    The poll, commissioned by the World Economic Forum, revealed that more than half of consumers in the included nations expect inflation, interest rates, and unemployment to continue to rise, while their own standard of living and disposable income will fall in 2023.

    Consumers of European nations participating in the survey include those from Hungary, Poland, Romania, Germany, the Netherlands, Ireland, Belgium, Spain, France, Sweden, the United Kingdom, and Denmark.

    More than 7 in 10 respondents (71 percent) expect the rate of inflation in their country to continue rising into the new year, while 67 percent and 64 percent estimate a further rise in interest rates and unemployment, respectively.

    Still more than half (58 percent) of respondents believe taxes will be hiked in their country as the global economy performance wavers, with just 29 percent expecting their own standard of living to increase and 28 percent saying they will see their disposable income rise.

    Poland and Hungary are the European nations with the highest levels of pessimism over the rate of inflation, with 79 percent and 77 percent, respectively, of consumers expecting the cost of living crisis to worsen before it improves.

    Similarly, both countries, in addition to Romania, make up the top three nations concerned about unemployment. Hungary (74 percent), Romania (74 percent), and Poland (69 percent) are all well above the global average of those believing unemployment will rise in 2023.

    Romania, France, and Spain top the European countries where consumers believe their tax liability will rise next year, with a staggering 85 percent of Romanians believing taxes in their country will rise, compared with 66 percent and 63 percent in France and Spain, respectively.

    Meanwhile, European nations make up 9 of the 10 most pessimistic consumers with regards to their own standards of living. While Japan languishes at the bottom of the table with just 8 percent confident of an increase in their personal circumstances in 2023, Italy (14 percent); Spain, the Netherlands, Poland, Belgium, and Hungary (16 percent); the U.K. (17 percent); and France and Denmark (18 percent) make up the bottom 10.

    Similarly, just 13 percent of Italians and 15 percent of Spaniards and Brits believe their disposable income will increase next year.

    The majority of those concerned with the cost of living crisis expect the prices of utilities, food, and other household items will increase, while mortgages, rent, and costs of socializing are less of a concern.

    Almost three-quarters of consumers (74 percent) blame the state of the global economy for their pessimistic outlook, while 70 percent attribute rising prices to the Russian invasion of Ukraine and its consequences. Nearly two-thirds (62 percent) accuse businesses of making excessive profits at consumers’ expense, 61 percent blame the Covid-19 pandemic, while half believe that immigration into their country is a cause for concern.

  • European Commission proposes freezing €7.5 billion of Hungary’s cohesion funds

    European Commission proposes freezing €7.5 billion of Hungary’s cohesion funds

    The European Commission has adopted the Hungarian recovery program, paving the way for a transfer of €5.8 billion, but will propose to the European Council to suspend €7.5 billion from the cohesion funds, the Commission Vice President Valdis Dombrovskis announced on Wednesday.

    “While a number of reforms have been undertaken or are underway, Hungary failed to adequately implement central aspects of the necessary 17 remedial measures agreed under the general conditionality mechanism by the deadline of Nov. 19, as it had committed to,” the Commission said in a press release.

    “The Commission has decided to maintain its initial proposal of Sept. 18 to suspend 65 percent of the commitments for three operational programmes under the cohesion policy, amounting to €7.5 billion,” it added.

    EU leaders will vote on the matter at the Dec. 19 EU Council summit, where a qualified majority is required.

    The Commission has also added 10 new points on which Hungary must make progress before the cohesion funds are released, amounting now to a total of 27 points.

    Justice Commissioner Didier Reynders also confirmed earlier information that four of the 27 milestones will eventually relate to the strengthening of the Hungarian judiciary. He indicated that Hungary will only be able to access recovery funds once these four milestones, among others, have been met.

    Reynders confirmed that the National Council of the Judiciary should be prevented from challenging the freedom of judges to refer to the European Court of Justice for the interpretation of law and opinions, and that Hungarian public authorities should be prevented from challenging final Hungarian court judgments in the Constitutional Court.

    At the briefing, Budget Commissioner Johannes Hahn said that it was not enough to meet the 17 conditions agreed to by the parties, which is why the decision to withhold funds was maintained. Public interest trusts cannot receive EU funds until the EU’s conflict of interest concerns are clarified, he said.

    It is important to note that these funds will not be lost and could be called up next year. However, the amount of EU recovery fund money that Hungary is entitled to would be reduced if no agreement is reached this year.

  • Hungary snubbed: EU’s von der Leyen refuses to travel to Budapest to announce multi-billion euro recovery plan

    Hungary snubbed: EU’s von der Leyen refuses to travel to Budapest to announce multi-billion euro recovery plan

    In a departure from convention, European Commission President Ursula von der Leyen will not personally travel to Budapest to announce the adoption of the Hungarian recovery plan on Wednesday, a Commission spokesman said on Tuesday, without giving an explanation for the cancellation of the trip.

    Commission spokesman Eric Mamer refused to elaborate as to why the trip was canceled, saying only that von der Leyen was not obliged to make the announcement in person, despite the fact that the commission chief has so far visited every country to make a personal announcement where EU funding is concerned.

    A year and a half ago, in July 2021, she had already booked a flight to Budapest, but the trip was canceled after the Hungarian parliament passed a child protection law that Brussels claimed severely discriminates against sexual minorities.

    The fate of Hungary’s recovery plan then became entwined with the rule-of-law sanctions mechanism that has since been launched, and after a series of pitfalls, Hungary will be the last member state to get the green light from the European Commission on Wednesday. At a forthcoming meeting of finance ministers, but before Dec. 19, member states will then have to approve the Hungarian plan, which could pave the way for €5.8 billion in grant aid should Hungary meet all of the many conditions.

    According to Radio Free Europe, von der Leyen’s entourage was holding off on the trip until the last minute, suggesting that Brussels was also mulling over the right approach. In the end, the EU appears to have decided that such a trip would not have looked good from a PR point of view, especially if the president of the Commission had “celebrated” the availability of the multi-billion EU funds in the company of the Hungarian leader, who has been criticized by European liberals for what they claim to be illiberal policies and systemic corruption.

    The approval of the Hungarian recovery plan is likely to draw criticism from the European Parliament in particular, as the European Commission is set to publish on Wednesday a negative assessment of Hungary’s performance in fulfilling measures to stop the rule-of-law sanctions mechanism launched in April against it and avoid the blocking of €7.5 billion in cohesion policy funds.

    Given that Brussels itself admittedly does not believe that EU budget money is in safe hands in Hungary, it might be asked why it is approving the recovery plan. However, the Commission argues that the EU accepting the plan does not mean payments will be made, and Hungary would have to meet no fewer than 27 tough conditions by March 31, 2023, in order to receive the first installment.

  • All EU member states opposed to commission’s gas price cap

    All EU member states opposed to commission’s gas price cap

    All 27 EU member states on Wednesday voiced their disagreement with a proposal from the EU executive to cap the price of gas at €275/MWh. The plan drew criticism from both supporters and opponents of such a measure.

    After months of infighting in the bloc, the European Commission proposed the cap ahead of Thursday’s meeting of energy ministers on the bloc’s latest emergency measures to alleviate an energy crisis as winter looms. The cap would be triggered if the price of one-month quotes on the Dutch gas exchange Title Transfer Facility (TTF) exceeds €275/MWh for two weeks and if, at the same time, prices are €58 higher than the global benchmark price for liquefied natural gas (LNG) for ten consecutive trading days.

    The proposal drew criticism from advocates of decisive market intervention to bring down skyrocketing energy prices, which last August hit record highs after Russia cut supplies following EU sanctions over Russia’s invasion of Ukraine.

    Polish Prime Minister Mateusz Morawiecki said the proposed level was “very high,” while another EU diplomat said: “It’s a cap that would not act as a ceiling.”

    The one-month TTF has risen since the commission’s proposal on Tuesday, trading at over €130/MWh, compared to a peak of over €340 in August last year. Consultancy firm Eurointelligence said the commission’s proposed criteria meant the cap was “clearly designed not to be used: in other words, it is not intended to effectively cap prices.”

    There are up to 15 EU countries calling for a robust cap. Among them, Belgium, Poland, Italy, and Greece have threatened to block further energy measures for approval on Thursday if the package does not contain an action plan to prevent excessive prices.

    On the other side, however, there is a small but powerful camp, led by the EU’s largest economy, Germany. Along with the Netherlands, Sweden, and Finland, this group argued that a cap would push suppliers to sell elsewhere and reduce incentives to cut gas consumption.

    In an attempt to allay those concerns, the commission said tracking the global LNG price would ensure suppliers continue to sell in Europe. It also proposed that mandatory gas savings would come into effect for the bloc if a cap is activated. This would mark a considerable change in EU policies, as member countries have so far only accepted voluntary cuts in gas consumption.

  • EU sanctions on Russia blew €10 billion hole in Hungarian budget

    EU sanctions on Russia blew €10 billion hole in Hungarian budget

    The European Union’s sanctions against Russia have caused a loss of 4,000 billion forints (€9.75 billion) to the Hungarian budget, yet have not achieved their goal of crippling the Russian economy, Hungarian Deputy Prime Minister Zsolt Semjén said on Wednesday.

    During a tour in support of the government’s national consultation on sanctions, Semjén said the Russo-Ukrainian war cannot solely be blamed for the dramatic rise in energy prices, as Brussels’ response to the war is what really tipped the scales. Semjén pointed out that the war caused gas prices to go up to $100, but when Brussels “started to threaten with sanctions,” they almost immediately rose to between $200 and $350.

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    He added that it seems as though Russia has not been pacified by the sanctions, as they sell their oil to China and India without any problems, and selling less gas does not reduce Russia’s revenues as higher prices have doubled their profits.

    “In order to protect the people of Europe, we need to rethink our sanctions policy, and Hungary will not support anything that endangers the energy supply of the Hungarian people and the Hungarian economy,” said the deputy prime minister.

    He is not the only Hungarian official criticizing Europe’s sanctions policy. Just this week, Tamás Menczer, the minister of state for bilateral relations of the Hungarian Ministry of Foreign Affairs and Trade, said that Europeans are far more harmed by sanctions than Russians.

    Menczer said that in the first nine months of last year, the share of gas and oil revenues in the Russian budget was 35 percent; for 2022, this figure has increased to 43 percent, meaning Russia is still earning substantial amounts of money by selling energy.

    “So Russia is generating record revenues, while we in Europe are paying a sanction surcharge for energy and suffering sanction inflation,” he said.

    Hungary’s deputy prime minister, Semjén, said that Hungary cannot support sanctions which are bad and harmful for all citizens of the European Union.

    “At the same time, the government feels obliged to help the Hungarian people in the difficult situation that has arisen,” he said, adding that this is why the government introduced price caps and an interest rate freeze, launched the factory bail-out program, and is providing a monthly subsidy of 181,000 forints (€441) for every Hungarian family up to the average consumption level in order to reduce utility bills.

    Semjén said that Hungary remains on the side of peace and that the possible escalation of the Russo-Ukrainian war threatens the whole world. He continued by saying that Russo-American negotiations, a ceasefire, and the launch of peace talks are needed as soon as possible, and that if this happens, Brussels will be able to provide the EU with a minimum of €18.5 billion per year for the Hungarian people.

  • Italians who refuse job offers to have social benefits revoked, says Meloni

    Italians who refuse job offers to have social benefits revoked, says Meloni

    Italians on unemployment benefits who turn down reasonable job offers will have their access to social security payments revoked in new laws expected to be introduced by Giorgia Meloni’s new administration.

    In a pledge to clamp down on a relief scheme that Meloni claims rewards laziness and is widely abused, the new Italian prime minister vowed to amend the citizens’ income available across the country, making it conditional upon those who receive job offers while receiving the benefit to take the position.

    The citizens’ income is an initiative first introduced by the left-wing Five Star Movement and sees over 3.5 million Italians receive a payment of €780 per month. Receipt of the benefit is widely skewed toward the poorer south of the country where 2.3 million of the recipients reside.

    As Meloni announced her first budget on Tuesday, she claimed it was wrong “to put people who can work on the same level as those that can’t.

    “Faithful to our principles, we’ll keep helping those who can’t work. For the others it will be abolished,” she added.

    The system is expected to undergo an overhaul at the beginning of 2024.

    Meloni’s budget sought to stimulate the economy with €35 billion euros of increased spending or tax cuts.

    It introduced tax cuts for the self-employed and employees, and hiked a windfall tax on energy companies from 25 percent to 35 percent, and cut VAT on essentials such as baby and sanitary products,

    The new government also lowered the age at which citizens can draw on their pension from 64 to 62, providing they have paid in at least 41 years of contributions.

  • UN, think tanks promote 60 million migrants for ‘aging’ EU by 2050

    UN, think tanks promote 60 million migrants for ‘aging’ EU by 2050

    In the same week that the European Parliament voted in favor of a resolution labeling the Great Replacement theory as “racist,” the Spanish newspaper La Vanguardia reported that the United Nations, the Wittgenstein Center in Austria, and the Center for Global Development in Washington D.C. are all advocating that Europe needs at least 60 million migrants in the coming decades “to survive” and that most of this immigration should come from Africa.

    The UN, which has long advocated for “replacement migration” as a solution to Europe’s aging population, is now warning that Europe will not gain these migrants “if it does not stop being a fortress against immigration,” according to the Spanish paper.

    The UN estimates that in 2050, the EU will have a shortage of 60.8 million workers, and the Wittgenstein Center for Demography and Global Human Capital argues this shortage will be even higher, placing it at 72.7 million. Both organizations are using their own estimates to advocate for further mass immigration.

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    “It will not be enough to lengthen the retirement age, bring more women into the labor market, or increase the birth rate. Nor will it be enough to further robotize the productive economy or to continue offshoring jobs as we have been doing,” says Charles Kenny, a senior fellow at the Center for Social Development in Washington D.C. “None of this will save Europe from an aging population.”

    He continued by saying that “Africa has to save Europe from the demographic crisis (…) Only immigration can correct this imbalance, and immigration of African origin will be the most natural way to provide the labor needed to maintain growth.”

    Kenny’s claim that African immigrants — potentially tens of millions of them — should fill Europe’s workforce would not only radically transform the continent’s demographics, but would ignite societal and even civilizational repercussions. As for Kenny’s claims about immigrants saving Europe’s job market, there is already substantial data from a range of countries that casts doubts on the idea that “only immigration” can save Europe and its job market

    There has been, after all, ample immigration from Africa and the Middle East, and so far, this has delivered poor results. Data from Germany, for example, shows that nearly half the migrants who made their way to Europe during the 2015 and 2016 crisis remain unemployed, and even those that are employed work mostly as low-skilled labor, often earning so little that they are eligible for social benefits from the state.

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    In fact, Europe’s migrant population has been a net drain on state finances in many countries, including in Denmark, which spends €5 billion a year on integration efforts — efforts that have mostly failed. In fact, the non-Western migrant population is so poorly integrated that Danes are overwhelmingly against accepting more immigrants. Even the country’s left-wing Prime Minister Mette Frederiksen has promoted a policy of “zero” asylum seekers.

    “Every fifth young man with a non-Western background born in 1997 had broken the law before turning 21. It’s not everyone. But there are too many young men who take the freedom of others, steal children’s futures, intimidate prison guards, and leave behind a long trail of insecurity,” said Frederiksen in 2021. Her position on migration is so popular that during snap elections on Nov. 1, she not only won a new mandate to rule, but her party is also by far the largest in Denmark.

    It is not just liberal Denmark. In Norway, only about half of migrants work despite €6.6 billion invested in job integration efforts. In France, migration costs the country €25 billion a year, and many migrants remain unemployed even after years. Meanwhile, Germany announced two years ago it was spending €64.5 billion on education, social services, housing, and language courses to integrate the foreigners it already has. Those massive financial sums were disbursed even before nearly 1.5 million more migrants arrived in Germany this year.

    If the UN report and Kenny’s claims are to be believed, these migrants should be heralded as a much-needed boost to Germany’s workforce. But the reality is that 12 out of 16 German states have already closed their borders entirely to new refugees, arguing their housing, social services, and education system are on the verge of being overloaded.

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    Data also refutes the argument that there will be integration problems in the beginning, but these will be outweighed by the benefits migrants eventually bring. The Turkish population, for example, which has in many cases been in Germany for multiple generations, is considered per many metrics to be the most poorly integrated group in the entire country. The promise of bringing in needed doctors, lawyers, and engineers, an idea elevated by proponents of mass immigration, has also not materialized. Most migrants feature low skills and little education; in some cases, migrants’ skills are so lackig that there is no viable path for them in Europe’s job market.

    Others simply prefer to collect social benefits rather than toiling in low-wage, menial labor. Even in instances where doctors and engineers have been recruited from Africa, this raises troubling moral questions. Does Europe deserve to poach the best and brightest from countries in dire need of competent professionals? If economies merely needed young people to provide a better future, then Africa would be on the path to economic success. However, despite an abundance of young people, these countries are rife with corruption, have little to offer in terms of patents and innovation, and feature extreme insecurity and high crime levels.

    Simply importing these young people to Europe will not work, according to many politicians, intellectuals, and policymakers. Hungarian Prime Minister Viktor Orbán, for example, has said the future of Africans is in Africa; he has put forward an alternative path, one which involves boosting the birth rate of Europeans.

    “In all of Europe, there are fewer and fewer children, and the answer of the West to this is migration,” said Orbán in 2018. “They want as many migrants to enter as there are missing kids so that the numbers will add up. We Hungarians have a different way of thinking. Instead of just numbers, we want Hungarian children. Migration for us is surrender.”

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    Many of Hungary’s aggressive pro-family policies have already paid off, but it would likely take a concerted effort across Europe to really see dividends from this strategy. A falling population and restrictions on international capital could actually benefit Europe’s demographic situation by helping ease housing prices, ensuring Europeans can afford the homes and apartments they need to feel secure starting families. At the same time, Europeans are increasingly wary of sending their children to schools featuring high rates of diversity, forcing parents to instead pay for expensive private schools — a trend that may only worsen the demographic picture and become more problematic as immigration increases.

    A brain drain in Africa due to Western nations’ immigration agenda will also likely only further fuel strife and conflict in a continent facing a population explosion, which is why conservatives in Europe have long argued that the smartest immigrants should remain in their countries where they can help buid up a functioning system.

    Despite these moral quandaries — along with integration problems and growing migrant crime — countries like Germany have pushed for even higher immigration numbers. The current left-wing government has long signaled it plans to drastically increase migrants to Germany and relax immigration rules, even as neighboring countries like Austria, Denmark, and Poland push for less immigration.

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    At the same time, there is little doubt that Europe’s population is rapidly aging, and this trend presents a serious problem for the continent.

    “An increasingly older population is a burden for economic growth and the welfare state,” said Juan Ramón Jiménez, an expert in migrations at CIDOB and doctor in Political and Social Sciences at UPF.

    “Twenty percent of Spaniards and Europeans are over 65 years of age, an age group that will represent 30 percent (of the population) in 2070. Now there are three workers for every retired person, but when the baby boomers stop working, this proportion cannot be maintained. We are going to lose the working-age population, that is, those between 15 and 64 years of age.”

    However, the reality is that the countries with the most immigration have often seen the poorest results. The United States, for example, which has accepted perhaps the highest number of migrants of any country in the world, has seen life expectancy drop even before Covid-19, public debt skyrocket to $30 trillion, inequality explode, high rates of segregation in schooling even in liberal cities, and falling real wages. The U.S. has accepted an unprecedented number of immigrants that has no real historical precedent, and despite the onging issues, proponents of mass immigration there have the same arguments as its supporers in Europe: All the problems will be fixed with simply more immigration.

    Conversely, Japan, which has taken in virtually no outside immigrants, has virtually no inflation despite prices soaring around the world and higher life expectancy; it has also managed its shrinking labor force through AI and automation. Despite Kenny’s claims, the problem of a shrinking labor force will only accelerate in the coming years; however, there are worries there will not be enough jobs even for those who wish to work over the coming 20 to 30 years, especially if advances in autonomous vehicles continue.

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    The UN, Wittgenstein Center, and Kenny also fail to factor in the price of an ethnically and culturally splintered Europe. Political polarization is growing around the issues of race and, to some extent, also religion, and these issues will only grow over time as White Europeans grow closer to minority status. This means that politics will increasingly devote more time to these issues surrounding identity rather than taking care of the core concerns of citizens.

    Crime is also invariably a factor, and an extremely expensive one at that. Significant amounts of police hours are now dedicated to simply managing the issues presented by multiculturalism, whether it is booming organized drug mafias in the Netherlands; waves of sexual assault in Sweden, Germany, Italy, and Belgium; or the significantly elevated terror threat seen in Europe.

    Despite claims that the Great Replacement is a conspiracy theory, the situation is both quantifiable and empirically true, according to a range of demographers, intellectuals, and politicians. Europe is already struggling with a housing crisis, crowded classrooms, and problems with integration, both in terms of language and cultural norms. The introduction of 60 million more migrants by 2050 into some of the most densely populated countries in the world will likely lead to an explosive situation, both politically and societally, and is unlikely to be the panacea many experts predict.

  • Russian economy officially in recession as sanctions start biting

    Russian economy officially in recession as sanctions start biting

    Russia’s GDP fell 4 percent in the third quarter, marking the second consecutive quarter of economic contraction and dealing a massive blow to President Vladimir Putin’s ability to fund his military operation in Ukraine.

    Moscow’s federal statistics agency, Rosstat, has announced that Russia has slipped into recession. In the second quarter, as Western sanctions began to take effect, the Russian economy contracted by 4.1 percent. Russia’s economy suffered a massive drop in trade after pro-Ukraine powers adopted the sweeping and devastating sanctions following the invasion of Ukraine.

    It also took a hit after hundreds of thousands of Russians — many believed to be highly skilled workers — fled the country after Russia announced a partial mobilization of reservists in response to heavy losses in Ukraine.

    Two successive quarters of negative economic growth constitute a recession, according to the official definition.

    “There is little sign in the latest monthly data that a sustained recovery will take place, and we believe the downturn could worsen in Q4 and Q1 with the recent mobilization of reservists and the EU-imposed oil embargo coming into force,” stated Liam Perch, senior markets analyst at Capital Economics.

    There have, however, been a few factors that may have softened the impact of Western sanctions on the Russian economy. Russia was able to continue exporting fossil fuels to Asia — though not at the quantities and prices it was used to in its trade with Europe.

    Russia also continued to export oil to the EU, despite cutting off natural gas supplies to the bloc in September. Given that several massive state-backed fossil fuel producers are essential to the Russian economy, Putin was widely seen as being able to finance his invasion of Ukraine with oil and gas revenues.

    Economists said exports to China, Belarus, and Turkey rose sharply in the third quarter of the year, and Russia’s banking sector managed to stabilize. However, Perch said the outlook “still remains bleak.”

    “The latest data for September shows that activity is stabilizing rather than recovering,” Perch said. “The mobilization of reservists in September may cause a sharp drop in demand in Q4. And the EU embargo on imports of crude oil and petroleum products from Russia will affect industry and exports next year. We believe it will be at least until mid-2023 before the economy embarks on a sustained recovery.”

    Before the effects of sanctions were fully felt, Russia’s economy grew by 3.5 percent year-over-year in the first quarter of 2022. Russia’s Economy Ministry estimates that GDP will fall by 2.9 percent this year, while the Central Bank expects a 3 to 3.5 percent decline before returning to growth in the second half of 2023.

    However, there is skepticism about the true state of Putin’s economic situation, with the Kremlin prone to hiding potential missteps and weaknesses.

  • Hungary creates energy ministry

    Hungary creates energy ministry

    In order to handle one of the country’s most fundamental needs, Hungary will establish a ministry of energy, cabinet minister Gergely Gulyás said on Monday.

    The ministry of energy, which Prime Minister Viktor Orbán has appointed Csaba Lantos to lead, will start its work on Dec. 1, while the ministry of technology and industry will be abolished and Minister of Industry László Palkovics will leave the government.

    “Due to the war and the sanctioned energy prices, energy security and energy prices are the most important issues in Hungary and Europe,” Gulyás said at an extraordinary press conference at the Carmelite Monastery. He added that the government has decided to create an independent energy ministry.

    Newly appointed Minister of Energy Csaba Lantos. (MTI/Szilárd Koszticsák)

    “Prime Minister Viktor Orbán asked Csaba Lantos to head the ministry, which he accepted with effect from Dec. 1,” he said.

    The resignation of previous Technology and Industry Minister László Palkovics was accepted by Orbán. Palkovics justified his decision by saying that he sees the ministry as a single portfolio and will not remain at the helm of the Ministry of Technology and Industry after the formation of the independent energy ministry. Lantos thanked Palkovics for his work and said that he would no longer be responsible for higher education, the automotive industry, and defense.

    The current technology and industry ministry will be abolished, and its tasks will be divided among several other ministries.

    Lantos, 60, has a degree in economics and for the better part of his professional life has worked in the financial sector, including several banks and investment firms. Since 2007, he has managed his own companies which range from healthcare firms to the car industry.

    He is married with seven children.

  • German economy faces bankruptcy wave as energy prices skyrocket

    German economy faces bankruptcy wave as energy prices skyrocket

    Some 32 percent of German companies are already having to resort to reduced working hours and redundancies. Meanwhile, more and more firms are being forced to file for bankruptcy due to inflation and unaffordable input costs.

    In October, the number of insolvency applications filed by companies rose by 18.4 percent compared to the previous month, according to the Federal Statistical Office.

    FILE – Baker Engelbert Schlechtrimen poses for a photo in his bakery in Cologne, Germany, Wednesday, Sept. 21, 2022. Bakeries are among the businesses facing the harshest input costs as energy and flood inflation soars. (AP Photo/Daniel Niemann, File)

    The construction sector had the highest number of bankruptcy cases, with 198, a 4.2 percent increase compared to last year. The sector is characterized by bottlenecks in supply, rising prices, and projects increasingly halted due to the crisis. In trade, including the maintenance and repair of motor vehicles, 167 bankruptcy proceedings were registered, up 18 percent from a year ago.

    [pp id=49213]

    Economic experts predict a recession by 2023, which will be greatly influenced by micro-enterprises and the self-employed. In October, sentiment among small entrepreneurs and the self-employed deteriorated significantly again, while concerns about their livelihoods are growing, according to an analysis by the Ifo Institute for Economic Research. The confidence index fell from minus 20.9 points in September to minus 25.0 points, a negative record.

    “The economic slowdown is hitting self-employed and micro-enterprises particularly hard, and existential concerns have markedly increased. In particular, the outlook for micro-enterprises in retail trade and construction is gloomy,” said Klaus Wohlrabe, head of Ifo surveys.

    EU officials are also raising the alarm, signaling that economic worries are a continent-wide concern.

    “Even the European Commission expects a recession by the end of 2022, although they expect the economy to grow modestly by 0.3 percent in 2023. The European economy is at a turning point,” said Paolo Gentiloni, the EU’s economic commissioner, citing high uncertainty, high energy prices, a decline in the purchasing power of private households, a weaker global environment, and tighter financing conditions.

    The trouble facing German small- and medium-sized enterprises (SMEs) is illustrated by a survey by DZ-Bank, which shows that the rapid rise in electricity and gas prices is currently the biggest concern for companies, with costs rising at all levels.

    The analysis shows that the energy crisis is particularly affecting medium-sized enterprises in the food industry; a significant proportion of SMEs are active in this sector, which is one of the largest consumers of energy. Bakers, dairy and sugar manufacturers, and even beverage producers, among others, need significant heat and energy for production, which are mostly produced using gas. The food industry is therefore one of the largest industrial consumers of gas, with a correspondingly high cost burden.

    However, medium-sized chemical companies are also in a difficult position, as gas is not only used to generate heat for production but is also used directly as a raw material for the production of many products.

  • More extensive ban on exports to Russia would be more effective than the West’s current sanctions, study finds

    More extensive ban on exports to Russia would be more effective than the West’s current sanctions, study finds

    If the West wants to cripple the Russian economy’s potential to support the war, it should focus on banning exports to Russia rather than Russian exports to Europe, a Hungarian study shows.

    “Restricting trade in products that Russia needs to import would be much more effective than the current penalties,” the Hungarian think-tank Oeconomus Economic Research Foundation wrote.

    “By restricting the supply of commodities that the countries applying sanctions need to import, we will only increase prices in the absence of sufficient alternative sources. This phenomenon can be observed in the European energy market, where the sanctioning countries have partially restricted imports of products for which they have a high import demand,” it added.

    The energy sanctions imposed so far highlight the need for a paradigm shift to discourage Russia from invading, the foundation said. The analysis recalls that the current perception is that Russia should be cut off from its sources of income to finance its offensive in Ukraine. The primary source of such revenue is the export of energy resources. Many question the effectiveness of the sanctions imposed so far, but few are formulating an effective alternative.

    A more effective alternative to the current sanctions would be to restrict trade in products that Russia needs to import.

    “Only 0.1 percent of the total value of global microchip trade is linked to Russia, according to the International Semiconductor Industry Association database. However, Russia imports 70 percent of its microchips,” the research says.

    While China has the largest share of these imports, at around 70 percent, Chinese microchips are of a lower technical standard and therefore cannot be used in advanced equipment such as fighter jets.

    Limiting international trade in microchips, as the U.S. has done with its technology sanctions, has proven to be hugely effective in cutting off the supply for Russian demand. Expanding on these could be the Achilles heel of the Russian bear, the analysis says.

    The technological sanctions already imposed by the United States and its allies are intended to make the Russian military industry impossible to operate, while not hindering trade in products for domestic consumers. This is why, for example, memory cards, digital cameras, and video games are exempt from the embargo. This partial exemption has been criticized by many, as it does not change the consumption choices and habits of the population, does not significantly lower their standard of living, and therefore makes it more difficult to express their dissatisfaction with the Russian leaders.

    The Hungarian think tank indicated that the negative impact of the majority of the energy sanctions applied will be reduced as Russia develops alternative export markets. In contrast, as the experience of the last six months shows, technological sanctions have proven their effectiveness in the short term with the chip shortage impacting industry across Russia. An extension of these sanctions to harder hit the Russian economy and its citizens could be the way forward to grinding Russia to a halt.

  • Sweden’s largest nuclear plant offline, provides 10% of country’s energy needs

    Sweden’s largest nuclear plant offline, provides 10% of country’s energy needs

    Sweden’s largest nuclear plant, Oskarshamn, which provides about 10 percent of the country’s electricity, is offline due to a turbine malfunction.

    According to initial reports, Sweden’s largest nuclear reactor, Oskarshamn 3, had to be shut down on Wednesday morning due to a turbine failure. Désirée Liljevall, the plant’s communications manager, was unable to give any details about the nature of the failure or how long production at the plant was expected to be shut down.

    The shutdown of Oskarshamn 3, operated by Uniper SE, could affect Swedish consumers in the middle of the energy crisis. The plant has an average production capacity of 1,450 megawatts, which is essential for the electricity supply in the south of Sweden.

    The reactor was designed in 1973 but was not commissioned until 1985. The initial capacity was 1,000 megawatts and then 1,200 megawatts, which was increased to 1,450 in 2011 when the plant received new turbines, as well as a new circulating system, generator, and transformer. As for the problems, this is not the first time a complete shutdown has occurred.

    In 2013, a bloom of jellyfish clogged the pipes responsible for the cooling water, and last February the reactor had to be taken offline for nine days due to a malfunction. In September 2022, experts from the International Atomic Energy Agency (IAEA) carried out a long-term safety review of the plant, from which they left satisfied, although they made recommendations for some safety improvements.

  • German finance minister pushes digital euro, claims there are no plans to abolish cash

    German finance minister pushes digital euro, claims there are no plans to abolish cash

    German Finance Minister Christian Lindner (FDP) has spoken out in favor of introducing “digital cash,” while adding such a move could “make everyday life easier and be a growth engine for the economy.” However, concerns remain that such a move would only be a stepping stone towards abolishing cash, a claim that Lindner currently denies, saying both cash and a digital euro can run side by side.

    In a short message on Twitter, Lindner added the digital euro would not be a “self-starter,” warning that “digital cash” would only be widely accepted as a “supplement or equivalent replacement for bills and coins” if privacy is protected.

    German Finance Minister Christian Lindner arrives for a meeting of the German federal parliament, Bundestag, at the Reichstag building in Berlin, Germany, Friday, Sept. 30, 2022. (AP Photo/Michael Sohn)

    “Personal and transaction data in everyday transactions must therefore not be stored,” Lindner emphasized. “So if the digital euro is a kind of platform, there will be many startups, for example, that develop additional utility that we can’t even consider today.”

    However, the FDP politician said that “digital cash” will not lead to the abolition of cash. “On the contrary, we are working to ensure that the planned digital euro has the same properties in terms of privacy as the printed and minted euro.”

    Cash remains the most popular form of payment in Germany, and many citizens value it for the privacy it offers. This year in neighboring Austria, over 500,000 Austrians signed an initiative to enshrine the right to pay in cash into the Austrian constitution.

    [pp id=50390]

    The “digital euro” would be digitally issued central bank money that would be accepted alongside euro bills and coins, according to Germans news outlet Junge Freiheit.

    “With a digital euro, there would be another payment option to choose from. It would make payment easier, contributing to accessibility and inclusion,” reads the European Central Bank’s website.

    Critics of digital central bank currencies argue that they will be rolled out as privacy-friendly at first, but the potential for abuse is enormous. They also argue that in order for the population to accept digital currencies, they must first be given the option of both cash and digital currency, before cash is entirely abolished.

    The latest proposal from the ECB also shows that there will be attempts to surveil where money is going and how it is being used. Unlike other digital currencies such as Bitcoin, the ECB argues that there would likely be an acceptance requirement for merchants, but it would also make it easier for the central bank to track money flows.

    Since 2021, the European Central Bank (ECB) and the central banks of the euro member states have been studying the implementation of such a digital currency. The review is scheduled to last until October 2023. After that, the ECB’s Governing Council will decide how to proceed with the project.

    As Remix News previously reported, digital money could one day be linked to political and social behavior in Western countries in a social credit system, as seen in China. Already, during the “Freedom Convoy” trucker protests against Covid-19 policies in Canada, the left-wing government of Justin Trudeau took the unprecedented step of freezing the bank accounts of protesters. Although civil liberty groups decried the authoritarian action as a flagrant abuse of power, many critics worry that the action could now serve as a template to deal with protesters and dissent in the future. If dissidents and those critical of government cannot keep their money outside the digital space, then they will have now way to safekeep their financial privacy should governments, like the one in Canada, take action against them.

  • Hungarian inflation hits 26-year high

    Hungarian inflation hits 26-year high

    Inflation in Hungary reached a 26-year high of 21.1 percent year-over-year in October, and officials expect it to rise further.

    According to data released by the Central Statistics Office (KSH) on Monday, food prices rose by 40 percent compared with October 2021, within which eggs and bread showed an increase of 87.9 percent and 81.4 percent, respectively. Household energy prices were up 64.4 percent, with natural gas rising by 121 percent despite a government scheme that caps domestic energy prices up to an average consumption level.

    The Central Bank did not comment on the inflation data, but Minister of Economic Development Márton Nagy said recently that inflation could peak toward the end of the year at around 25 percent.

    A few hours after KSH released the inflation data, Cabinet Minister Gergely Gulyás announced at his weekly press conference that the government will freeze egg and potato prices at their end of September level; he admitted, however, that this would be little more than a band aid, reducing inflation by 0.1 to 0.2 percent.

    Flanked by Nagy, Gulyás said at the press conference that Hungarian inflation was in part due to the European Union’s sanctions against Russia, which drove up energy prices, which, in turn, negatively affected transport costs and food prices.

    Nagy added that inflation could start on a downward slope early next year and recede to single digits by the end of 2023.

    Nagy also said that “however difficult 2023 will be, the government is committed to maintaining the family support system, but it is time to examine the effectiveness and economic impact of the programs and decide accordingly.” While he did not go into details, this presumably means that the government might revisit its current price caps and energy subsidy system.

  • US, EU and UK pour over €70 billion of taxpayers’ money into Ukraine, but doubts are growing

    US, EU and UK pour over €70 billion of taxpayers’ money into Ukraine, but doubts are growing

    With winter approaching and the energy crisis worsening, some EU member states need to fundamentally reassess their situation, and the renewed call to allocate tremendous sums of money to Ukraine is beginning to be overridden by the visible signs of social and political crises within their own borders.

    Most importantly, fewer and fewer people believe it is realistic that Ukraine will ever repay even part of the loans beyond its grant aid. With Kyiv holding a bottomless bag in front of it, demanding billions and billions more with no end in sight, as cruel as it sounds, some are quietly pondering euthanasia.

    Who gives and how much?

    The aid that donor countries send to Ukraine can be divided into three parts. The most important is the arms shipments, without which the war would have been over long ago. Then comes concrete material aid and finally humanitarian aid. The Ukraine Support Tracker, a website set up by the Kiel Institute for the World Economy to monitor aid flows, has recently published a breakdown of aid by country for the period Jan. 24 to Oct. 3. The data shows that the U.S. is by far the largest donor overall: €52 billion in total over the period, while the various institutions and organizations of the European Union contributed “only” €16 billion.

    The U.K. is third on the list with €6.7 billion, followed by Germany with €3.3 billion, and Canada with €3 billion.

    The difference in these amounts justifies the increasingly sharp criticism of the U.S.’s decision to send increasingly more money to Ukraine when many of its own citizens and cities are in dire straits. In the United States, which is facing midterm elections, some experts and politicians, particularly on the conservative spectrum, are describing the Russo-Ukrainian war as a “European problem” and calling for reducing aid. If the Republicans win the majority in Congress on Nov. 8, there is a chance that the scale of financial aid flowing into Ukraine will change dramatically.

    However, if the data is broken down, it is clear that the vast majority of American altruism is not financial aid but military aid. While arms supplies amount to €27.6 billion, the figure for material and humanitarian aid is €15.2 billion.

    At the same time, the EU as an institution has provided €12.3 billion in financial aid. If only the EU member states at the top of the list — Germany €1.15 billion, Poland €1 billion, France €800 million, and Italy €500 million — are added, it is clear that the EU is financially donating more to Ukraine’s economic lifeline than the critical United States.

    Source: IWF Kiel

    The statistics are very different when we look at how much each country is spending on Ukraine relative to its own means. In terms of GDP, Latvia leads with 0.9 percent, followed by Estonia (0.8), Poland (0.5) and Lithuania (0.4). The United States is only eighth on this list at 0.2 percent.

  • Business sentiment in Germany at an all-time low

    Business sentiment in Germany at an all-time low

    German companies are more pessimistic about the future than ever before, with 52 percent of companies surveyed by the Association of German Chambers of Industry and Commerce (DIHK) expecting their own business situation to deteriorate within the next 12 months.

    Only 8 percent expect an improvement, putting business pessimism at a level comparable to that at the height of the coronavirus pandemic.

    “Companies fear that the worst is yet to come,” said DIHK CEO Martin Wansleben. “This is the worst level we have ever measured since the survey began in 1985,” he added.

    Even during the coronavirus lockdown, the financial crisis, or after the bursting of the dotcom bubble, the proportion of optimistic companies was always more than 10 percent.

    Accordingly, DIHK expects economic output to shrink by 3 percent next year. The main reason for the companies’ pessimism is, of course, the energy price crisis — 82 percent of the companies rate the high prices for electricity and gas as a business risk.

    As a result of high energy prices in the country, more and more companies are considering relocation, according to DIHK. This is also reflected in the fact that the expectations of German companies abroad are significantly more optimistic than those of companies that produce exclusively in Germany.

    But the high prices for electricity and gas are not the only reason why companies are concerned about the near future. In addition to the shortage of skilled workers, more than one in two companies surveyed (51 percent) also cited rising labor costs as a risk factor.

    According to DIHK, this is likely because of the increased minimum wage in particular, but also high wage demands due to inflation. The association also forecasts a high inflation rate of around 8 percent for the coming year.

    The poor economic situation in the country is additionally reflected in the latest mechanical engineering figures. The German Engineering Federation (VDMA) reports that incoming orders from domestic customers fell by 4 percent in September compared with the same month last year.

    By contrast, things are going better for mechanical engineering companies abroad: 9 percent more orders were received from EU countries and 8 percent more from countries outside the European Union. Business is particularly brisk in the United States at present.

    “We don’t see any reluctance to invest there,” reports VDMA chief economist Ralph Wiechers. There have also been above-average orders from India, Mexico, Japan, and Turkey, as well as from Italy and the United Kingdom so far this year, especially in the process industry, automation, robotics, and machine tools sectors.

  • UK support for Russian sanctions increasingly fragile as energy costs spiral

    UK support for Russian sanctions increasingly fragile as energy costs spiral

    While the United Kingdom population remains broadly supportive of Western sanctions on Russian energy, its support is not unconditional and could change significantly should energy prices continue to rise in the country, new polling has revealed.

    An Ipsos survey conducted for Sky News revealed that 70 percent of respondents were currently in favor of continued sanctions against Russia for its aggression in Ukraine, sanctions that have led to an unprecedented rise in energy prices across Europe prompting national government intervention — just 8 percent are opposed to sanctions and 23 percent were undecided.

    The 70 percent figure in support of sanctions has dropped by 8 percentage points from when the same question was put to the public back in March, shortly after the Russian invasion of Ukraine.

    However, the same polling warns that public support for sanctions could erode and quickly should the cost-of-living crisis in the country worsen.

    Source: Sky News

    When respondents were asked whether they would continue to support the government’s implementation of economic sanctions against Russia, even if they led to energy prices in the U.K. increasingly ever further, that support plummets from 73 percent back in March to just 41 percent — 27 percent were hesitant and stated ‘Neither/Don’t Know,’ while 32 percent revealed they would oppose the continuation of sanctions, up 24 percent points on March.

    Energy costs in Britain have more than doubled since the question was first put to respondents in March.

    When respondents are split between those who profess to be living comfortably, and those finding it difficult to manage economically at the current time, opposition in the latter category to sanctions if energy bills were to increase further would outweigh those in support by 40 percent to 34 percent respectively.

    And even among those living comfortably, support for sanctions would drop from 75 percent currently to 48 percent, with opposition rising from 7 percent to 27 percent.

  • Eurozone inflation soars beyond forecasts to hit record 10.7%

    Eurozone inflation soars beyond forecasts to hit record 10.7%

    Inflation across the eurozone soared to a record high of 10.7 percent in October as citizens continue to struggle with the ongoing cost-of-living crisis.

    The figure, released by Eurostat on Monday, showed an increase of 0.8 percent points from the 9.9 percent figure for September. Economists had predicted a more modest rise to 10.2 or 10.3 percent.

    A rise in energy costs from 40.7 percent to 41.9 percent in September and an increase in food, alcohol, and tobacco from 11.8 percent to 13.1 percent contributed to the rise of the cost of living across the continent.

    Inflation of industrial goods and services also rose to 6 percent and 4.4 percent respectively.

    The eurozone economy barely avoided recession in its third quarter with growth of just 0.2 percent, down on the 0.8 percent growth experienced in the second quarter. The combination of stifled growth and rising prices are warning signs of a difficult winter ahead.

    According to preliminary flash estimates, France and Spain’s GDP increased by 0.2 percent for the quarter, while German GDP was up 0.3 percent and the Italian economy was up 0.5 percent. Czechia retained the same level of growth.

    Meanwhile, Belgium and Austria’s GDP contracted by 0.1 percent, while the Latvian economy receded by a worrying 1.7 percent.

    Further estimates for the third quarter are expected to be released on Nov. 15.

  • Germany faces wave of bankruptcies as companies increasingly fail to pay their bills

    Germany faces wave of bankruptcies as companies increasingly fail to pay their bills

    Due to Germany’s ongoing energy and inflation crisis, companies are increasingly unable to pay their bills, and if the past is any guide, new data shows that Germany is set to be hit with a wave of bankruptcies in the near future.

    The data comes from Atradius, one of the world’s biggest credit insurance and debt collection agencies, which is reporting a significant rise in overdue notices, which it also saw in the wake of the 2008 financial crisis. German companies are paying their bills later and later, and some are simply not paying at all.

    “We are seeing an increase in overdue notifications,” said Frank Liebold, who heads the German credit insurance business at Atradius. He told Die Welt that “this increase is likely to accelerate in the coming weeks.”

    [pp id=51248]

    The term “overdue” in relation to these notices does not just mean that invoices were not paid on time, but also they were not paid after follow-up reminders. The accelerating reports of companies failing to pay is a strong sign that a crisis is around the corner, according to Liebold.

    “It’s a leading indicator. After that, there is usually a crisis,” he said. “The last time there was this effect was in the financial crisis of 2008.”,

    As Remix News has previously reported, 60 percent of Germans are living paycheck to paycheck, and input costs for businesses across the country have soared. Those companies unable to pass on costs to cash-strapped consumers are facing bankruptcy. Steel plants, beverage companies, and a range of other key industries are reeling, and there is even talk of Germany facing “deindustrialization” if it does not change course and drop resource sanctions against Russia.

    Already in early September, CEO of ArcelorMittal Germany Reiner Blascheck said that “production in Germany is currently no longer competitive.” ArcelorMittal shut down two major plants in the country, and Blascheck was calling for political intervention to halt the crisis, but most politicians in Germany’s left-wing government have only told citizens they will have to prepare for a drop in their standard of living, including suggestions they wear two sweaters instead of one to stay warm at home.

    [pp id=49675]

    At the same time, interest rates are rising, supply chains are disrupted, and commodity prices are wildly fluctuating with the overall trend towards higher prices.

    The only question now is how big the downturn will be.

    Atradius provided data from an internal study to Die Welt showing how dire the situation is. For example, in the chemical industry, only 55 percent of invoices are paid on time while 39 percent are overdue. In the transport industry, nearly the same exact figures are present, with 55 percent paid on time and 38 percent overdue. The companies surveyed expect the situation to worsen.

    “The companies surveyed fear that these delays in payment processes will lead to ongoing liquidity problems in the coming months,” reads the study.

    According to the Die Welt report, demands on companies to meet environmental, social, and corporate governance goals are also leading to incredible pressure, as these are often extra costs imposed by outside actors that hurt companies’ bottom lines.

    “The risks are getting bigger,” says Liebold, who points to other industries such as steel, paper, glass, automotive, and mechanical engineering, which are all under severe stress.

    [pp id=48504]

    Atradius is not the only company raising the alarm, with the credit agency Creditreform pointing to a crisis on the horizon.

    “Our accounts receivable register clearly shows that payment behavior is steadily deteriorating,” says Patrik-Ludwig Hantzsch, head of economic research at Creditreform. “Regardless of whether it’s a small company, medium-sized company or a large corporation: companies of all sizes have recently made their lenders wait longer and beyond the set payment target for the receipt of money.”

    “The risk of default increases from week to week.” Debt collection efforts are also growing, according to Hantzsch. “Banks have long been asking us about default risks in the coming months.”

    Creditreform is predicting a sharp increase in bankruptcies, especially in the first quarter of 2023, and this could have a domino effect, as those facing a liquidity crunch often cannot pay their customers or providers, who in turn are unable to keep their business running.

  • Belief that economic power in the EU will ‘shift to eastern nations’ like Poland is a ‘pipe dream,’ argues German columnist

    Belief that economic power in the EU will ‘shift to eastern nations’ like Poland is a ‘pipe dream,’ argues German columnist

    The idea that Poland and other eastern countries will somehow pick up the slack from a weakening Western Europe and become a new economic powerhouse is a “pipe dream,” writes author Bruno Bandulet, who also works as a weekly columnist for German newspaper Junge Freiheit.

    “But if Germany crashes, what does that mean for the European Union? Brussels follows the lead from Washington, a European response to the war remains absent. The idea that the powerhouse of the EU will shift to the east, by which is meant to a large extent by Poland, remains a pipe dream,” wrote Bandulet.

    Despite arguments that the east of Europe will help offset Western output drops, Bandulet makes arguments against this development.

    [pp id=49213]

    The commentator argues that Germany and France make up 40 percent of the entire EU economy of 27 member states, and if Germany is on the ropes, that means all of Europe is going down with it.

    “The four Visegrád countries (account) for just under 7.5 percent (of GDP). No one can replace the German engine, and certainly not the enormous German contributions to the Brussels redistribution machine, which are already on the rise again.”

    In what should worry all of Europe, the German author points to how Germany’s economic outlook is already rapidly deteriorating.

    “When the winter gets cold and the gas runs out, the four major economic research institutes in the country fear the longest economic crisis since World War II. In 2023, economic output could shrink by 7.9 percent and in 2024 by 4.2 percent. Deutsche Bank already sees the beginning of Germany’s deindustrialization,” he writes.

    [pp id=48504]

    He points to massive cancellation of business investments, writing that more planned investments have been cancelled so far in 2022 than during the financial crisis of 2008 along with the Covid-19 crisis of 2020. That means the future is looking increasingly bleak not only for Germany, but also the rest of Europe.

    Bandulet predicts that those companies in Germany that cannot pass on massively increased input costs to consumers will face bankruptcy soon. He laments what he said is the inability of the country’s new Green party economic minister, Robert Habeck, to do anything to stem the crisis.

    “Ultimately, the OECD will be proved right with its dramatic forecast, according to which the Federal Republic will be the economic laggard among all major industrialized countries next year. And in such a situation, the German economy minister can think of nothing better than to announce that we will all become poorer. That’s not what he’s in office for, that’s certainly not what he was elected for.”

    Sanctions are disastrous for Germany

    Bandulet outlines how Germany reached the situation it is in due to a combination of the country’s shift towards green energy coupled with runaway money printing from the European Central Bank.

    “The seeds of the most persistent inflation in a hundred years were sown by the European Central Bank. It flooded the eurozone with money as in wartime and did not react until this year — too late; inflation was already galloping away. The Merkel government’s failed energy turnaround was based on the idea that it could do without nuclear and coal by filling the gap with cheap Russian natural gas — after all, the Russians had always delivered reliably, even during the Cold War.”

    He notes that this plan collapsed after the war in Ukraine broke out, noting that Germany’s gas tanks may be currently full, but they were filled at prices ten times more than what Germany previously received from Gazprom.

    To underline just how important this gas was, he points to BASF’s massive plant in Ludwigshafen, which “consumes more gas than the whole of Switzerland.” Without cheap gas, steel, chemical production, and auto manufacturing suddenly becomes exponentially more expensive for Germany, which will drive the country’s deindustrialization.

    [pp id=43102]

    Just as Hungarian Prime Minister Viktor Orbán is urging, Bandulet argues that repealing at least some sanctions is a simple matter of self-preservation. He also hints that it was not Russia that blew up the pipelines, as is the standard line in the German media and press, as the pipelines have been vital to Germany’s economic interests as well as Russia’s. These two nations that can mostly be ruled out based purely on asking, Cui bono, or “Who does it benefit?”

    “It is legitimate to ask whether Berlin and the EU would not have been better advised to provide financial and humanitarian support to hard-pressed Ukraine, but at the same time exempt Russian raw materials from the sanctions. The sanctions had and continue to have no influence on Moscow’s ability to wage war. There is no obligation to commit economic suicide. By the way, we would still like to know who blew up the Nord Stream pipelines.”

    Debt danger

    Bandulet argues that European expansion cannot go on, even if Olaf Scholz is dreaming of an EU made up of 36 members. He says it is “anyone’s guess who will have to foot the bill for the newcomers.”

    German taxpayers face a serious threat over efforts to pool the debt of weaker EU countries.

    “In reality, the idea is to enable the cash-strapped eurozone states to take on new debt that they are unable to raise on their own at tolerable interest rates, and they do not even increase the respective national debt levels, because they are attributed to the EU as a whole,” he writes.

    The danger for Germany is that Paris and Rome may grow closer even as Berlin and Paris grow apart. This would increase the pressure on Germany to bend over debt, and potentially leave Germans even more on the hook for other member states than they already are, especially during a time when Germany’s future prosperity looks increasingly diminished.

  • EU nations agree to ban internal combustion cars by 2035

    EU nations agree to ban internal combustion cars by 2035

    The European Parliament and the 27 EU member states have reached an agreement to ban the sale of new cars with internal combustion engines from 2035, the Czech EU presidency announced on Thursday. The deal is part of the EU’s drive to reduce transport emissions in the bloc to as close to zero as possible.

    The decision will be reviewed again in 2026. Under the EU’s climate change package, emissions are to be cut by 55 percent by 2030 compared to 1990 levels, with climate neutrality to be achieved by 2050.

    The European Parliament voted on June 8 to require manufacturers to market only cars and vans that do not emit climate-damaging greenhouse gases from the middle of the next decade. However, the ban on the sale of new cars with internal combustion engines has sparked fierce disputes with Germany, which has a major car industry.

    “The world is changing and we need to stay at the forefront of developments. I believe we can take advantage of this technological transition,” said Jozef Síkela, the Czech minister for industry and trade, who currently holds the six-month rotating presidency of the Council of the European Union, adding that the roadmap outlined would make the targets achievable for car manufacturers.

    The arrangement also includes incentives to electric car manufacturers and exemptions for smaller manufacturers on internal combustion vehicles.

    “With these targets, we create clarity for the car industry and stimulate innovation and investments for car manufacturers. In addition, purchasing and driving zero-emission cars will become cheaper for consumers,” EU Rapporteur Jan Huitema (Renew, NL) said.

    “I am pleased that today we reached an agreement with the Council on an ambitious revision of the targets for 2030 and supported a 100 percent target for 2035. This is crucial to reach climate neutrality by 2050 and make clean driving more affordable,” he added.

  • Hungary says nuclear energy is vital to the country’s industry and independence

    Hungary says nuclear energy is vital to the country’s industry and independence

    The Hungarian government has been fighting hard in recent years to end Brussels’ efforts to shut down the nuclear energy industry, Minister of Foreign Affairs and Trade Péter Szijjártó said in the United States at a conference of the International Atomic Energy Agency (IAEA). He stressed that the Paks nuclear energy plant expansion is a matter of urgency for Hungary’s security and competitiveness.

    “Work is underway and the government plans to start pouring concrete next November; Paks-2 will be completed by 2030,” Szijjártó said at a ministerial meeting of the IAEA in Washington.

    He said Hungary cannot abandon nuclear energy in the interests of energy security, and indeed such efforts should not be abandoned in Europe as a whole, as nuclear helps reduce carbon emissions and protect the environment. He said that the anti-nuclear policy is fundamentally flawed and ideologically driven.

    “Those who oppose it invoke Chernobyl and Fukushima, but it is like saying that if a car accident happens, we will never get into a car again,” Szijjártó said.

    Péter Szijjártó at the IAEA ministerial meeting in Washington. MTI/KKM

    The Hungarian minister also pointed out that Hungary is one of the few countries that has managed to grow its economy in recent years while reducing its carbon emissions, largely thanks to nuclear energy. He said that sustainable development is unthinkable without nuclear power plants. In his view, this is not only an economic issue but also a sovereignty issue, which is why Budapest has strongly opposed the introduction or even the lifting of any sanctions on civil nuclear projects and cooperation.

    “The automotive and battery industries are the main drivers of the Hungarian economy. Both are highly energy-intensive, and our development and competitiveness are unthinkable without Paks-2,” he said. Szijjártó added that those who attack this project tend to talk about Russian influence, but in reality, the Hungarian project is an international investment involving companies such as General Electric and Siemens.

    Hungary signed the contract regarding the expansion of the Paks power plant in 2014, with the cost of the project totaling €12 billion, of which Hungary would initially contribute €2 billion; the remaining €10 billion will be provided through a 30-year loan by the state-owned Russian company that serves as the main contractor, at interest rates of 4 to 5 percent.

    Hungary’s only nuclear plant, located approximately 100 kilometers south of Budapest, currently has a capacity of 2,000 megawatts. The addition of the two VVER pressurized water reactors will add another 2,400 megawatts to that. The first reactor is planned to become operational in 2025 and the second in 2027.

  • Germany: Migrants will receive housing spots promised to construction job apprentices

    Germany: Migrants will receive housing spots promised to construction job apprentices

    Although the German coastal city of Rostock was supposed to house trainees for the construction industry, the city is evicting them and turning the accommodations into refugee housing.

    It was apparently more profitable for the private operators of the apartments to rent the rooms to the Hanseatic city, according to NDR in a letter from the Mecklenburg-Vorpommern construction association to Rostock’s Mayor Regine Lück of the Left party.

    The construction association warned that the cancellation of housing for vocational students could even lead some to entirely abandon their training. The move comes despite a shortage of skilled workers in construction, and the association is warning that it could mean the industry loses out on critical skilled workers in the future.

    [pp id=25822]

    While the Left party defended the move, the Alternative for Germany (AfD) said that “shortly before Christmas, dozens of trainees in the construction industry are facing the threat of unemployment. This policy is not only anti-social, but also massively harms Mecklenburg-Vorpommern,” said Nikolaus Kramer, chairman of the AfD state parliamentary group in the state.

    The city’s social affairs senator Steffen Bockhahn (Left), on the other hand, appeared relaxed. “Agitation does not help,” said the politician. They are working “on a joint solution,” the politician said.

    Due to policies of the left-wing government, Germany has been overwhelmed with mass immigration this year, with well over a million refugees and illegal migrants arriving in the country, pushing the population above 84 million for the first time. The influx has led to a huge burden on the country’s schooling system, social services, and housing. In the past, German senior citizens have been evicted from housing to make way for immigrants, while in other cases, migrants complained that their free accommodations were not centrally located enough.

    [pp id=8048]

    While the refugee crisis has cost tens of billions, the left-wing government running Germany has called for the country to take up to 10 million Ukrainian refugees if necessary.

    The AfD has recently been surging in the polls, partly due to its restrictive immigration stance. Mecklenburg-Vorpommern, located in the most northeastern portion of the country, is one of the strongholds of the AfD, with the party being the second-strongest in the state after the Social Democrats (SPD). A new poll recently put the party in striking distance of overtaking the SPD to become the strongest party in the entire state.

  • Michelin restaurant guide now covers all of Hungary

    Michelin restaurant guide now covers all of Hungary

    This year, for the first time, the Michelin Guide will publish a list of restaurants for the whole of Hungary, the Hungarian Tourism Agency (MTÜ) announced on Monday. As a result of the move, the entire gastronomic offering of Hungary will be included on the international map, which is another milestone in the development of the country’s tourism and gastronomy industries.

    The agency said that the world-famous publication, which already rates businesses in Budapest and the surrounding countryside, could contribute almost immediately to an increase in turnover and, in the longer term, boost the competitiveness of the sector. The selection will give a good idea of the changes that Hungary’s dining scene has undergone in the last 10 to 15 years.

    The restaurants recommended for the 2022 edition of the Michelin Guide in Hungary, including the Michelin Star or Bib Gourmand awards, will be announced on Nov. 3 2022. The inspectors of the world’s most prestigious gastronomic guide have returned several times to find the best restaurants the country has to offer.

    “Hungary has become a very dynamic gastronomic destination, thanks to the great variety of its products, including precious spices, typical meat and cheese products from the local terroir, but also a great variety of wines. We look forward to showcasing outstanding restaurants and talented professionals to our international community of food lovers,” the Michelin Guide wrote on its website.

    In addition to the star ratings established in 1936, Michelin now also offers ratings in several other categories. The well-known one-star rating means a restaurant offers top-quality cuisine that is worth a stop if you happen to be passing by. Two stars are awarded to restaurants that are worth a detour trip, while three stars are awarded to cuisine of exceptional quality.

    In addition, the Bib Gourmand is awarded to restaurants that offer good value for money — where you can get good quality food at a more moderate price. Typically, it is awarded to excellent bistros or family restaurants. In addition to its famous stars and the Bib Gourmand award, recommended restaurants that are included in the guide are marked with a plate, while a green star recognizes efforts towards sustainability.

  • EU pension fund liability soars to €122 billion

    EU pension fund liability soars to €122 billion

    The European Union’s pension commitment for former European Commission officials has climbed by more than €6 billion since 2020 to €122.5 billion due to indexing salary payments in line with inflation in some EU countries, it has emerged.

    This figure includes the pension entitlements and healthcare costs for 36,000 EU employees, both active and retired, along with their surviving dependents.

    As reported by Germany’s Bild newspaper, calculations by the European Commission saw the salaries of EU officials rise by around 7 percent, an increase that will be enforced retroactively as of July 1 — the rise sees Commission President Ursula von der Leyen taking home approximately an extra €2,000 per month, while MEPs and EU commissioners will receive an extra €623 and €1,460, respectively.

    This salary bump comes despite the majority of salaries across the bloc not being linked to inflation and many millions struggling due to the ongoing cost-of-living crisis.

    The many reasons for the salary hike and, consequently, the increase in pensions for EU officials is due to domestic rules in Belgium and Luxembourg, which both automatically index employee salaries to inflation, albeit against the European Commission’s own advice to governments and that of labor group representatives.

    [pp id=51584]

    EU staff salaries can be adjusted twice a year to reflect changes in living costs and can be applied retroactively in circumstances where inflation has risen above 3 percent in the corresponding period.

    With inflation spiraling in the eurozone, increasing by 12 percent and 6.9 percent in Belgium and Luxembourg, respectively, some EU officials could see yet another rise in wages next year, which would also see a further increase in pension fund commitments.

    In addition to wages index-linked to inflation, EU officials have numerous other privileges. “They receive expatriation allowances, child allowances, a high child benefit, set-up assistance, and a household allowance,” German publication Junge Freiheit reported.

  • Germany’s €200 billion gas relief plan effectively sinks EU’s gas price cap idea

    Germany’s €200 billion gas relief plan effectively sinks EU’s gas price cap idea

    Delivering yet another lesson on the might and weight in Europe of the German economy, the Bundestag on Friday approved a €200 billion relief package to help its citizens and businesses struggling with rapidly rising energy bills. However, the massive financial package is pitting Germany against much of the rest of the EU.

    “Prices have to come down, so the government will do everything it can,” Chancellor Olaf Scholz said at a press conference flanked by Vice-Chancellor and Economics Minister Robert Habeck and Finance Minister Christian Lindner.

    The plan comes just in time for Germany, where both industry and consumers are facing skyrocketing energy prices, and will allow private households to benefit from a price cap of 80 percent of their normal consumption from March. The price cap for large companies will come into force in January.

    But the move is only possible with the suspension of the debt brake enshrined in the country’s constitution. The debt brake limits the federal government’s structural net borrowing to 0.35 percent of GDP; however, it can be suspended in the event of an “extraordinary emergency.”

    “This is good news for everyone” Scholz tweeted on Saturday.

    But, to the dismay of EU member states hoping for a joint EU price cap at the Thursday-Friday summit, Germany’s domestic borrowing plan took the wind out of the initiative, which cannot possibly be carried out without German money.

    “Without a common European solution, we seriously risk fragmentation. So, it is paramount that we preserve a level playing field for all,” European Commission President Ursula von der Leyen said over the weekend, without mentioning Germany.

    Responding to EU Commissioner for Economy Paolo Gentiloni’s and Internal Market Commissioner Thierry Breton’s comments on how the German move could impact a common European solution, Scholz directly addressed Frenchman Breton’s implied criticism.

    “Commissioner Breton can certainly look around him, where he comes from, and therefore know that the measures we are taking are not unique, but are also being taken elsewhere and are justified,” Scholz said in a not-so-subtle reference to Breton’s home country.

  • New data shows immigrants are driving down wages for German workers

    New data shows immigrants are driving down wages for German workers

    The left-liberal German government’s immigration policy is depressing wages for skilled German workers, says Alternative for Germany (AfD) social affairs expert René Springer. He adds that even though the government poses as a left-wing champion, its actual economic policy is aggressive neo-liberalism.

    “The state is now only a vicarious agent of a neo-liberal policy to lower wage costs on the backs of employees,” the member of the Bundestag told German news portal Junge Freiheit.

    AfD labor specialist René Springer. (Twitter)

    Springer’s request to the federal government inquiring about the wage differences between Germans and foreigners, which the government answered, was made exclusively available to Junge Freiheit. According to the government report, German employees earned an average of €3,643 in 2021, more than €900 higher than foreigners, who have an average salary of €2,728. The gap has more than doubled since 2012, when it was €400 per month.

    [pp id=8048]

    The AfD politician is now warning of politics at “the expense of employees.”

    The wage differences with employees from the main countries of origin of asylum seekers are particularly large. Here, the salary difference was almost €1,400. Among Bulgarians, the wage difference was even higher, at €1,479 per month. According to the German government, 70 percent of full-time skilled workers receive wages that are lower than those of German skilled workers. Even 43 percent of foreign skilled workers earned less than unskilled German workers.

    [pp id=51248]

    This disparity in incomes is also reflected in pension payments later. About 28 percent of foreign workers received a wage in 2021 that was insufficient to receive a pension above the basic income support level after 45 years of work. For people from the main asylum countries of origin, this is 44 percent. By comparison, wages for German workers are only 11 percent below what would be needed for a pension above the minimum wage.

    For Springer, the figures have a clear message:

    “The state is now only a vicarious agent of a neo-liberal policy to lower wage costs on the backs of employees,” he said. The AfD rejects “the wage-depressing import of a foreign reservist army (…) just as much as the mass immigration of precarious and unskilled workers,” said Springer.

  • Germans should wear two sweaters, work more, and drop vacation to deal with crisis, says former finance minister

    Germans should wear two sweaters, work more, and drop vacation to deal with crisis, says former finance minister

    Another German politician is calling on citizens to make sacrifices and prepare for a loss in prosperity. This time, Wolfgang Schäuble (CDU), Germany’s finance minister for eight years under Chancellor Merkel and former president of the German Bundestag, is calling on Germans to put in more effort and complain less.

    Regarding the energy shortage that is crippling German industry and threatening Germans with cold homes this winter, he said, “Then you just put on a sweater, or maybe a second sweater. One should not moan about it, but one must recognize: Many things are not self-evident.” In addition, citizens should prepare for power outages with candles, matches, and flashlights.

    [pp id=47984]

    Regarding inflation and high energy prices, Schäuble, who has an estimated net worth of between €1 million and €5 million, said that the state could only support those who are in serious need.

    “To the others, one must also say: In times of need, you cannot take a vacation trip. The danger I see is that we believe the state is something that merely has to supply more and more to its citizens,” he told Bild newspaper. He added that the state is not a supermarket and the citizens are not bargain hunters.

    Considering Schäuble spent nearly his entire career working in the realm of public administration, he has never really held a job in the private sector or been subjected to market forces that could cripple his standard of living, such as surging energy prices. He always received his salary regardless of where the economy was going. Critics also pointed out that it was under his party, the CDU, and his stewardship, that Germany pursued its cheap energy policy that led the nation to rely on Russian gas.

    [pp id=50395]

    Schäuble also criticized that Germans want to work less, mostly part-time, and never on weekends. “That won’t work. Because there is a shortage of workers everywhere! My experience is: Always having fun – that’s not life fulfillment,” he said to Bild.

    Although there is a worker shortage in Germany that needs to be addressed, many Germans are already working full-time and yet are facing bankruptcy along with fears that their jobs may soon be gone; and putting on a sweater is not necessarily going to fix the situation, writes Bild journalist Johannes Bockenheimer.

    Schäuble joins a wave of politicians across Europe working in tandem to prepare citizens for a loss of prosperity due to the very policies they have championed. Many of these same wealthy politicians will not have to worry about heating their homes, having enough money to buy groceries, or having any reduction in their vacation time. In fact, EU politicians in Brussels just gave themselves a 7 percent raise on top of their already large salaries. Other German politicians have also called on Germans to make “sacrifices” to support Ukraine, including the chairwoman of the German parliament’s influential defense committee, liberal-democrat Marie-Agnes Strack-Zimmermann (FDP). She sits on millions of euros worth of assets and earns a substantial salary.

    Last week, former German Interior Minister Gerhart Baum (FDP) also called for young people to adapt to the economic crisis. “I would like to ask you to adapt a little more, to change your lifestyle, to reduce your expectations of prosperity.”

  • EU officials set to receive big wage hikes – despite the move going against the Commission’s own advice

    EU officials set to receive big wage hikes – despite the move going against the Commission’s own advice

    European Union officials, including the European Commission president, commissioners, and MEPs, can now look forward to significantly higher salaries. However, the twist in the story is that the pay wages actually go against the European Commission’s own advice on the matter of pay raises.

    In what critics say is another example of, “Do what I say, not as I do,” the EU commission has historically advised governments and the heads of labor and managerial organizations to avoid raising wages in the face of inflation. The commission’s advice on wage-seting is that nations and companies should avoid indexing wages to inflation, as that practice creates the conditions for a wage-price spiral and creates the conditions for further inflation,

    In response, nearly all EU countries no longer take part in the practice, with the exception of Belgium and Luxembourg.

    [pp id=47984]

    The EU now claims that its own wage hikes are justified due to rising inflation in Belgium and Brussels. The inflation rate is automatically included into the salaries of EU officials. For Brussels, it currently stands at just over 7 percent.

    According to the European Commission’s plans, EU officials will receive almost 7 percent more pay. The salary increase is to apply retroactively to July 1, reports Germany’s Bild newspaper.

    In concrete terms, this means that Commission head Ursula von der Leyen (CDU) will receive around €2,000 more per month in the future, while an MEP will receive €623 more, and an EU commissioner can count on a salary increase of €1,460. The increase alone will account for an extra €98 million in spending for 2022.

    As Remix News has previously reported, many wealthy EU officials and politicians have advocated for more sanctions on Russia, saying Europeans can make “sacrifices” to support Ukraine, such as left-wing MEP Guy Verhofstadt, reportedly one of the wealthiest MEPs in the entire EU. Despite his enormous wealth, he will also be benefitting from a wage hike that will increase his already substantial salary.

    In addition to high salaries, EU officials have numerous other privileges. For example, they receive expatriation allowances, a high child allowance, furniture allowances, and a household allowance.

  • Giorgia Meloni’s ‘Italian Job’

    Giorgia Meloni’s ‘Italian Job’

    The 2003 movie, “The Italian Job,” is a good metaphor for the ‘job’ that Giorgia Meloni, the first female party leader to win the Italian elections, will undertake at the helm of her new government.

    The genre classification of the film is action thriller, and that is pretty much what the new government will have to be. It does not bode well either that the president of the European Commission threatened Italian voters with unmistakable openness even before the elections that if they voted in the “wrong direction,” she would have the means to reverse the course. To illustrate this, she cited Hungary and Poland as examples, in case anyone had any doubts about the existence of these tools.

    In order to understand this better, let us look at the general situation in Italy, particularly from the point of view of why the direction in which Italy is heading, and what the “right” direction is, is such a sensitive issue for Europe as a whole. The fact that Italy has had 68 successive governments in 76 years, including the new one, suggests that the social and political structure is not very stable, and that any construct that might have been intended to achieve stable governance is falling apart in a short space of time. This was also the case when the traditional two major political forces, the Christian Democratic Party and the Socialist Party, were driving the political process, and the rapidly changing political climate meant that governments changed almost every year. In an average four-year term, at least three governments followed one another.

    Then, over the course of a decade or two, both major parties collapsed, and the resulting vacuum was filled by parties that were rebuilt partly from the ruins of the old and partly from at least new-looking parties, further undermining the chances of stability. The world of politics is, of course, only a mirror image, showing, albeit through many different channels, the state of a given society. In other words, it is not simply politics that is unstable, but the whole of Italy’s social structural dynamics. This has been the case for a very long time, and as things stand, this is not going to change any time soon.

    As we know in the eurozone countries, the ratio of public debt to GDP must not exceed 60 percent, but today, at most, 3 out of 18 countries meet this criterion, and in Italy the ratio is above 150 percent. Public debt amounts to €3.2 trillion, by far the largest in the European Union and roughly five times the size of Hungary’s total national wealth.

    All of this cannot be explained by the prevailing narrative, so for a while it was placed under the direct control of the global financial power system of Mario Draghi, but this construct has now fizzled out. The old order has finally collapsed, replaced by a confused liberal-globalist complex and an equally rather incoherent national right. But the three parties of the radical right that are now entering government are also divided on migration, climate, and the war in Ukraine, and they so far have no coherent strategy for interpreting and managing socio-economic tensions.

    So we should be pleased that, after Hungary and Poland, there will now be a third country in the group of openly and courageously “rebellious” member states, and look upon it with cautious optimism. However, so far, we know little about the strategy on which the new governing coalition will base its ideas. So let us wish those taking on the “Italian job” good luck.

  • ‘Our great-grandchildren will pay for this’ – Germany’s plan to borrow €200 billion in ‘shadow’ debt to pay for gas price cap criticized by federal audit office

    ‘Our great-grandchildren will pay for this’ – Germany’s plan to borrow €200 billion in ‘shadow’ debt to pay for gas price cap criticized by federal audit office

    Germany’s ambitious plan to take out €200 billion in debt to pay for a gas price cap is designed to shelter consumers and businesses from skyrocketing energy prices, but Germany’s Federal Court of Auditors is already calling the entire scheme into question.

    The German government has long employed “special funds” in its budget practices to avoid labeling spending as official debt. The questionable practice allows little oversight from parliament, but the Federal Court of Auditors points out that the €200 billion, which is yet another such item in the “shadow budget,” would further cloud the already murky boundaries of the country’s budget.

    As Remix News reported, Germany’s federal coalition government announced last Thursday a gas price cap for which the federal budget has set aside €200 billion.

    “Prices have to come down, that’s our conviction. To make them go down, we are putting up a big defensive umbrella,” said Chancellor Olaf Scholz (SPD) at a joint press conference with Finance Minister Christian Lindner (FDP) and Economics Minister Robert Habeck (Greens).

    Kay Scheller, president of the Federal Court of Auditors, sharply criticized the proposal, saying that special funds Germany has recently started utilizing are growing enormous. He pointed to the €100 billion defense development fund and the €60 billion climate fund, which create a lack of transparency in the federal budget, as reported by Hungarian news outlet Makronom.

    He said that Finance Minister Christian Lindner’s (FDP) argument that money flowing in through special funds is different from ordinary debt, which can increase inflation, is wrong.

    “In the case of special funds, the state borrows in the same way, so they are federal debt even if they are called something else,” said Scheller, adding that the German government makes disturbingly frequent use of special funds, over which there is a lack of parliamentary oversight.

    “The federal budget is subject to the principle of unity, which means that it must be fully transparent to both parliament and the public,” added Scheller, stressing that the already large number of funds (there were 26 in 2020) makes this increasingly difficult.

    Opposition to a “shadow budget”

    Friedrich Merz, leader of the Christian Democratic Union (CDU), has a similarly scathing opinion of the proposal. He pointed out at a press conference: “The three funds mentioned above alone will mean €360 billion in new debt for Germany, while the annual budget is planned at €496 billion. The debt accumulated in the shadow budget is almost as much as an entire federal budget,” Merz said.

    The conservative Alternative for Germany (AfD) party also warned of ballooning debt costs.

    “Our great-grandchildren will pay for this policy,” criticized AfD co-leader Alice Weidel. Holes would only be plugged “instead of securing our future with an expansion of nuclear energy and making us more independent.”

    The Federal Court of Auditors is a judicial body that, while a part of the federal system, is not subordinate to any branch of the government. It serves as the supreme federal authority for audit matters in the country, according to the country’s constitution. The court lacks the power to make or enforce legally binding rules but can make recommendations.

  • Sweden braces for a winter of power shortages

    Sweden braces for a winter of power shortages

    Emergency scenarios are being prepared in Sweden in case of power cuts. The Scandinavian country has had a dry and windless summer, which has resulted in less electricity being produced from renewable energy, while its nuclear power plants are not ready to supply consumers. Meanwhile, the economic situation is worsening as inflation skyrockets and housing costs continue to rise.

    Falling energy prices, a worsening economy, and a change of government have all contributed to the declining economic situation in Sweden, according to a recent study by the Hungarian Oeconomus Economic Research Foundation. Consumer inflation hit an all-time high in August, reaching 9.8 percent, the highest in 30 years. The biggest increases were in housing and transport costs.

    The analysis points out that, unlike Hungary, Sweden did not seek to compensate energy and fuel prices, but cut taxes; however, this did not live up to expectations. The Swedish government expects the economy to slow further next year, with industrial production possibly stagnating.

    Meanwhile, severe energy shortages loom. Emergency scenarios have already been drawn up. The dry and windless summer has meant less electricity from renewable sources, and nuclear power plants are unable to supply the country. In addition, with Russian gas cut off and oil exports stopped, Sweden is forced to buy from elsewhere, which increases the cost of electricity.

    The state energy supplier is trying to prepare for the winter with austerity tips, for example, washing at night, installing LED light bulbs, and turning down the heating. They are also openly talking about the possibility of partial power cuts. In this case, Swedes are asked to insulate windows, gather the whole family in a single room, and build a makeshift hut out of blankets.

    “There are precise plans for the areas where supplies must be provided in all circumstances, for example, in hospitals, where a power cut would have serious consequences,” said Erik Ek, strategic operations director at state-owned utility Svenska Kraftnät.

    The Moderate Party, which is about to form a new government, supports the expansion of nuclear power. They have already announced that they will spend 400 million Swedish krona (€36 million) on this, but it is certainly not a solution to the energy shortages expected this winter.

  • Dutch inflation soars to unprecedented 17.1%, 10 eurozone countries in double digits

    Dutch inflation soars to unprecedented 17.1%, 10 eurozone countries in double digits

    Eurozone countries are continuing to suffer the effects of a devalued currency and soaring inflation with the Netherlands reporting a record 17.1 percent level of inflation for September.

    The spike in the cost of living is the highest increase ever measured by the country’s Central Bureau of Statistics (CBS).

    The government of the eurozone’s fifth-largest economy announced earlier this month it would spend €18 billion next year to support Dutch consumers with their energy bills, and also announced a gas and electricity price cap.

    “The consequences for people, families and companies are severe,” the Dutch King Willem-Alexander said in his speech outlining the government’s spending plans last week.

    “It is painful that an increasingly greater number of people in the Netherlands are having trouble paying for rent, groceries and health insurance and their energy bills,” he added.

    [pp id=50181]

    “I was shocked, it is terrible,” Minister of Finance Sigrid Kaag told the NOS broadcaster.

    “You wonder how bad it can get,” added Micky Adriaansens, the minister of economic affairs.

    The cost of living crisis in the country is primarily being driven by higher energy prices, up a staggering 114 percent over September of last year.

    Double-digit inflation has been recorded in 10 eurozone countries in September, with Estonia, Lithuania, and Latvia all experiencing sky-high inflation at 24.2 percent, 22.5 percent, and 22.4 percent respectively.

    Elsewhere, Slovakia has recorded 13.6 percent, while Greece is at 12.1 percent, Belgium is at 12 percent, Austria stands at 11 percent, and Germany and Slovenia have hit 10.9 percent and 10.6 percent, respectively.

  • German government announces €200 billion gas price support

    German government announces €200 billion gas price support

    Germany’s federal coalition government announced on Thursday a gas price cap for which the federal budget has set aside €200 billion.

    “Prices have to come down, that’s our conviction. To make them go down, we are putting up a big defensive umbrella,” said Chancellor Olaf Scholz (SPD) at a joint press conference with Finance Minister Christian Lindner (FDP) and Economics Minister Robert Habeck (Greens).

    The German government is providing a total of up to €200 billion for this purpose, which is to come from the economic stabilization fund actually intended for dealing with the coronavirus crisis and will be financed by loans. Lindner promised that the debt brake would again be fully complied with next year, and called on the CDU/CSU to approve the package.

    Criticism from the CDU/CSU, AfD and Left Party

    The CDU, however, was appalled by the plan in initial reactions. One of its lawmakers, Klaus Wiener, called the plan “madness.” The government is “throwing money at it as if there were no tomorrow,” he claimed, adding that none of this changes the actual problem of the energy shortage.

    “Even our great-grandchildren will pay for this policy,” criticized AfD leader Alice Weidel. She said that holes were only being plugged “instead of securing our future by expanding nuclear energy and making us more independent.”

    Gas levy off the table

    The leader of the Left Party in the Bundestag, Amira Mohamed Ali, complained that the press conference left more questions than answers. “When will the gas price brake come? How? For whom? What about those who have already received their horror bills? Once again, big words, but nothing concrete,” she asked.

    The so-called gas levy, on the other hand, in which consumers were supposed to pay to rescue struggling energy importers such as the now-nationalized Uniper Group, is now off the table.

  • Hungary is the only EU state still receiving Russian gas

    Hungary is the only EU state still receiving Russian gas

    With three of the four pipelines delivering Russian natural gas to Europe out of commission, Hungary is now the only EU member state still receiving Russian gas, Forbes Hungary writes.

    There are four pipelines that could supply Russian natural gas to Europe: Nord Stream 1, with a capacity of 55 billion cubic meters (bcm) per year (deliveries on this one were halted by Russia); Nord Stream 2, with an identical capacity of 55 bcm (this one never became operational after the German government refused to approve it in the wake of Russia’s invasion of Ukraine).

    Yamal Europe, the longest pipeline (4,107 kilometers) supplies gas from the Yamal Peninsula in Western Siberia, terminating in Germany, and has a capacity of 33 bcm. Deliveries were halted by Russia in May.

    Turk Stream, delivering gas from Russia under the Black Sea and through the Balkans, has a capacity of 31.5 bcm and is the only pipeline still in operation. It terminates in Hungary, meaning that as of now, Hungary is the only EU member state still receiving Russian natural gas.

    Due to the huge income Russia has made from soaring gas prices, coupled with a massive reduction in other trade with Europe, Russia has no interest in completely shutting down these pipelines. Although Hungary still receives gas, its price is linked to market prices, thus the country is strongly opposed to any further sanctions against Russia.

    Earlier this week, Prime Minister Viktor Orbán announced a national consultation over the EU’s Russia sanctions, with the consultation asking citizens whether they support the sanctions or not. The Hungarian government has vocally opposed many of the sanctions imposed on Russia arguing they harm Europeans more than they hurt Russians. Hungarian Prime Viktor Orbán just last week called for an end to Russian sanctions by the end of the year in order to halt inflation, halve food prices, and bring soaring energy costs under control.

  • Hungary halts all non-essential budget expenditures

    Hungary halts all non-essential budget expenditures

    In order to be able to pay for the cost of energy prices inflated by the European Union’s sanctions against Russia, the Hungarian government has frozen all non-essential payments to ministries, the finance ministry confirmed on Wednesday.

    In response to an inquiry by commercial television station ATV, the finance ministry confirmed in writing the spending freeze.

    “The government has imposed disciplined, frugal management on the budget in response to the energy crisis triggered by the sanctions. Sanction surcharges have to be paid for natural gas and electricity, so while the sanctions are in place, the government will continue to manage (the budget) frugally,” the ministry said in a statement.

    The ministry assured that the government “automatically pays salaries, pensions, public education, higher education, social, health and public service expenditures, as well as payments for EU programs for 2014-2020 and for material costs.”

    All other payments, however, will require the authorization of the finance minister.

    The ministry did not specify the size of potential savings the spending freeze would bring.

  • Hungary’s drought problem could force a switch from growing corn to millet

    Hungary’s drought problem could force a switch from growing corn to millet

    The traditional African and Asian grain sorghum, also known as millet, should be a good replacement crop for corn in Hungary, as the country is facing increasing periods of drought, said State Minister for Agriculture Zsolt Feldman.

    He pointed out that research data suggest grain sorghum is a real alternative and complementary option to corn and other crops in animal feed, and one worth considering.

    “In addition to yield security, sorghum’s lower production costs, absence of toxins, and similar nutritional value to maize make it more effective than maize in poor quality areas,” said Feldman, listing the positive characteristics of sorghum.

    According to experts, there could be up to 100,000 hectares of additional domestic agricultural land where sorghum can be grown more effectively and profitably than other crops, as it can achieve yields of 5-7 tons per hectare even amid a drought as severe as this year’s.

    Tamás Petőházi, president of the National Association of Cereal Growers, also said that the exceptional drought, which has not been seen for 100 years, along with the war in Hungary’s neighborhood are also pushing farmers to grow alternative crops.

    Farmers say that even the most optimistic estimates are that this year’s crop will certainly not be able to meet more than 10 percent of domestic demand.

    “This is unprecedented, with agriculture producing well in excess of domestic demand every year and a significant export deficit of millions of tons,” they pointed out.

    Market players forecast a corn crop of 2.8-3.6 million tons this year, instead of the usual 6-9 million tons. Domestic consumption of corn for food, feed, and industrial purposes is 4-5 million tons a year, which means Hungary may need to import up to 2 million tons. The most obvious source should be Ukraine, but the war there continues to hinder grain exports.

  • Hungary hikes interest rate to 13%, highest level in 22 years

    Hungary hikes interest rate to 13%, highest level in 22 years

    On Tuesday, the Monetary Council of the Hungarian Central Bank (MNB) increased its base rate by an unexpected 125 basis points to 13 percent, a 22-year high.

    MNB governor György Matolcsy said this was the last in a 16-month-long string of base rate hikes.

    “We have ended the cycle of interest rate hikes that started 16 months ago, but monetary tightening will continue,” Matolcsy said at a press conference following the meeting of the Monetary Council. He stressed that the fight against inflation is not over and that the MNB will continue to fight against inflation, which is expected to slow down only next year, reaching the edge of the MNB’s tolerance band (i.e., 3 to 5 percent) by 2024.

    [pp id=24676]

    He said that the decade of the 2020s is reminiscent of the decade of the 1970s, with low growth, high inflation, and unexpected shocks. However, the Hungarian Central Bank — like the Federal Reserve in the United States — was among the first to recognize this, said Matolcsy. He added that the inflation phenomenon is why the base rate was raised to the highest level, coupled with a number of challenges, including the current account deficit. The central bank also takes financial stability into account when making monetary policy decisions, he added.

    “There is no point in going beyond a double-digit base rate,” Matolcsy said. “However, the MNB maintains that we need to return to the path of balance and growth, which the epidemic has led us away from.”

    The central bank chief reiterated his earlier criticism that the Hungarian budget had deviated from the common Polish-Hungarian equilibrium path. Therefore, he said, transitions in Hungary, such as the digital and competitiveness transitions and the reorganization of higher education, must now be accelerated. However, this requires capital, Matolcsy stressed.

    MNB Vice-President Barnabás Virág said fresh September inflation data shows that consumer prices will remain on an upward path in the coming months, but that price pressures will become more pronounced from 2023.

    The inflation rate is expected to be between 13 and 14.5 percent this year and 12 to 14 percent next year. Economic growth will be between 3 and 4 percent this year and between 0.5 and 1.5 per cent in 2023, according to the vice-president, but even that small growth forecast might not materialize due to downward risks.

  • German business confidence plummets to two-year low as recession looms

    German business confidence plummets to two-year low as recession looms

    The mood in the German economy has deteriorated considerably in the past month with the ifo Business Climate Index falling by 4.3 points to 84.3 in September, its lowest value since May 2020.

    The drop in confidence was sharper than experts had predicted, with economists polled by Reuters only expecting a decline to 87.0 points.

    The slump was felt across all four major sectors of the German economy, including manufacturing, services, trade, and construction, with President of the ifo Institute Clemens Fuest warning that the country “is slipping into recession.”

    According to the institute, order books for Germany manufacturers have shrunk as pessimism grips the sector, and companies are more pessimistic than they have been since the peak of the coronavirus pandemic in April 2020.

    Confidence in the services sector “took a nosedive,” according to Fuest, with companies “expecting a further marked deterioration in the coming months,” and the hospitality sector is expected to take a significant hit. A weaker currency, higher inflation, and in particular spiraling energy costs are contributing to the decline in confidence.

    Indexes in the trade and construction sectors also weakened noticeably.

    The readings are in stark contrast to the sentiment among German businesses in September of last year when the Business Climate Index peaked at 99.2.

    “The pessimism with regard to the coming months has increased significantly,” said Ifo President Clemens Fuest, while Ifo economic expert Klaus Wohlrabe in an interview with Reuters was even more alarmed.

    “We see a big minus on all fronts,” he told the new outlet. “The energy-intensive sectors in particular are extremely pessimistic about the winter,” he added.

    “The entire Ifo index signals more than ever a recession in the winter,” Commerzbank chief economist Jörg Krämer was quoted as saying in Die Welt.

    “Germany has become poorer due to the massive increase in the price of energy imports,” said Krämer. “We are facing an economically difficult winter.”

  • Britain’s Conservative party is ‘conservative again’ as tax cuts dominate new chancellor’s mini-budget

    Britain’s Conservative party is ‘conservative again’ as tax cuts dominate new chancellor’s mini-budget

    There was an audible gasp among the House of Commons on Friday as newly-appointed Chancellor Kwasi Kwarteng announced his flagship policy for his first budget statement, the scrapping of the 45p tax rate for Britain’s highest earners, a move he believes will “attract global talent and incentivize enterprise.”

    Tax cuts dominated Kwarteng’s first major policy announcements, including the scrapping of a tax rise in Britain’s corporation tax to 25 percent that was due next year, instead keeping the tax at 19 percent.

    Brits will pay less stamp duty on house purchases, with the tax-free threshold increased from £125,000 to £250,000, and no stamp duty being owed by first time buyers on the first £425,000 of a property’s purchase price.

    From April 2023, the basic rate of Income Tax will be cut from 20p to 19p, which the Treasury says will “help working families keep more of their hard-earned cash,” and planned increases to National Insurance Contributions have been scrapped.

    The government revealed its aim was to achieve a trend growth rate of 2.5 percent for the UK economy through tax cuts valued at £45 billion a year by 2026/27.

    So how are Britain’s biggest tax cuts in decades being funded? By more government borrowing. According to the Treasury document published alongside the Chancellor’s statement, the U.K. government will borrow an additional £72.4 billion this year.

    Kwarteng told the Commons the country’s leaders “need to embed tax simplification into the heart of government,” calling tax “central to solving the riddle of growth.”

    In addition to the above, planned increases in the duty for beer, wine, and spirits have been canceled, while overseas visitors will enjoy VAT-free shopping.

    [pp id=48038]

    IR35 tax rules pertaining to self-employed contractors will also be scrapped, enabling contractors to legitimately work for one company without the need to be classed as an employee and taxed as such.

    Conservative backbench MPs welcomed the statement, with one reportedly texting the Telegraph’s associate political editor Christopher Hope saying: “Rejoice, we are Conservative again.”

    The chief political commentator at the Sunday Times, Tim Shipman, called Kwarteng’s statement “the most remarkable ‘budget’ since about 1987,” when Margaret Thatcher was Britain’s prime minister.

    Political commentator Isabel Oakeshott insisted the mini budget “is not radical, it’s Tory. It’s what the Conservatives should have been doing for the last 12 years.”

    “A brilliant statement from Chancellor Kwasi Kwarteng, fulfilling the robust and right vision of Prime Minister Liz Truss and beginning a new era for our country. At last we have a new Conservative way forward,” tweeted Conservative backbencher and free-marketeer Steve Baker.

  • Spanish socialists to slap temporary two-year tax on country’s wealthiest

    Spanish socialists to slap temporary two-year tax on country’s wealthiest

    Spain’s socialist government plans to impose a temporary two-year tax on the richest 1 percent of the country’s population in an attempt to alleviate the current crisis, Budget Minister Maria Jesus Montero said on Thursday.

    Speaking to La Sexta television channel, Montero revealed she was in negotiation with left-wing Podemos, her party’s junior coalition partner, over how best to implement the scheme.

    Despite providing no insight into how the proposal would be enforced, Montero confirmed it would be a tax on “millionaires, those who are in the top 1 percent income bracket.”

    Such individuals are frequently regarded as wealth and job creators themselves, and as such, in the eyes of free marketeers are important to retain to further encourage trickle-down economics.

    “We are going to use a similar scheme to that for energy companies and banking,” Montero told the channel explaining that “for the next two years … the big fortunes of this country will be asked to make a temporary contribution.”

    The government minister said she expected the tax to be enforced next year.

    As well as an additional tax on the country’s wealthiest, Spain’s ruling coalition has also announced plans to impose a windfall tax on energy companies and banks in an attempt to raise €7 billion to redistribute and alleviate those struggling from the cost-of-living crisis currently enveloping Europe.

    “There is no social justice without fiscal justice,” a spokesperson for the Socialist Party in Congress, Patxi Lopez, said back in July, calling the windfall tax on companies the duty of a “progressive government.”

    The move is in stark contrast to methods adopted by other European governments to solve the same problem, including the new U.K. Prime Minister Liz Truss who last week resisted calls by Britain’s opposition to impose a windfall tax on energy companies, and whose Chancellor Kwasi Kwarteng is expected to push on with reversing planned increases to corporate tax and national insurance contributions in a mini-budget to be announced on Friday.

  • ‘An unbelievable price shock’ – Germany’s producer prices jump 45.8%, the highest increase since 1949

    ‘An unbelievable price shock’ – Germany’s producer prices jump 45.8%, the highest increase since 1949

    Producer prices rose 45.8 percent in August compared to the same month last year, with the jump showing the sharpest increase since records started being kept in 1949.

    The incredible level of prices that companies are now paying for materials, energy, and logistics is leaving many of them with a bitter choice: Either pass prices on to consumers who can ill afford it or risk ruining their own profit margins and potentially face bankruptcy.

    The number of 45.8 percent contains within it the risk of a social and economic explosion in the coming months. While producers may be paying 45.8 percent more, consumers have not yet seen that kind of increase in inflation — yet. Producer prices are generally believed to rise first before those higher costs develop into general inflation.

    [pp id=48504]

    The costs for producers are not only rising year over year, but also month to month, with prices jumping 7.9 percent in August compared to July. This figure was also the highest value ever measured in this category, according to data from the Federal Statistical Office (Destatis).

    The biggest factor in the jump in costs comes from the energy sector, with the price of oil, gas, electricity, and other types of energy rising 139 percent. However, this sector touches nearly every other sector, including agriculture, manufacturing, and chemical production. Compared to 2021, electricity prices alone have risen 174.9 percent.

    Some companies have reacted to this jump in energy prices by simply shutting down production, such as the world’s largest steel company, ArcelorMittal.

    “Production in Germany is currently no longer competitive,” said Reiner Blaschek, the CEO of ArcelorMittal Germany, which recently shut down two plants in the country. He is calling for quick political intervention, saying, “We need competitive energy prices for industry.”

    It is not just one company ringing the alarm bell either, but also business associations representing hundreds of companies.

    “More and more companies are telling us that they no longer have a supply contract for electricity or gas at all. The tap is turned off in the truest sense of the word,” said Peter Adrian, the president of the Association of German Chambers of Industry and Commerce (DIHK), while speaking with the RND newsroom. “But without energy, no economy can run.”

    Besides energy, industrial prices are still far higher than a year ago, with the producer price index rising 14 percent year-over-year. There may be some areas where prices are sinking, but economists remain surprised by how persistent inflation remains.

    [pp id=48209]

    “An unbelievable price shock,” commented LBBW economist Jens-Oliver Niklasch on the development to German news outlet T-Online. “None of this bodes well for inflation, it’s here to stay.”

    According to Destatis, consumer prices have risen 7.9 percent compared to the previous year, but consumers are likely to be hit with further price increases in coming months. In addition, the country’s popular 9-euro ticket and automobile fuel discounts have both already expired, which according to Deutsche Bundesbank, Germany’s central bank, will further drive inflation to “advance into the double-digit range in the next few months.”

    Companies are also living under fear of having to hike the prices of their products, as they believe such price increases will lead to a reduction in demand. In other cases, companies are locked into long-term contracts that prevent them from rising prices. Nevertheless, over the long term, companies will either have to increase prices or face severe financial consequences.

    According to the Ifo Insittute, 47.5 percent of all companies have already announced price increases in August, and nearly half say they intend to raise prices further.

    “Unfortunately, there is no end in sight to the wave of inflation,” said Ifo economic chief Timo Wollmershäuser.

  • Germany’s conservative AfD party receives electoral boost with anti-sanctions policy

    Germany’s conservative AfD party receives electoral boost with anti-sanctions policy

    Germany’s right-wing Alternative for Germany (AfD) party has been given a substantial boost by its anti-sanctions policy while also condemning Russia’s invasion of Ukraine, daily Magyar Nemzet writes.

    AfD, which won 10 percent of the vote in last September’s German elections, now stands at 14 percent in recent polls.

    “Even if the gas tanks are full, we will only have enough gas for three months. What comes next? Instead of ideology, a real policy based on facts should be pursued,” AfD MP Steffen Kotré told the Russian news agency TASS, referring to the fact that Germany, like other EU countries, may face an energy shortage in the winter due to the sanctions.

    Russian gas deliveries to Germany are still significantly lower than the usual level in recent years. Transport on the Nord Stream 1 pipeline connecting Russia with Germany has completely stopped, and the start-up of the recently completed Nord Stream 2 pipeline was suspended by the German government a few days before the Russian troops entered Ukraine. The AfD demands that the German government start the pipeline.

    “If it turns out that the burdens of people with little money and lower middle-class families cannot be reduced, then the AfD can become the mouthpiece of the protesters again after a long time,” political scientist Julia Reuschenbach told the Reuters news agency.

    According to a survey published in August by pollster INSA, 65 percent of Germans fear that there could be mass demonstrations and riots in the fall and winter due to the energy crisis. INSA also found that while previously 75 percent of Germans said they would not vote for the AfD under any circumstances, this percentage has now dropped to 61 percent.

    At the other end of the political spectrum, the radical left-wing parliamentary party Die Linke is faring less well — according to surveys, it would barely pass the 5 percent parliamentary threshold — and the party is threatened by a split due to internal disagreements about the war. Former faction leader Sahra Wagenknecht harshly criticized the sanctions, or, in her words, “the economic war started by Germany.” In addition, Wagenknecht called the German government the stupidest in Europe.

    “Of course, the war against Ukraine is a crime. But how silly is the idea that we can punish Putin by pushing millions of German families into poverty and destroying our economy while Gazprom makes record profits?” she asked. Since the current leadership of Die Linke does not share Wagenknecht’s views, the party’s separatists could form a new party under the leadership of the former faction leader in time for the 2024 European Parliament elections.

  • The future of the world economy depends on humans learning from their past mistakes, says Hungarian central bank head

    The future of the world economy depends on humans learning from their past mistakes, says Hungarian central bank head

    In the current global environment, dialogue is the only path to renewal and development, and broad cooperation is the “secret recipe” for sustainable economic growth, said György Matolcsy, the governor of the Hungarian Central Bank (MNB), on Monday.

    In a speech at the opening of the Eurasia Forum 2022 conference in Budapest, Matolcsy pointed out that for the sake of sustainability, the green transition and the digital transition must be accelerated, and the focus must be placed on the fusion of knowledge, talent, and technology.

    According to the governor of the central bank, the future of the world economy depends on whether humanity can learn from the mistakes of the past, and whether it can utilize science to achieve its aims.

    “Physics and biology provide valuable lessons about complex systems, and economists must also acquire this knowledge,” Matlocsy said, warning that “there is a lot to lose if the profession is not open to this.”

    Matolcsy also spoke about the fact that since 2020 the world has faced significant difficulties; after the seven-year period of recovery, a cycle reminiscent of the 1970s and 1940s has begun. The peculiarity of the cycle is not only higher inflation and slower growth, but also wars and disasters.

    “In-depth knowledge of the operation of complex systems can help in dealing with the above problems,” he said. At the same time, he said it was good news that there is always the possibility of reforming the system, that extreme situations can be avoided, and that the conditions for sustainable growth can be created.

    At the same conference, Hungary’s minister for culture and innovation, János Csák, said that behind the Hungarian government’s economic and social measures lies a complex way of thinking that takes into account people’s basic needs, such as the need for belonging, care, and security.

    “All this explains why the government does what it does,” Csák said, adding that competition and cooperation between different parts of the world will be decided according to who will succeed in addressing the deepest human needs.

    “The need of belonging somewhere is one of the deepest human needs; it is present, for example, through the feeling of patriotism, even in such individualistic societies as the American one,” Csák said.

    He pointed out that the government’s task is to create the conditions for people to take care of themselves, their loved ones, and their communities. A good society is not one where the government offers ready-made solutions, but one where individuals are able to prosper based on their own resources and luck, he added.

  • Europe will be the biggest loser of the global economic crisis, think tank head warns

    Europe will be the biggest loser of the global economic crisis, think tank head warns

    If it continues on its path of energy sanctions, Europe could come out worse from the global economic crisis, warned Olivér Hortay, head of energy research at the Hungarian think tank Századvég.

    In a video posted on Facebook, Hortay said that today, the majority of countries have to deal with two challenges at the same time. On the one hand, economies have become overheated due to the recovery from the pandemic, and on the other hand, there is a global shortage of energy and raw materials. Among others, the price of raw materials essential for the operation of economies has sky-rocketed. The textbook answer to what should be done in such cases is the following: The economy must be cooled, thus reducing the artificially inflated demand. Meanwhile, it must also be possible to increase the amount of available energy and raw materials, improving the supply.

    It is important that the two endeavors are carried out in a coordinated way because reducing demand too rapidly, in addition to an insufficient expansion of the supply of raw materials, could have catastrophic consequences. In such cases, income decreases in such a way that the prices remain high, i.e., the economic policy artificially pushes companies and families into a vulnerable situation. This is the reason why today the majority of rational countries place more emphasis on managing the energy crisis than on cooling the economy, Hortay pointed out.

    For example, India has openly indicated that it will not join the sanctions against Russia because it considers the reduction of inflation as its main priority, for which it needs cheap energy. China is doing the same, but quietly. And the United States, at the cost of significant political losses, essentially abandoned all climate protection efforts in order to increase its production capacity as quickly as possible. However, Europe is doing just the opposite.

    The community has reduced its own extraction capacities in recent decades, so a significant part of its demand is covered by imports. The rise in the price of energy is a money pump that sucks more and more resources from the European Union to the supplying countries, which is why the devaluation of the euro has reached a dramatic pace, Hortay warned.

    In order to mitigate the trend, the European Central Bank is forced to follow the U.S. central bank’s interest rate hikes, which cools the economy.

    At the same time, however, the Union, instead of making every effort to increase the energy supply, is introducing and floating ever stricter sanctions. This, in turn, is becoming the reason for the shortage itself, which will lead to another price increase, and the process will start all over again in a vicious circle, Hortay said.

  • German beer and soda industries grow desperate as hundreds of companies face bankruptcy wave

    German beer and soda industries grow desperate as hundreds of companies face bankruptcy wave

    As energy and other input costs sharply rise, Germany’s beverage industry is warning of an imminent wave of bankruptcies in the coming months, with hundreds of firms involved in beer and soda production under severe threat.

    “The cost increases for companies have long since reached a level that threatens their existence. This affects crafts and medium-sized businesses as well as the entire industry,” complained five associations in a joint statement.

    The main causes are the high energy and raw material prices as well as logistics problems and CO2 shortages. CO2 is a major component in beer and other carbonated beverages. These rising costs now threaten hundreds of companies, many of which have struggled with the threat of bankruptcy years before the coronavirus crisis and the current inflation shock.

    [pp id=48504]

    “Whether gas, electricity, or fuel, whether agricultural raw materials, packaging, or logistics — excessive cost increases, coupled with increasing disruptions in the supply chain up to delivery failures, are exceeding the resilience threshold for many companies in the beverage industry,” according to the group of industry associations.

    Many manufacturers are still struggling with the difficulties of the coronavirus crisis, which sent shockwaves through the beverage industry. Restaurants, catering halls, bars, clubs, and hotels were shuttered, leading to massive losses for a wide range of sectors, with beverage producers especially hard hit. As a result, companies have already burned through capital reserves, and now the next crisis has already arrived.

    The producers of beer, mineral water, and soda are particularly badly affected, as CO2 is required for their production. According to Die Welt newspaper, fruit juice manufacturers are currently reporting additional production costs of €120 million, while breweries say their costs rose by almost €800 million. These companies and the associations representing them are now demanding intervention from the federal government and electricity and gas price caps, which have been introduced in other countries like Belgium, France, and Spain.

    [pp id=32996]

    “The federal government must not leave the companies alone in this situation,” write the managing directors of the Association of German Mineral Springs (VDM), the German Brewers’ Association (DBB), the Association of Private Breweries Germany, the Association of the German Fruit Juice Industry (VdF), and the Federal Association of German Beverage Wholesalers. “Without rapid government intervention and without effective aid, hundreds of companies and thousands of employees will lose their livelihoods in the German beverage industry alone.”

    The associations write that beverage companies cannot simply raise prices either, pointing to consumers who have little to no financial reserves to afford price increases and the fact that retailers have most of the pricing power.

    Other industries are already seeing bankruptcies, including the first organic food supermarkets. Germans are increasingly turning to bargain-priced foods and other goods after food prices rose 14 percent in July compared to the same month last year, according to German newspaper Taggespiegel. This has left organic food and health stores increasingly losing market share to cheaper retailers. Organic supermarkets saw a 16.5 percent reduction in sales in the first half of the year while health food stores saw sales drop by 39.5 percent, according to the market research company GfK.

  • VW’s Porsche to be floated on stock market

    VW’s Porsche to be floated on stock market

    Sixty years after the launch of the iconic Porsche 911 sports car, Porsche will IPO on the stock market with 911 million Porsche AG shares, the Hungarian daily Magyar Hírlap reported.

    The 911 million shares are divided into 455.5 million preferred shares and 455.5 million ordinary shares, according to the website of the share issuer. Only preferred shares will be listed on the stock exchange.

    Details of the underwriting range, the valuation, and the accepted major investors are likely to be announced after the Volkswagen board meeting at the end of the week, Reuters news agency reported.

    But Porsche SE, Volkswagen’s largest shareholder, has already committed to buying 25 percent of the common stock plus one share at a 7.5 percent premium over the preferred stock.

    Presentations to potential investors will end on Friday, according to multiple sources, so senior executives can hold discussions at the end of the week before launching the underwriting process early next week.

    According to sources, the stock exchange prospectus, the official announcement of the issue, will be published on Monday, after which institutional and private investors can start subscribing to Porsche shares. Volkswagen and Porsche declined to comment on the news agency report.

    Porsche’s market capitalization is likely to be between €70 billion and €80 billion based on the issue price, according to one of the sources. In its latest weekly analysis, HSBC financial institution estimated Porsche’s market capitalization to be much lower, at €44.5-€56.9 billion.

    The Volkswagen group’s brands include Audi, Bentley, Cupra, Lamborghini, Porsche, SEAT, Škoda, and Volkswagen cars, both light and heavy commercial vehicles, and Ducati motorcycles.

  • Fuel retailers demand end to Hungary’s price cap, but massive inflation threat looms

    Fuel retailers demand end to Hungary’s price cap, but massive inflation threat looms

    The Hungarian fuel price cap achieved its goal, but now it is necessary to abolish it completely, the secretary general of the Hungarian Mineral Oil Association has said.

    During an interview, Ottó Grád said that “in the last 10 months, the measure has achieved its goal, so there is no other alternative, it must be completely phased out.”

    According to the general secretary, the losses can no longer be financed and there are supply problems in the domestic and regional markets, so excessive consumption should be reduced as soon as possible. He added that he thought removing the price cap would definitely reduce demand.

    The same opinion was expressed by Gábor Egri, the president of the Association of Independent Gas Stations (FBSZ).

    “The small gas stations are perhaps even more fed up with the official price than the large ones, and proportionally they have suffered the most damage. We don’t even want to think about extending the price cap by months. We trust that it will be phased out,” he said.

    Government spokesman Gergely Gulyás said on Sept. 8 that the cabinet will likely decide this weekend about the future of the fuel price cap, which expires on Oct. 1. Hungary has had a HUF 480 (€1.17) per liter price cap for automotive fuels since last November, which currently only applies to private consumers.

    The Makronóm think tank predicts that the HUF 480 price cap will probably not remain in effect. However, it will not be lifted completely but only partially; for example, the limit will be set at HUF 550 instead of HUF 480.

    In the meantime, Dávid Németh, the leading analyst at K&H Bank, said that removing the price cap would mean a 33 percent increase in the price of gasoline and a 56 percent increase in the price of diesel; he also said market prices would increase inflation in Hungary by 2.5 percent.

    “The circumstances that justified the introduction of the official price (cap) still exist now, and have even gotten worse,” the analyst added.

  • Should Europe turn to fracking its huge shale gas reserves to solve the energy crisis?

    Should Europe turn to fracking its huge shale gas reserves to solve the energy crisis?

    According to estimates, there is more shale gas under Europe than in the United States, yet the continent supposedly needs imports as a result of fracking restrictions due to high population density and popular dissent.

    At a time of soaring energy prices in Europe, the question arises again as to what prevents Europe from using hydraulic fracturing, which significantly expanded American gas production. There is strong public suspicion on the continent of the process that helps extract shale gas, and the conditions are also different from those in the United States.

    Europe shale gas reserves. (Világgazdaság)

    However, with the EU importing 155 billion cubic meters of Russian gas in 2021, finding new sources could be key. The steps taken so far — such as LNG shipments, increasing the use of renewable energy sources, modernizing heating and similar solutions — could only replace 102 billion cubic meters of the missing shipments this year.

    Meanwhile, the new U.K. prime minister, Liz Truss, announced last week that she would end the moratorium on fracking introduced back in 2019. Although Britain is no longer a part of the EU, the decision could reignite debate over shale gas production in countries where government bans previously prevented the technology from being used.

    Among others, Germany, France, the Netherlands, and Bulgaria have decided to ban the fracking process, while only two similar wells are in operation on the British Isles from the time before the moratorium.

    [pp id=48239]

    Although some estimates suggest that the European Union has larger reserves of shale gas than the United States, except for Ukraine, which has long wanted to rid itself of Russian gas, no meaningful exploitation of these reserves is taking place anywhere on the continent.

    However, despite the high reserves, European production is limited by the fact that, compared to what is experienced on the other side of the Atlantic, the population density is much higher and the population’s resistance to the procedure is also greater. The technology is also believed to increase the frequency of earthquakes. In 2013, protesters in a small village near London prevented drilling from continuing, and similar events took place in Poland a year earlier.

  • Indians now own more real estate in London than the English

    Indians now own more real estate in London than the English

    More real estate in London is owned by Indian proprietors than by the native English population, a new study has revealed.

    According to the London-based property developer Barratt London, English property owners are the second-biggest group in their own capital, sandwiched between Pakistani proprietors below and Indian property owners at the top.

    Indian investors, both living in the U.K. and abroad, are reportedly willing to spend between £290,000-450,000 (€335,000-520,000) for one-, two-, or three-bedroom apartments in the U.K. capital.

    [pp id=18617]

    “We are seeing a strong demand from Indian investors looking to purchase properties in London and invest in the stable and long-term property market,” Stuart Leslie, Barratt’s international sales and marketing director told FinancialExpress.com. He added that approximately one-third of Barratt’s overseas sales are to investors intending only to use the property for its rental income.

    Leslie revealed that Indian homebuyers make up 3.5 percent of the overseas market; the Middle East is “another strong player … with investors from Saudi Arabia, Qatar, and Kuwait.”

    “They’re eager to invest in the U.K. residential market because they are getting better returns owing to the exchange rates and market presence presently,” Leslie said. “It is relatively a safer market in comparison to the UAE or India.”

    Furthermore, a globally friendly timezone, universal language, and longstanding democratic and legal principles make London an optimal place to do business as well as relocate, with admissions of Indian students to U.K. schools and universities increasing by 128 percent in just one year.

    Meanwhile, the economic downturn, sky-high property prices, and current mortgage stress tests make owning a property in London for most domestic workers simply unachievable.

    The average London property price now stands at £523,666 (€605,338) as of March 2022, up 4.8 percent year-over-year, and the percentage increase in house prices nationally was 11.5 percent year-over-year in August.

    With salary review websites such as Glass Door reporting that a typical salary in London is £40,979 (€47,364), and lenders remaining reluctant to allow prospective buyers to borrow more than 4 to 5 times their annual salary, the majority of first time buyers are priced out of the market and resort to renting.

  • Six in 10 UK manufacturers at risk of closure, lobby group warns as energy prices soar

    Six in 10 UK manufacturers at risk of closure, lobby group warns as energy prices soar

    As many as six in 10 British manufacturing businesses are at risk of closure, according to a recent survey as soaring energy bills and the wider cost-of-living crisis has owners feeling the squeeze.

    MakeUK, a manufacturing lobby organization in the U.K., announced on Saturday that 42 percent of manufacturers have seen their electricity bills rise by 100 percent in the past 12 months, and 32 percent have also seen their gas bill double.

    The rise in prices has seen 13 percent of manufacturers already reduce their hours of operation, and 12 percent have been forced to make job cuts as a direct result of increased energy bills. The majority of businesses warn that if bills continue to increase this year and rise by over 50 percent as expected, closures and redundancies “will become inevitable.”

    The lobby group issued on Monday a proposed 100-day plan for the incoming prime minister, who is expected to be announced later on Monday. It includes a call for an emergency budget; a demand to commission the Migration Advisory Committee (MAC) to review the Shortage Occupation List (SOL), which outlines key job roles in high demand in the U.K. to allow businesses to recruit from overseas more easily; and an overhaul of the Apprenticeship Levy “to ensure British people are among the most productive and highly skilled workers in the world.”

    Last week, U.S. investment bank Goldman Sachs predicted that inflation could rise to an eye-watering 22 percent in the U.K. next year if the current rise in wholesale energy prices continues as expected.

    [pp id=46771]

    The energy price cap, which limits how much energy companies can charge domestic consumers in the U.K., could rise by more than 80 percent at its next review in January, which the bank warns would “imply headline inflation peaking at 22.4 percent.”

    Inflation in Britain reached double digits for the first time since the 1980s in July, and if Goldman Sachs estimates were to be realized, the cost of living in the U.K. would come close to hitting the country’s post-war record of 24.5 percent inflation set in August 1975.

  • Bank of America slammed for ‘discriminatory’ preferential mortgage scheme exclusively for Blacks and Hispanics

    Bank of America slammed for ‘discriminatory’ preferential mortgage scheme exclusively for Blacks and Hispanics

    An American investment bank has been accused of discrimination after announcing an initiative that will see first-time homebuyers be offered a mortgage without any down payment or closing costs, but only if they’re Black or Hispanic.

    The scheme, expected to be trialed in Charlotte, Dallas, Detroit, Los Angeles, and Miami neighborhoods, is the first of its kind, intended to provide minorities with a chance to step onto the property ladder, but critics have slammed the bank for what some call its racist program.

    Former Trump campaign adviser Steve Cortes tweeted: “Hey Americans who happen to be white: You bailed out Bank of America when they (and every other big bank) nearly collapsed the economy. Now…BofA pays you back with an explicitly race-based lending program that overtly discriminates against white people. Had enough???”

    [pp id=8202]

    “Can someone explain to me how this isn’t racial discrimination?” asked author and Washington Times columnist Tim Young.

    “So if you’re White, Asian, Indian, or Arab, you’re just shit out of luck?” asked former Commissioner of the New York Police Department Bernard Kerik.

    The pilot scheme has been named the Community Affordable Loan Solution by the bank, which says that “homeownership strengthens our communities and can help individuals and families to build wealth over time.”

    The bank claimed the program will “help make the dream of sustained homeownership attainable for more Black and Hispanic families, and it is part of our broader commitment to the communities that we serve.”

    [pp id=8420]

    In a press release announcing the plan, the bank did not address the obvious concerns of positive discrimination, or explain how disadvantaged White or Asian families could benefit from any similar scheme.

    Under the program, prospective Black or Hispanic homebuyers will be able to acquire a mortgage without any down payment, no mortgage insurance, no closing costs, and no minimum credit score.

    Eligibility will be assessed based on other factors such as a history of keeping up with rent payments and utility bills. Applicants are also expected to complete a homebuyer certificate course that will be provided by Bank of America and its partners before being approved for a loan.

  • Inflation could ‘top 10% in Germany,’ warns country’s central bank as economic forecast darkens

    Inflation could ‘top 10% in Germany,’ warns country’s central bank as economic forecast darkens

    Germany’s central bank, the Bundesbank, has corrected its economic forecast, predicting double-digit inflation for the country by the fall in its latest monthly report.

    The country’s central bank chief, Joachim Nagel, told the Rheinische Post that Germany’s inflation rate could surge over 10 percent in the fall, which would mark the highest rate in 70 years.

    The institution highlighted the soon-to-end €9 rail pass and fuel discount as two factors contributing to the higher cost of living, in addition to the introduction of a gas surcharge.

    “The increase in the general statutory minimum wage creates additional cost pressure,” the bank added, referring to the rise in the minimum wage to €12 per hour, which will apply from October.

    A weaker euro will impact the country’s purchasing power for wholesale gas, and even with VAT on gas being reduced from 19 to 7 percent, the gas surcharge to be implemented from October will “gradually be reflected in [energy] prices in the autumn.”

    [pp id=46771]

    “Also due to the increasing labor market shortages, there are signs of higher wage pressure than in the second quarter,” the report added.

    The federal government has been warned by business associations that the gas levy announced by Federal Minister of Economics Robert Habeck (Greens) could represent a major blow to the entire German economy with business leaders warning that companies could relocate or close due to the financial pressures.

    The German government is slapping a 2.88 cents per kilowatt-hour surcharge on households and industry for ongoing gas consumption.

    Europe’s economic powerhouse has been a concern now for some time, with Germany recording its first-ever trade deficit in goods last month, leaving analysts predicting a contraction for Germany’s economy later this year.

    [pp id=46790]

    The Bundesbank is increasingly pessimistic about future economic developments in Germany and expects a recession by the winter.

    “Due to the unfavorable developments on the gas market, the probability that the gross domestic product will decline in the coming winter half-year has increased significantly,” its monthly report stated.

    The Munich-based Institute for Economic Research (IFO), one of Germany’s leading think tanks, predicted back in April that Europe’s largest economy would contract by 6.6 percent this year, marking the country’s worst recession in post-war history.

  • Hungarian economy booms, GDP up by 6.5% in second quarter

    Hungarian economy booms, GDP up by 6.5% in second quarter

    In the second quarter, Hungary’s gross domestic product (GDP) increased by 6.5 percent compared to the previous year, the Central Statistical Office (KSH) reported on Wednesday based on its first estimate.

    Analysts expected a lower annual GDP growth of 6.1 percent and 0.4 percent compared to the previous quarter.

    Hungarian Minister of Finance Mihály Varga took a victory lap on social media, highlighting how Hungary continues to grow despite the war in Ukraine, which has put immense pressure on the economies of Central Europe.

    He noted that the 6.5 percent GDP growth figure in the second quarter comes on the heels of 8.2 percent growth in the first quarter.

    While Hungary faces significant challenges this winter due to Europe’s ongoing energy crisis, the figures are sure to assuage some fears and boost confidence in the economy, according to Hungarian media outlet Magyar Nemzet.

    Varga emphasized that it is good that Fitch Ratings confirmed Hungary’s strong debt rating despite the war crisis and European recession fears.

    The data shows that industry and services contributed the most to the growth. Within industry, the expansion of the food industry and the production of electrical equipment was particularly significant, and among market services, the expansion of accommodation services, catering, and transportation and storage was significant.

     A significant decline in agriculture curbed growth, added KSH.

    The Central Statistical Office will announce the detailed data of second quarter GDP on Sept. 1.

  • Crude oil prices hit six-month low

    Crude oil prices hit six-month low

    Oil prices fell to their lowest level in six months on Thursday after U.S. data showed crude and gasoline inventories rose unexpectedly last week, while OPEC+ said it would raise its output target of oil by 100,000 barrels per day (bpd), Reuters reported.

    Brent crude futures fell $3.76, or 3.7 percent, to $96.78 a barrel, the lowest level since Feb. 21, just before the Russian invasion of Ukraine.

    West Texas Intermediate (WTI) crude futures fell $3.76, or 4 percent, to $90.66, the lowest since Feb. 10. The contract hit a session low of $90.38 a barrel, the lowest since Feb. 25. Both contracts fluctuated during the meeting.

    U.S. gasoline inventories, a gauge of demand, also showed a surprise increase as demand slowed, the Energy Information Administration said.

    The demand outlook remained overshadowed by growing concerns of an economic slowdown in the United States and Europe, the debt crisis in emerging market economies, and a strict zero-Covid-19 policy in China, the world’s biggest oil importer.

    “A dip below $90 is now a very real possibility, which is quite remarkable given how tight the market remains and how little scope there is to mitigate this,” said Craig Erlam, a senior market analyst for Oanda from London.

    But talk of a recession is growing stronger and, if it were to become a reality, would likely address some of the imbalance, the analyst added.

  • Orbán: Europe has ‘shot itself in the lung’ and is now ‘gasping for air’ due to EU sanctions on Russia

    Orbán: Europe has ‘shot itself in the lung’ and is now ‘gasping for air’ due to EU sanctions on Russia

    Europe has entered an “age of wars,” both militarily and economically, Hungarian Prime Minister Viktor Orbán said in his latest warning over EU sanctions against Russia that have crippled the European economy.

    Speaking to Hungarian state radio on Friday morning, the Hungarian prime minister said of the pan-European response to the Russian invasion of Ukraine that “at first I thought we just shot ourselves in the foot, but now it seems that the European economy shot itself in the lung, and that’s why it is now gasping for air.”

    He lamented the historic price hikes across Europe as the cost-of-living crisis grows, and claimed the current war in Europe “is not only taking place on the fronts but also in the world economy, or at least in the European economy, and the increase in energy prices is part of that.

    [pp id=41905]

    “Now, we have to fight for everything we have taken for granted,” Orbán told listeners.

    The Hungarian prime minister, who was handed a fresh mandate by the electorate in April, warned that as a result of EU energy sanctions imposed on Russia, there will soon be countries with a severely restricted supply of energy or worse, no source at all. Meanwhile, there will be other countries where there will be gas, but the price will be sky-high.

    “We belong to the latter category,” Orbán said.

    Hungary recently introduced a 7-point energy emergency plan for the country ahead of what is expected to be a difficult winter for Europe. Under the plan, Hungary is restricting exports of energy and will continue to increase its gas reserves as European neighbors look on with envy.

    Earlier this month, European People’s Party President Manfred Weber called on countries with ample gas reserves to share their gas with other nations or be forced to by the European Union, a suggestion firmly dismissed by Hungary’s Minister for Technology and Industry László Palkovics, who referred to it as a kind of “communist” type of confiscation.

    [pp id=39737]

    Orbán heavily criticized the European Union’s response to the conflict in Ukraine, including the imposition of sanctions, which the Hungarian government objected to.

    “The most important thing would be for them to see in Brussels that a mistake was made: The sanctions policy did not fulfill the hopes attached to it; in fact, it had the opposite effect,” Orbán told listeners.

    Earlier this week, Russia posted its highest current account surplus since 1994 after recording a $70.1 billion surplus in the second quarter of the year.

    “They thought that the sanctions policy would hurt the Russians more than the Europeans, but it hurts us more,” Orbán continued.

    The Hungarian leader warned that according to forecasts, the European economy will enter a recession by the end of the year due to the combined effect of the sanctions policy and the Russo-Ukrainian conflict.

    “There is still a labor shortage in Hungary,” Orbán said, but advised employed Hungarians to value their work and do everything possible to keep their job because in the coming months, he warned, a European economic downturn is inevitable.

  • Germany reports first trade deficit in goods since 1991 as business leaders warn of economic crisis

    Germany reports first trade deficit in goods since 1991 as business leaders warn of economic crisis

    The largest economy in Europe reported its first monthly trade deficit in over 30 years in May as the energy crisis and sanctions imposed on Russia pushed up the cost of imports.

    Data published on Monday by the federal statistical agency Destatis revealed a trade deficit in goods of €1 billion for May; imports rose by 2.7 percent over the previous month to €126.7 billion, while exports dropped by 0.5 percent to €125.8 billion.

    The country’s exports to EU member states dropped by 2.8 percent compared with April 2022, while imports from these countries rose by 2.5 percent.

    [pp id=41284]

    The United States was Germany’s largest customer, importing €13.4 billion worth of goods, a month-over-month increase of 5.7 percent, while China remained the country’s largest import partner as Germany purchased goods to the value of €18 billion in April, down 1.6 percent on the previous month.

    Experts at banking giant ING believe Germany, along with the rest of the eurozone, will enter recession this year, with Carsten Brzeski, head of macro research at the company telling the FT: “In the past. Germany could always rely on strong exports to revive the economy and today’s numbers show the trade balance will not return as a positive element for growth for at least the next couple of years.”

    Experts consider the evaporation of Germany’s trade surplus to be primarily due to the soaring price of imports, with energy in considerably shorter supply than it was prior to the Russian invasion of Ukraine on Feb. 24, and the sanctions imposed on the Kremlin and Russian state-owned suppliers.

    “It’s not that surprising that exports are declining in the current environment,” Oliver Rakau, an economist at Oxford Economics in Frankfurt, told Bloomberg. “You have to focus on the imports, and there especially on price developments.”

    [pp id=41128]

    The head of the Confederation of German Employers’ Associations, Rainer Dulger, warned that “difficult years lie ahead” for the country following a meeting with German Chancellor Olaf Scholz on Monday; he claimed Germany was facings its “toughest economic and social crisis since reunification.”

    “We can no longer take for granted the continuous economic growth that we experienced before the Covid-19 pandemic and the Ukraine war,” he added.

    German politicians are already sensing the impending energy crisis set to hit the country come winter, with European People’s Party President Manfred Weber calling for an EU summit on the “equitable distribution” of natural gas frugally stored away in tanks by countries such as Poland, Hungary, and the Czech Republic.

    “In other words, we need binding mechanisms on how to deal, in solidarity, with the gas that is in storage tanks so that everyone doesn’t just look out for themselves. In autumn, when things get really serious, these mechanisms have to work,” Weber told German newspaper Tagesspiegel in an interview on Sunday.

    A decline in gas flows of approximately 60 percent by Russian state-owned Gazprom via the Nord Stream pipeline last month caused Deutsche Bank analysts to predict a “big negative supply shock” for Europe’s powerhouse economy. They warned, “If the gas shutoff is not resolved in coming weeks, we worry this will lead to a broadening of energy disruptions with material upfront effects on economic growth and, of course, much higher inflation.”

  • German finance minister warns of a ‘severe economic crisis coming’

    German finance minister warns of a ‘severe economic crisis coming’

    German Finance Minister Christian Lindner (FDP) has joined the rising chorus of voices warning of a severe economic crisis on the horizon for Germany, saying this “danger” is “due to the sharp rise in energy prices, supply chain problems, and due to inflation.”

    Lindner made his prediction on Germany’s ZDF’s “Heute Journal” political talk show on Sunday night, saying that already “in a few weeks and months,” according to the politician, Germany “could have a very worrying situation.” He forecast “three to four, maybe five years of scarcity.” 

    He said that the German government must formulate a response to this crisis, saying, “In this situation, we must not be choosy.” He added that it is necessary to talk about all the options, including extended operating times for the three nuclear power plants that are still operational in Germany.

    [pp id=39637]

    Due to a lack of gas deliveries from Russia, Lindner’s party, the Free Democrats (FDP), is demanding that the three German nuclear power plants still in operation should at least be checked again. The SPD and the Greens, on the other hand, want to phase out nuclear energy completely by the end of the year, as previously planned by the grand coalition. 

    The three remaining reactors should finally go offline by the end of December at the latest, as stipulated by the Atomic Energy Act.

    Warnings about looming bankruptcies and a massive increase in gas prices over the coming months are driving the three parties in the left-wing government to search for a solution to avert a crisis by winter. The German government has already backtracked on some of its promises and signaled it will reopen coal-fired energy plants to ensure energy security.

    Underlining the challenge facing the government, Lindner admitted that there was “no agreement” in the traffic light coalition about nuclear power. At the same time, he criticized the plans of Economics Minister Robert Habeck (Greens) to rely on coal-fired power plants: “In any case, I’m not satisfied that we are extending the climate-damaging coal, but not even considering the possibilities of nuclear energy.”

    Lindner denied that Russia’s President Vladimir Putin could put Germany under pressure: “He doesn’t have us in his hands, we are the designers of our destiny.” 

    Lindner claims that Germany can diversify its energy supply, close other supply chains, and act in a manner free from Russian pressure. In addition, he said that domestic gas and oil deposits could help serve as replacements. 

    “There must be no taboos when it comes to controlling price developments for people,” said the finance minister. 

  • US pushes EU to bypass nations blocking ban on Russian oil

    US pushes EU to bypass nations blocking ban on Russian oil

    Those following current European politics will be familiar with a number of recent examples of the currently dominant liberal elite’s approach to changing rules, if those rules happen to be preventing them from getting their own way.

    One of the most recent and still ongoing examples is the attempt to abolish the institution of the veto in almost all policy areas, which would in turn enable the European Parliament’s left-wing majority to essentially reshape the continent’s political landscape in its own progressive image without any opposition. Yet, there are signs that Brussels not only has the full support of the current Biden administration on its way to achieving a left-dominated superstate, but its policies are being directly shaped in line with Washington’s geopolitical interests.

    According to a Reuters report, the White House may have found a way to bypass some member states’ opposition to the Russian oil and gas embargo that Brussels is trying to implement in order to starve Moscow of vital income. On Tuesday, U.S. Treasury Secretary Janet Yellen suggested that the EU should consider combining import tariffs on Russian energy resources with a gradual oil embargo. This would in practice make any veto on the Russian oil sanction meaningless, as it could drive the Russian oil price so high that Moscow would have to increase its prices to a point where it would be economically unfeasible for all sides to purchase their product.

    Either way, ordinary consumers would have to pay for the price increase brought about by the new tariffs, or by rebuilding the entire energy infrastructure in countries highly dependent on Russian energy. Yellen is expected to present her above proposal at the G7 meeting of finance ministers later this week.

    This would especially hit hard in Central and Eastern European countries, whose economies are highly dependent on Russian oil. The EU had offered a transition period for Hungary, Slovakia and Czechia until 2024 to wean themselves off of energy supplies from the east, which the new left-wing, pro-European Czech government of Petr Fiala accepted, and signs are that the government of Slovak Prime Minister Eduard Heger is also going to succumb to these demands. Hungarian Prime Minister Viktor Orbán has, however, signaled that these plans are unrealistic and unacceptable because their implementation would in reality bring the Hungarian economy to its knees.

    Judging by the statements coming from the Czech and Slovak leadership, it is patently obvious that neither of them have any plans to comply with the completely unrealistic plans of the EU to change energy suppliers, rebuild their infrastructure to accept a different type of oil and gas, and crucially, to find financial resource to pay for this transition in record time. Yet, Czech Foreign Minister Jan Lipavský has already gone as far as criticizing Hungary for pointing out the obvious, and calling Budapest’s stance on the Russian oil embargo “unacceptable.” Lipavský is a member of the radical leftist Pirates party and is known for his hostile view regarding the Hungarian conservative government, thus the strong and undiplomatic language from his corner comes as no surprise.

    Yellen discussed her tariffs proposal with European Commission President Ursula von der Leyen on Tuesday, putting a lame spin on the U.S.’s all too obvious interference on European policy-making. “We’re not trying to tell them what’s in their best interest, but you know, we discussed some of the things that are under consideration,” she said. In other words, the White House is in fact dictating European sanctions policy, steamrolling smaller member states’ voices calling for a stop to self-destructive energy embargoes. She also pledged her administration’s help in finding alternative energy resources to replace Russian oil and gas, including supplying liquefied natural gas (LNG) to Europe. This would inevitably increase European countries’ dependence not only on direct U.S. energy supplies, but also on global energy routes largely controlled by the United States.

    The tariffs proposed by Yellen would also go towards financing the colossal post-war reconstruction effort in Ukraine, although the exact mechanism has not yet been revealed as to how they wish to convert European resources to directly aid a non-EU country. Nor has the U.S. Treasury Secretary revealed how she intends to make a decision reached at the G7 meeting mandatory to all EU member states, especially if one such as Hungary disagrees with the plans.

    The entire debate does not bode well for the sovereignty of smaller, economically less powerful European nations, who will willingly, as in the case of Czechia and Slovakia, or unwillingly in the case of Hungary, end up paying the highest price for a war they had no part in, all while strategic decisions are increasingly being made without their input, and often against their will.

  • Hungary, Poland to lead Central European economic growth

    Hungary, Poland to lead Central European economic growth

    Although the war in Ukraine will set back the post-pandemic global recovery, Hungary and Poland will lead economic growth in Central Europe, the International Monetary Fund said in its spring 2022 World Economic Outlook.

    Economic growth in both countries will be lower than projected in the organization’s October forecast.

    The International Monetary Fund estimates that Hungary’s gross domestic product (GDP) will grow by 3.7 percent this year and 3.6 percent next year. In its October report, the IMF expected another 5.1 percent growth by 2022 after last year’s 7.1 percent expansion.

    Inflation could accelerate to 10.3 per cent this year from 5.1 per cent last year, up from 3.6 per cent expected in October; next year, the pace will slow to 6.4 percent as forecast.

    The unemployment rate will rise from 4.1 per cent last year to 4.3 per cent this year, and will fall to 4.2 per cent by 2023.

    According to the IMF’s forecast, Poland will achieve the same economic growth of 3.7 percent this year as Hungary after 5.7 percent last year. In October, the IMF expected GDP growth of 5.1 percent by 2022. Next year, the growth of the Polish economy may slow to 2.9 percent. In Poland, after 5.1 percent last year, inflation could be 8.9 percent this year and 10.3 percent next year. The unemployment rate may fall to 3.2 percent this year and three percent next year, after 3.5 percent last year.

    Regarding Ukraine, the IMF said it currently estimates that GDP could shrink 35 percent this year after last year’s 3.4 percent increase; the IMF did not provide a forecast for any other indicator.

    The IMF forecasts that Russia’s GDP could shrink by 8.5 percent this year after a 4.7 percent increase last year, and drop by a further 2.3 percent in 2023. Inflation could be 21.3 percent this year and 14.3 percent next year, after 6.7 percent last year. Unemployment will rise from 4.8 per cent last year to 9.3 per cent this year, and the rate will fall to 7.8 per cent next year.

  • Nickel prices explode as shortage hits home

    Nickel prices explode as shortage hits home

    Nickel trading has resumed on the London Metal Exchange (LME) a week after a rare market shutdown was ordered following an exponential rise in the metal which saw its price rise 250 percent to more than $100,000 per tonne in just two days.

    The LME had suspended trading on the metal for just the second time in its history after brokers had been unable to seek cover for unprofitable short positions due to an unprecedented rise in prices, which also put pressure on one of the major nickel producers and a major Chinese bank.

    The parabolic price movement, which began shortly after the Biden government considered banning Russian crude oil imports, placed enormous pressure on commodity markets on Monday, particularly in the oil, gas, nickel, aluminum, palladium, and wheat markets. According to Bloomberg, each has reached a multi-year high or a new record.

    [pp id=31240]

    Nickel is used in the manufacture of stainless steel and in batteries for electric vehicles. It has risen in price by more than 25 percent in the past year, reaching its highest level in a decade last month.

    Demand is booming, with a shortage of metal used for electric car batteries, and so far, there are few signs that market prices are falling. Goldman Sachs Group Inc. predicted last month that demand for nickel would exceed supply by 30,000 tonnes this year, up from 13,000 tonnes previously.

    One of the victims is Chinese entrepreneur Xiang Guangda — also known as the “Big Shot” — who has accumulated a huge short position in nickel futures and is now facing a multi-billion dollar market loss.

    Guangda, who controls Tsingshan Holding Group, one of the world’s largest nickel producers, was forced to close the entire position. It is not known how much Guangda lost but it has been reported to have exceeded $2 billion.

    Despite the reopening of the market on Wednesday, albeit with restrictions, traders remain cautious about the volatility of the metal’s position and are biding their time before dipping back into the market.

    “Commodity markets overall have calmed down, oil is back below $100 a barrel and aluminium has come off $800 a tonne in the last few days, so maybe trade will resume in an orderly fashion,” one metals trader told Reuters news agency.

    “But how can we know what will happen tomorrow. A lot of people will be sitting on their hands,” they added.

  • Viktor Orbán walks his own path on the Russian-Ukrainian conflict

    Viktor Orbán walks his own path on the Russian-Ukrainian conflict

    Hungarian Prime Minister Viktor Orbán, who has rejected not only shipping arms to Ukraine but also weapon transfers on Hungarian soil, explained his stance on Ukraine in a wide-ranging interview for the newspaper Mandiner.

    When asked about what lead Vladimir Putin to attack Ukraine, he opined that this is in fact a result of a clash among major geopolitical players. NATO has been steadily expanding eastwards, while Russia saw this as a threat. This prompted them to make two fundamental demands, one of which was for Ukraine to declare its neutrality and the other was that NATO would commit to not admitting Ukraine. The Russians did not receive these security guarantees, so they decided to obtain them by force.

    The Russians, as a result, have irrevocably rearranged the security map of the continent, because their security policy vision is that Russia must be surrounded by a neutral zone. However, the Hungarian prime minister also hastened to add that war cannot be an acceptable means for any geopolitical purposes, and he resolutely condemned the Russians for choosing to attack Ukraine.

    [pp id=30244]

    Orbán thinks that the military phase of the Russian attack will be over once they obtain sufficient dominance on the battlefield, and this will lead those involved to negotiations.

    As for his government, the prime minister reiterated his earlier position according to which Hungary must stay out of war and all must be done to prevent Hungarians from drifting into conflict. He confirmed that his government will not veto any sanctions against Russia, and will not be the one to erode European unity on the matter, but warned that one thing is certain: Russia will continue to exist after the war, and Hungary and the European Union will have their interests even after the conflict ends.

    Orbán also shared his views on Europe’s energy security in the context of Russian sanctions, and of the geopolitical decisions that his government is preparing for in the coming years.

    As to the key issues of energy security, Orbán was of the opinion that gas supplies from Russia must continue, otherwise European economies would suffer gravely. There is of course the crucial issue of the construction of the second reactor of the Hungarian nuclear reactor Paks, currently supplying 40 percent of the country’s electricity. According to media sources, the construction work is already behind schedule, and instead of the planned 2027 completion, the Russian firm Rosatom, which is responsible for the project, is planning to hand it over in 2029.

    [pp id=30005]

    However, if the EU or the U.S. decides to block the construction as a part of the sanctions package against Russian interests, Orbán said he believes his country would be forced to import even more Russian gas and also at a higher price. According to him, if the energy cooperation with Russia would cease to exist, energy bills would triple overnight for Hungarian families.

    During the interview, Orbán also spoke about his widely reported concept of “strategic calm” amidst the conflict in Ukraine. This means, he explained, “to talk little, but when you do, do so accurately and responsibly.”

    Even one misconstrued remark or misplaced sentence can cause serious trouble in a war, and information and speech can amount to half the battle. According to him, the Hungarian left-wing opposition currently wants to send weapons to be used against Russians, or deploy Hungarian soldiers to the battlefield. Hungary’s leader said this proves that they lack both responsibility and knowledge. knowledge. With their irresponsible statements, they are only pouring oil on the fire and operating against Hungary’s interests, remarked the prime minister.

    Instead, he pledged more humanitarian support for refugees and to look after Ukrainians fleeing the war.

    [pp id=30522]

    Orbán also explains why his government had decided to build a positive relationship with the Chinese, saying China will soon be the strongest economic and military power in the world, while the United Staters is in decline.

    Hungary, with a population of 10 million, has to maneuver skillfully during such a historic transitional period by remaining in an alliance with the West, but also by building a relationship with this emerging new superpower. This is a complex task that pushes the boundaries of the art of policymaking. He explained the current Anglo-Saxon dominance of the world means that the ruling powers also demand a recognition of their position as morally correct. It is not enough for them to accept the reality of power, they also have to accept what they think is right.

    The Chinese have no such expectations, says Orbán, and that marks a major difference.

  • Azerbaijan is ready to assist with Europe’s gas shortage, ambassador claims

    Azerbaijan is ready to assist with Europe’s gas shortage, ambassador claims

    Azerbaijan stands ready to supply Europe with emergency gas, the country’s ambassador to the United Kingdom, Elin Suleymanov, told media outlet News.az.

    “If there is an urgent need, as we have seen in Turkey, some volumes would, of course, be made available,” Suleymanov said in an interview in London.

    Azerbaijan can produce more gas and expand the Southern Gas Corridor, a European initiative for a natural gas supply route from Middle Eastern regions into Europe. It can also channel flows from Turkmenistan as the two nations prepare to develop the Dostlug field in the Caspian Sea, the ambassador said.

    “We are not looking at energy security and the potential expansion and growth of volumes through a short-term crisis, you cannot succeed with short-term mandates. It’s a long-term plan, it’s a process, it’s not like someone comes up and says, ‘Give me more gas,’” he added.

    The Southern Gas Corridor, which consists of Shah Deniz 2, the extension of the South Caucasus pipeline, the Trans Anatolian natural gas pipeline (TANAP) and the Trans Adriatic pipeline (TAP) became fully operational on Dec. 31, 2020.

    A total of 8.1 billion cubic meters of gas were transported by TAP in 2021. The pipeline supplied 6.8 billion cubic meters to Italy and 1.2 billion cubic meters to Greece and Bulgaria.

  • UK energy company apologizes for blog post telling Brits to ‘cuddle pets’ and ‘clean the house’ to keep warm amid skyrocketing energy bills

    UK energy company apologizes for blog post telling Brits to ‘cuddle pets’ and ‘clean the house’ to keep warm amid skyrocketing energy bills

    An energy company in Britain has felt compelled to apologize to its customers after publishing a blog post in which it advised Brits to exercise, cuddle pets and to keep the oven door open after cooking to stay warm this winter as the country faces ever-rising energy bills.

    Ovo Energy, Britain’s third-largest energy supplier, said it was “embarrassed” by the blog which was sent to its customers under the guise of helpful “energy-saving tips,” but later accepted its content was “poorly judged and unhelpful.”

    As Brits experience a concerning rise in the cost of living, attributable not least to the skyrocketing price of energy which has seen a number of energy companies fold in the past year, Ovo Energy suggested that rather than turning on the heating, Brits could simply wrap up warm or eat porridge as an alternative.

    Other tips included “challenging the kids to a hula-hoop competition” and “cleaning the house.”

    Petrol station prices are seen on a board in London, Wednesday, Nov. 17, 2021. Consumer prices in the United Kingdom surged at the fastest rate in nearly a decade in October amid soaring energy costs, official figures showed Wednesday, a development that has cemented market expectations that the Bank of England will raise interest rates next month. The Office for National Statistics said inflation accelerated to 4.2% in the 12 months through October, from 3.1% the previous month. (AP Photo/Frank Augstein)

    “Open your curtains when it’s sunny to warm your home naturally” was another suggestion put forward by the energy supplier.

    Chairman of the Business Select Committee Darren Jones, a Labour MP, branded Ovo Energy’s tips “offensive,” adding in a social media post: “I’m not sure who signed off a marketing campaign telling people to wear a jumper and eat porridge instead of turning on the heating if you can’t afford it.”

    The energy company has since apologized for the ill-judged blog post in a statement which read: “We understand how difficult the situation will be for many of our customers this year.

    “We are working hard to find meaningful solutions as we approach this energy crisis, and we recognize that the content of this blog was poorly judged and unhelpful. We are embarrassed and sincerely apologize.”

    The blog post has since been taken down.

    Global gas prices have already seen household bills in the United Kingdom increase drastically in the last 12 months, and with the price cap, which limits the amount energy suppliers can charge, set to rise in April, bills are expected to increase further still.

  • Hungary’s central bank governor warns of parallels between today’s financial climate and that of the 1970s

    Hungary’s central bank governor warns of parallels between today’s financial climate and that of the 1970s

    As more and more people see greater parallels between modern-day global issues and those prevalent in the 1970s, many are asking the question: will the ’70s return in our decade?

    The short answer is no, because history is never truly repeated in its entirety. The long answer is yes, because there are enough similarities between the two decades upon analysis of the global political climate and the economy. The dual law of life and history is repetition and change — both can be valid simultaneously for the 1970s of 50 years ago and now for 2020.

    A new era is beginning

    The early 1970s marked the end of about 25 years of general economic recovery after World War II. In doing so, within the framework of a dual world system, Western economies based on industrial mass production have been able to sustain high growth, low inflation, moderate budget deficits, low public debt, high employment, the construction and maintenance of a welfare state, and promote a foreign policy in favor of global trade over isolationism.

    The 2020s will also see the end of a period of some 25 years, with a brutally complex health, social and economic crisis at the very beginning. This was an era of growth fueled by the introduction of new digital technologies, namely the Internet revolution that took place in 1996.

    The digital revolution has also initiated significant transformations in a number of other technologies (energy sector, automotive, AI, 3D, robotics, financial system). As a result, despite the crises, the world economy has been growing steadily, inflation has remained low, employment has risen, two billion Asian consumers have entered the world market, and budget deficits and public debt have been squeezed. New means of payment (euro, renminbi, cryptocurrencies) and digital techniques (but not yet digital central bank money) replaced the former petrodollar while the dollar continued to function as the global currency.

    A complete turnaround in these areas is also expected in the 2020 decade. Inflation has returned and will remain persistent, leading to rising central bank and bank interest rates; budget deficits and public debt are persistently high; the major central banks continue to play a key role in financing government debt; GDP growth will be modest as energy prices, commodity prices, supplier prices as well as transportation costs rise. The investment climate is deteriorating and financing conditions are becoming uncertain. High employment is at stake and social tensions are perpetuating.

    Not a few years – a whole decade

    In the 1970s, many times it seemed that the ordeal was over, but there was always another shock and it was only by the end of the decade that the picture came together. The initial steps of the scenario launched by the U.S. Great Strategy created a chain reaction in the then Western world economy.

    The release of the dollar from the gold fund (1971) sparked exchange rate and interest rate wars. The first oil price explosion (1973) was followed by the second (1979); the world economy recovered from the 1974-1975 crisis by 1976, but the sharp rise in oil prices following the 1979 Iranian revolution led to another crisis.

    The easing of Soviet-American tensions in the first half of the ’70s was again followed by sharp opposition in the second half of the decade. Inflation was double-digit, sometimes very high indeed, and eventually the “Volcker Shock” reversed the explosion of inflation in America. It is instructive that the Fed first responded to inflation, which rose to 7 percent in 1978, with a base rate of 10 percent, and then, with inflation rising to 9 percent by the end of 1979, the new Fed president (Paul Volcker) raised the base rate to 20 percent, beating inflation.

    The group of OECD countries also split during this decade. Those who had not been able to curb inflation through austerity are still carrying the burden of accumulating public debt due to high budget deficits.

    A decade of geopolitical turn

    We are here in the early 2020s, and the chain reaction in the global economy has already begun in the wake of the first steps taken by the United States. An attempt to separate China from the world economy, dead in the ashes, has begun. Inflation has returned, with the first crisis of the decade — the coronavirus pandemic — leading to falling average GDP growth, soaring energy and transport prices, rising budget deficits and rising public debt.

    Exchange rate and interest rate wars are back. Instead of deficits in the national economy, global deficits are emerging (chips, rare earths). The developed world is again divided into a growing and a stagnant group. Much of the developing world is in trouble, and a significant portion of attempts to catch up are coming to a halt.

    The turning point so far and expected in the 2020 decade stems in large part from the U.S. recognition that while the U.S. has maintained global security, trade, and a dollar-based financial system as the only world power, the eurozone is attempting to build a dollar-competing world currency, moving faster than expected towards a new dual (G2) world order. Just as 50 years ago, this decade will simultaneously challenge the U.S. in Europe and East Asia, with a slightly modified role.

    Conclusion

    Hungary has already recognized the parallels of the 1970s and the challenges of the 2020s. The next step is to find effective solutions. This went well in the crisis management of 2020-2021, so why can that not continue throughout the whole decade? Just as the current successful crisis management is built on a successful decade of 2010-2019, we can build on the crisis management of the last two years throughout the 2020 decade, and we will certainly need to.

  • Kazakhstan crisis crashes cryptocurrencies

    Kazakhstan crisis crashes cryptocurrencies

    Cryptocurrencies suffered a major double blow last week from the Federal Reserve’s increased willingness to raise interest rates and the political crisis in Kazakhstan, which led to a halt in cryptocurrency mining operations there.

    This is a result of a general tendency of investors to give up riskier investments, given that the U.S. Federal Reserve has quickly shown its willingness to increase interest rates and sell debt securities.

    Bitcoin fell sharply during the week after starting the new year at around $47,000. On Wednesday, the price of the world’s largest cryptocurrency crashed following news from the Fed and sent the trading range below $43,000, the lowest level since the end of September 2021. Currently, Bitcoin is trading below $42,000, with no sign of recovery so far.

    At the same time, Ether experienced a similar crash, reaching below $3,000 on the eToro platform on Saturday. The cryptocurrency had started the week at over $3,800, but is now trading below $3,200.

    The crisis in Kazakhstan halts bitcoin mining

    Bitcoin has slowed down after power outages cut Kazakhstan’s crypto mining industry, says Simon Peters, an analyst at eToro’s crypto asset investment platform.

    “The ongoing political crisis, which has led to riots and tensions in the capital, has had an involuntary impact on Bitcoin. With power outages in the country, major crypto mining operations were forced to shut down, leading to a decrease in cryptocurrency hashrate (i.e. cryptocurrency creation rate), overall network computing power and a decrease in the value of BTC tokens,” said Peters.

    Kazakhstan has quietly become a world leader in Bitcoin mining, with its production second only to the United States, following China’s recent crackdown on mining operations.

    “As long as the situation remains unclear in this country, ongoing tensions will continue to have a potential impact on the hashrate and the global price,” says the analyst.

  • Germany isolated with its anti-nuclear climate hysteria

    Germany isolated with its anti-nuclear climate hysteria

    As 2021 drew to a close, there were fireworks across Europe in more ways than one, as a European Commission draft proposal revealing the bloc’s intention to classify some nuclear and natural gas energy as ‘green’ sparked anger in some member states.

    Whilst the majority of nations welcomed the proposals as pragmatic and realistic, understanding the need to embrace such energy resources for the foreseeable future, the left-wing Green ministers within Germany’s newly-appointed government exploded in indignation at the plans.

    German Economy and Climate Minister Robert Habeck addresses the media after the handover of the office at the Economy Ministry in Berlin, Wednesday Dec. 8, 2021. (Odd Andersen/Pool via AP)

    The Commission’s working paper makes it clear that these resources should be viewed only as a means for a smooth transition to future greener energy, stating: “It is necessary to recognize that the fossil gas and nuclear energy sectors can contribute to the decarbonization of the Union’s economy.”

    Under the plans, certain natural gas and nuclear power stations that meet the highest efficiency and environmental standards could receive a green label by the EU, and should the majority of EU member states agree to the plans, the proposal could be ratified into EU law by 2023.

    FILE – The nuclear power station is seen in Gundremmingen,southern Germany, May 23, 2006. Germany on Friday, Dec. 31, 2021 is shutting down half of the six nuclear plants it still has in operation, a year before the country draws the final curtain on its decades-long use of atomic power. (AP Photo/Christof Stache, file)

    Rather unsurprisingly, Germany’s Greens are less than enthusiastic about the proposal, regarding it a betrayal of the EU’s green transition. The country’s Environment Minister Steffi Lemke declared it “absolutely wrong that the European Commission intends to include nuclear power in the EU taxonomy for sustainable economic activities,” and also expressed concerns over nuclear waste and possible nuclear disasters. Economy and Climate Protection Minister Robert Habeck added that the Commission’s plans would “water down the good label for sustainability” and called them “green-washing.”

    Just a month ago, similar statements from the now-retired Merkel government would have meant an almost certain death sentence for such plans, but the new government does not possess anything like the leverage and authority across Europe as its predecessor. To make matters worse for the Scholz government, the proposal had to a large extent originated from Germany’s arch rival, France, who relies on nuclear energy for 70 percent of its electricity, and is unlikely to pay much attention to the concerns of Germany’s radical left-wing politicians — not to mention the fact that three out of Germany’s nuclear power stations were decommissioned at the end of the year, making an energy U-turn for the nation highly problematic.

    Germany is also holding the Nord Stream 2 gas pipeline hostage to the praise of Polish politicians who view Russian fossil fuels as an instrument of hybrid warfare and political interference from Moscow. However, the blocking of the Russian gas pipeline comes amid exasperation from consumers who continue to see their energy bills skyrocket due to a shortage of heating fuels, and from governments who have supported the new routes for the Russian gas pipeline bypassing the politically-volatile Ukraine.

    FILE – German Chancellor Olaf Scholz delivers a speech during a meeting of the German federal parliament, Bundestag, at the Reichstag building in Berlin, Germany, on Dec. 15, 2021. Russia’s natural gas pipeline to Europe is built and ready to flow. But not so fast. The Nord Stream 2 pipeline faces a rocky road ahead. There’s also the statement by the U.S. secretary of state that gas won’t flow if Russia launches military aggression against Ukraine. (AP Photo/Michael Sohn, File)

    It is not surprising then that Balázs Orbán, the Hungarian state secretary for strategy, had welcomed the Commission’s proposal to “green list” some nuclear and natural gas generated energy. Commenting on the plans in a social media post, Orbán highlighted the fact that the Commission’s proposed green labeling scheme would open the door to new investment in the energy sector.

    Furthermore, Orbán pointed out that nuclear power plants should be considered sustainable if they can ensure that they do not cause significant damage to the environment, which includes the safe disposal of nuclear waste — this move follows a joint resolution of 10 member states in October, which emphasized the importance and legitimacy of nuclear energy.

    The main proponent of nuclear power is France, which currently holds the presidency of the European Council. “The V4 member states, including Hungary, whose four reactors produce 48 percent of the country’s electricity, have also played a significant role in recognizing that the nuclear sector can also contribute to the clean energy needed to decarbonize the EU economy,” Balázs Orbán explained.

    The Hungarian state secretary concluded by claiming the proposal would become a positive development in several respects, as embracing nuclear energy will not only make it possible to achieve climate neutrality, but will also play an important role in reducing high energy prices and in mitigating the EU’s energy dependence.

  • Global arms sales shrug off COVID-19 pandemic

    Global arms sales shrug off COVID-19 pandemic

    The top 100 companies in the arms industry sold weapons and military services for a total of $531 billion in 2020, an increase of 1.3 percent in real terms on the previous year, according to new data released earlier this month by the Stockholm International Peace Research Institute (SIPRI).

    Arms sales last year in particular were up 17 percent from 2015 and recorded an increase for the sixth consecutive year.

    U.S. companies continued to dominate the rankings, representing 41 of the 100 top firms for a combined total of $285 billion in arms sales — an increase of 1.9 percent compared to 2019. The turnover of U.S. companies reached 54 percent of the total turnover of the top 100, with the top five rankings continuing to be occupied by American firms since 2018.

    “The industry giants were largely shielded by sustained government demand for military goods and services,” said Alexandra Marksteiner, a researcher with the SIPRI Military Expenditure and Arms Production Programme.

    “In much of the world, military spending grew and some governments even accelerated payments to the arms industry in order to mitigate the impact of the Covid-19 crisis,” he added.

    China solid second

    Chinese-based firms also saw a combined increase in arms sales, with the top five Chinese companies in 2020 totaling $66.8 billion in sales, up 1.5 percent on 2019.

    Chinese companies accounted for 13 percent of the top 100 arms sales last year, sandwiching the Asian superpower between the United States in first and the United Kingdom in third.

    In recent years, Chinese arms companies have benefited from the country’s military modernization programs and focused on military-civilian fusion. They are among the most advanced military technology manufacturers in the world, according to SIPRI. The Chinese state-owned defense corporation Norinco, for example, has jointly developed the BeiDou military-civilian navigation satellite system and deepened its involvement in emerging technologies.

    Europe slips on poor French performance

    Together, the 26 European arms companies in the Top 100 accounted for 21 percent of total arms sales, or $109 billion. The seven UK companies had arms sales of $37.5 billion in 2020, up 6.2 percent from 2019. BAE Systems — the only European company in the top 10 — saw its arms sales rise 6.6 percent to $24 billion.

    The combined arms sales of the top six French companies fell 7.7 percent, a significant drop largely due to a sharp year-over-year decline in sales of Dassault-supplied Rafale fighter jets. However, Safran’s arms sales rose due to increased sales of targeting and navigation systems.

    Four German companies are in the Top 100 and their arms sales reached $8.9 billion in 2020, an increase of 1.3 percent compared to 2019. German companies accounted for 1.7 percent of total arms sales on the Top 100 list. Rheinmetall, Germany’s largest arms manufacturer, managed to increase its arms sales by 5.2 percent. In contrast, shipbuilder ThyssenKrupp reported a decline of 3.7 percent.

  • European debt numbers improve, but Greek public debt exceeds 200%, Italy second with 156.3%

    European debt numbers improve, but Greek public debt exceeds 200%, Italy second with 156.3%

    The general government deficit and government debt-to-GDP ratios declined in the second quarter compared with the first quarter in both the European Union and the euro area, according to seasonally adjusted data released on Friday by Eurostat, the union’s statistical office

    The general government deficit in the 19-nation euro area fell to 6.9 percent in the second quarter from 7.1 percent in the first quarter. In the EU-27, the same figure fell from a 6.6 per cent deficit to 6.3 percent. The data are inaccurate in that seasonally adjusted data for Greece, Croatia, Italy and Cyprus are not usually included in the Eurostat statement. The unadjusted figure is known for all 27 member states, suggesting that the general government deficit to GDP fell to 6.4 percent in the euro area from 8.8 per cent in the first quarter, while in the EU it fell from 8 percent to 5.6 percent.

    Spain had the largest general government deficit as a share of GDP, at 10.9 percent in the second quarter, jumping well from the 5.9 percent deficit in the first quarter. The second-largest general government deficit as a share of GDP was measured in Cyprus, up 10.5 percent from 2.3 percent in the first quarter. The smallest deficit was in Bulgaria, 0.6 percent. However, there were four countries with a general government surplus in the second quarter, the largest at 2.3 percent in Luxembourg.

    According to Eurostat, without a seasonal adjustment, the general government deficit in Hungary decreased to 2.5 percent in the second quarter from 6.8 percent in the first quarter, and seasonally adjusted the deficit decreased from 12.3 percent in the first quarter to 8.5 percent.

    In the euro area, government debt as a share of GDP fell to 98.3 percent from 100 percent in the first quarter, and in the EU it fell from 92.4 percent to 90.9 percent. In the second quarter, the highest government debt-to-GDP ratio was measured in Greece, at 207.2 percent, followed by Italy (156.3 percent), Portugal (135.4 percent), Spain (122.8 percent), France (114.6 percent), Belgium (113.7 percent) and Cyprus followed with 112 percent. The lowest government debt-to-GDP ratio was in Estonia with 19.6 per cent, followed by Bulgaria with 24.7 percent and Luxembourg with 26.2 percent.

    According to Eurostat, Hungary’s public debt was more than 39,416 billion Hungarian forints, which was 77.4 percent of GDP, less than the 80.8 percent registered in the first quarter. Government debt as a share of GDP was 70.2 percent in the second quarter of last year.

  • IMF increases Hungarian GDP forecast

    IMF increases Hungarian GDP forecast

    The International Monetary Fund (IMF) significantly increased Hungary’s economic growth forecast for this year and next, daily Magyar Nemzet writes.

    The current forecast predicts a growth of 7.6 percent this year and 5.1 percent next year.

    While the IMF did not cover Hungary in its previous report in July, its April 1 report forecast GDP growth of 4.3 percent for this year and 5.9 percent for 2022. In October last year, the IMF signaled a 3.9 percent GDP growth for Hungary by 2021. Last year, the performance of the Hungarian economy fell by 5 percent.

    The current IMF forecast indicates 4.5 percent inflation in Hungary this year, after 3.3 percent last year and 3.6 percent in 2022. In the April forecast, the IMF indicated more moderate inflation, 3.6 percent by 2021 and 3.5 percent by 2022. This year’s inflation forecast in April was 0.2 percentage points higher than the October estimate of 3.4 percent.

    The unemployment rate will be the same as last year’s 4.1 percent this year as well, and then drop to 3.8 percent in 2022.

    In April, the IMF saw a Hungarian unemployment rate of 3.8 percent for this year and 3.5 percent in 2022. In October last year, the IMF still projected an unemployment rate of 4.7 percent by 2021.

    Global outlook

    The IMF marks a 5.9 percent increase in global gross domestic product (GDP) by 2021 in the World Economic Outlook (WEO) world economic forecast, followed by a 4.9 percent increase next year. In its revised version of the spring forecast in July, the IMF forecast GDP growth of 0.1 percentage points higher this year, and 4.9 percent growth next year.

    According to the IMF’s latest global economic growth forecast, while the global economy will continue to recover from last year’s downturn, growth will be somewhat lower due to another wave of the pandemic.

    Nearly 5 million people have already died in the coronavirus epidemic, and the proliferation of the aggressive delta variant poses a serious health risk that will prevent life from fully returning to normal, they wrote.

    In its spring WEO forecast released in April, the IMF projected 6 percent GDP growth for this year and 4.4 percent growth for 2022.

    The IMF pointed out that the smaller-than-expected expansion of global economic growth was due to slower growth in some countries, particularly the outlook for weaker performing developing countries due to the deteriorating epidemic situation.

    At the same time, the disruption and delays in supplies experienced by developed countries have also played a role in curbing global GDP growth.

  • Hungary has cheapest business costs in the world, according to global business index

    Hungary has cheapest business costs in the world, according to global business index

    The 2021 Business Cost Index has published its annual data, a report that is used by companies and investors as a reference point in starting a business abroad. As well as listing US business cost data broken down by states, the report also has a global index that ranks 31 countries, mostly those located in Europe, in terms of business, energy, or taxation expenses, plus wages and other criteria.

    For those familiar with global taxation rates, it will come as no surprise that Hungary should be so high up on the list of those countries where starting an international business comes at a low cost. However, after the post-COVID global economic reshuffle, Hungary has actually managed to come up on top of the list of cheapest countries to invest in. The index takes into account average annual wages, average electricity price (cents per kWh), average internet price per Mbit, and top corporate income tax rate, all of which are then summed up in a 1 to 10 business cost affordability score. Hungary managed to score 8.31 points, followed by Lithuania (7.89), Czech Republic (7.39), Estonia (7.13), and Poland (7.03).

    The bottom of the list is occupied by none other than the big European and global economic powerhouses, with Germany scoring the least amount of points (2.98), followed by Australia (3.49), Denmark (3.63), the United States (3.66), and Switzerland (3.81). As far as international investors and manufacturers are concerned, all these countries are weighed down by high corporate taxation and high wages. Almost all of those at the bottom of the list are, in their turn, high up in the Global Competitiveness Index that assesses the ability of countries to provide high levels of prosperity to their citizens. This depends on how productively a country uses available resources. In this regard, Hungary is in the top one-third.

    Hungary coming out on top of the global list of countries that are cheapest for investment is influenced mostly by two data: low wages and exceptionally low corporate taxation (9%). Some might argue that low wages are nothing to brag about, or that employees could be paying the price for the country’s attractiveness for investors. However, if living costs are taken into account, Hungary has the third-lowest in the EU, right after Romania and Poland. A Hungarian employee earns around USD$25,400 per annum, which is well over the $23,600 mark for Slovakia that only manages 7th place in the index of cheapest countries to invest in.

    Energy prices in Hungary are fairly average, yet the price of fast internet connection, which is an increasingly important factor for businesses, is one of the cheapest in the EU. However, the pièce de résistance, with which the Hungarian government of Viktor Orbán has managed to attract record levels of foreign investment, is without doubt the 9% corporate tax that is one of the lowest among developed countries. After the global economic slump caused by the Coronavirus pandemic, Hungary is expected to grow a record 7.5% in 2021, largely due to the fact that its government was able to maintain high levels of foreign investment in the country, even during the difficult past year and a half.

    In the coming years, the biggest challenge for the Hungarian economy in terms of maintaining its attractiveness for foreign investors will be the introduction of the global minimum tax rate proposed by the Joe Biden administration. This was nominally introduced in order to reign in tax-dodging US technology giants, but critics have pointed out that it will also hit smaller economies like Hungary, whose low tax rates have helped maintain competitiveness. In fact, the Hungarian government has resisted the introduction of the 15% corporate tax alongside Ireland and Estonia, yet with Ireland recently announcing their compliance with the proposals, Hungary, fearing US measures, had to follow suit.

    Hungarian finance minister Mihály Varga has announced that the minimum corporate tax rate will not be raised from 9%. Instead, Hungary will introduce measures tailored to individual cases that will balance out the difference between the Hungarian 9%, and global 15% minimum corporate tax rates. There will also be a ten-year transitional period before introducing the new measures, which in practice means that the Hungarian government is playing a waiting game while it looks into measures to balance out negative effects of the global tax rate by other economic means and incentives, such as government subsidies for foreign investors.

  • Global food prices reach ten-year high

    Global food prices reach ten-year high

    This year’s record food crop will still fall short of global demand, and as a result, grains and vegetable oil prices have reached the highest levels in ten years, the United Nations’ Food and Agriculture Organization (FAO) said in a recent report.

    The FAO food price index follows the international prices of most globally traded foods, averaging 130.0 points last month, the highest value since September 2011, according to the agency. This value was 128.5 for the August revision.

    Year-over-year prices rose by 32.8 percent in September. Agricultural commodity prices have risen sharply over the past year, fueled by declining yields and Chinese demand. The FAO grain price index rose two percent in September from the previous month. This was due to an increase in wheat prices of almost four percent, in the face of strong demand and declining export availability.

    “Among the main cereals, wheat will be the focus in the coming weeks, as demand has to be weighed against rapidly rising prices,” said Abdolreza Abbassian, chief economist at FAO.

    According to the FAO, world vegetable oil prices have risen 1.7 percent in the past month alone and have risen about 60 percent year-on-year, as palm oil prices have risen dramatically due to strong import demand as well as labor shortages in Malaysia.

    Palm oil futures prices continued to rise in early October, reaching a record as the upturn in crude oil markets provided additional support for vegetable oils used in biodiesel.

    According to the FAO, global sugar prices rose by 0.5 percent in September due to unfavorable crop conditions, raising concerns about the situation in Brazil, the largest exporter. In terms of grain production, the FAO forecast a record world harvest of 2.8 trillion tonnes in 2021, a slight increase from its previous forecast of 2.788 trillion tonnes a month ago. Global cereal stocks are expected to decline in 2021/22, the FAO added.

  • PM Orbán: Central Europe recovering rapidly from COVID-triggered economic crisis

    PM Orbán: Central Europe recovering rapidly from COVID-triggered economic crisis

    The Central European economic area — including Slovenia and Hungary — is emerging faster from the crisis caused by the COVID-19 pandemic because they have persevered, capacities have not been dismantled, and people have kept their jobs, said Prime Minister Viktor Orbán in Celje, Slovenia, on Wednesday.

    In his opening speech of the 53rd MOS International Fair of Crafts and Entrepreneurs, the Hungarian prime minister emphasized that all Central Europe’s strategies to preserve the economy were done at the best possible time, on the eve of a new era in which both countries, Slovenia and Hungary, could win. Hungary is ready to continue fruitful economic cooperation with Slovenia, noting that Hungary will exhibit on 525 square meters at the fair, and that there are 26 Hungarian companies present.

    The prime minister emphasized that Hungarians and Slovenes had established the most effective cooperation in their history.

    “Slovenia has always been seen as a Central European country like ours, and if we work together, if we join forces, both countries will be among the winners of the new world economic era, along with all of Central Europe,” Orbán said.

    He noted that Hungary is at the beginning of a new global economic era — the pandemic has turned lives upside down, causing not only a health but also a serious economic crisis. Last year was a dark year for the world economy, with 114 million people losing their jobs globally, investment falling by 42 percent, and the volume of world trade falling by more than 5 percent.

    Orbán went on to point out that hundreds of factories have been closed, large and robust international companies have been forced to cut capacity, and many international companies have dramatically curtailed their activities, meaning that power relations have fundamentally changed in all segments of the world economy.

    He said he believed that the new world economic era that began this year would start with extremely fierce competition for the redistribution of production capacity worldwide. Factories are not simply restarted where they were closed, and capacities are not automatically rebuilt where they were before, he pointed out.

    The prime minister emphasized that investors were looking for new locations with greater success and that Hungary is primed to enter this competition. Countries and regions that have survived the crisis, that have had a strategy, and that did not dismantle existing capacities will have a head start. He added that the Central European Economic Area — including Slovenia and Hungary — is just such a place.

    Title image: Hungarian Prime Minister Viktor Orbán (L) and his Slovenian counterpart Janez Janša (R) at a trade expo in Celje, Slovenia. (Prime Minister’s Press Office/Vivien Cher Benko)

  • Hungarian central bank head’s golden rule: The solution always comes from within

    Hungarian central bank head’s golden rule: The solution always comes from within

    President of the Hungarian National Bank (HNB) György Matolcsy has released his new vision for the course he believes Hungarian society should follow in the coming decades, entitled “Lessons from the post-Trianon century” (Trianon refers to the Versailles peace treaty of 1920).

    The media-savvy banker is known to have opinions about issues that lay outside the remit of banking and the national economy, yet his advice is usually well received on all sides of the Hungarian political spectrum. This week, he has released a 10-point program, in which he fairly explicitly advises the political decision makers to set only goals for their Hungary that are compatible with the relatively small geographic size and small economy of country.

    He lists his priorities as follows.

    1. “Let us not take part in any super-power competitions, let us not believe in any promises and rewards. Instead, let’s enter the economic, cultural, community and sports competitions in the region, in Europe and around the world. Post-Trianon size, strength, population, location are sufficient to sustain the nation and increase national prosperity / well-being, but nothing else.
    2. Let us follow our own real national interests in everything, not imaginary ones. Stand up for our own values and interests. To do this, but only for this, let us build strength in all areas. For this, but only for this, let’s look for allies.
    3. Let’s look at Hungary from the direction of the outside world, not just from our own national interests. Let’s ask what can we give, what does the world need from the values of the Hungarian nation? Let us give, so that others would give to us, without self-abandonment, but in abundance.
    4. Let’s follow the golden rule: the solution is always internal. National currency, internal debt, an efficient state, strong communities and families, a growing and not a disappearing nation, a domestic middle-class, strong domestically-owned businesses and all the rest that can be found within are the real sources of success.
    5. Let’s avoid extremes and find the golden middle road in politics, economic policy, lifestyle, government intervention, indebtedness, lending, and everywhere else.
    6. Let us be competitive in all areas of life, because competitiveness based on preparedness, creativity, speed and adaptability is the only way to achieve our national goals.
    7. Our national success depends on how we explore and offer to the world the special features of our culture, values, language and natural / geographical features. We know we are irregular, it can be a special value in everything that leads to success, but it can also be a constraint that leads to failure.
    8. The last century is about political and military power, this century is about economic / intellectual power based on talent and creativity. Apart from the three great powers expected to rise in our century, our fate, just as everyone else’s, depends on these.
    9. We need good leaders emerging from a strong middle class at all levels of national functioning, while we must use all means to prevent leaving behind populous social groups. This is the ultimate guarantee of political stability and economic catching-up.
    10. Our last hundred years showed us that we are winning if we use the state well. There, as much as the best, using no more or less of it as necessary. Competition of nations, businesses, cities, or families is, in fact, the competition of the functioning of the state.

    We have closed the last hundred years and have set off towards the national successes of the coming decades. Only we can win this, and only we can spoil it. Let’s choose the first option!” concluded György Matolcsy.

    The writing is accompanied by an interesting comparison regarding Hungary’s economic development as compared to other countries. According to the head of the HNB, compared to the 27 EU member states, in 2020 Hungary stood at 74.2 percent in terms of economic development, up 1.2 percent from 2019. This is the highest since the end of WWII.

    Compared to the United States, in 2020, Hungary stood at 52.1 percent, which is an all-time high. According to Matolcsy, in the beginning of the 1950s, Hungary’s economy stood at 70 percent as compared to Western Europe, but by the end of the 1980s, this has collapsed to just 55 percent. The highest Hungary has ever compared to Western European economies was in 1936, when the country has reached an 83 percent level of development

  • EU slaps fuel tax on private jets

    EU slaps fuel tax on private jets

    Contrary to the European Commission’s original plan to exempt cargo planes and private jets from a fuel surcharge, the EU has for the first time in its history instated a €0.37 ($0.44) fuel tax on private jets, likely to be applied within two years.

    In mid-July, the Commission presented a review of the energy tax directives, which would exempt air cargo and private aircraft that are otherwise the most polluting. According to the proposal, EU states should have taxed this type of flight only domestically or under agreements with other EU member states.

    The proposed amendments were based on the argument that high taxes would adversely affect both EU haulers and third-country haulers, which would only make trade more difficult. In addition, private flights and “entertainment” flights using the aircraft for personal or leisure purposes would be exempt.

    The entry into force of the draft tax should have been approved by all 27 EU member states, but since this did not happen, the end result was that freight flights would remain tax-free, but for the first time in history, private flights will be taxed.

    Under the new proposal, therefore, private flights within the European Union will have to pay a fuel tax, which will come into force relatively quickly: within two years. It is estimated that the tax will be around €0.37 per liter, which is a very significant amount. Although the tax levied is relatively high, it is probably still not enough to significantly reduce private flights, as the social strata that travel by private planes will still be able to afford this luxury.

    And EU member states can consider how they spend the tax revenue within their borders, or even support energy costs for lower-income households.

    A typical business jet like the Gulfstream G650ER carrying a maximum 19 passengers burns 1,714 liters of A-1 jet fuel per hour, which currently costs $0.45 per liter, meaning that the additional tax will effectively double that cost.

    Title image: Gulfstream G650ER private jet. (source: gulfstream.com)

  • Bread prices on the rise in Romania despite record wheat crop

    Bread prices on the rise in Romania despite record wheat crop

    Romania harvested a bumper wheat crop this year, yet wheat is becoming more expensive, leading to rising prices for bakery products. The phenomenon is tied to the world market, but also to offset the losses of previous years.

    This year brought the largest wheat harvest since Romania’s accession to the EU in 2007. According to a statement from the Ministry of Agriculture, more than 11.33 million tonnes of wheat were grown this year in the country, and by Aug. 16, 98.54 percent of the area of ​​about 2.2 million hectares had been harvested. The average yield per hectare was 5,346 tonnes.

    By way of comparison, last year’s drought resulted in a crop of only 6.4 million tonnes of wheat in the country. The grain growers of Szeklerland — the predominantly Hungarian-inhabited area of the country — did not have a bad year either, although the area is not primarily famous for its grain. At the same time, yields in Hargita county are around the national average of 5.3 tons per hectare, and in Háromszék they exceed four tons in the case of wheat and barley.

    These yields are generally worth treating with caution until the final figures come in, as farmers usually harvest the more promising crop first. Despite the abundant and high-quality wheat crop, experts are likely to make bread and bakery prices more expensive in the fall.

    The explanation for the seemingly contradictory phenomenon is that the price of wheat and flour is determined by the world market, and this year the wheat harvest in Europe and worldwide is of lower quality. Thus, despite the outstanding quantity and quality in Romania, disappointing crops elsewhere increases the demand and the prices globally.

    “This year, Romanian producers are trying to make up for last year’s losses by raising the price of wheat, when they were able to harvest 6.4 million tonnes nationwide. In America, Ukraine, Russia, i.e. the large wheat producers, however, the drought has accumulated this year, the yield is lower worldwide,” Romanian Agriculture Minister Adrian Oros said at a press conference.

    It is also noteworthy that while the price of wheat generally falls during harvest, this has not happened this year either. László Diószegi, one of the best-known bakery entrepreneurs in the country, predicts a 10 percent price increase.

    “From September 15, we will have to raise the price of bread, otherwise we will hardly be able to cover our production costs,” Diószegi said. “Flour prices have already increased three times this year, and another price increase has been announced since September 13. We have not raised our (bakery) prices for almost two years, but the drastically rising price of flour, energy and labor will make it inevitable for us.”

    Title image: MTI/Tamás Sóki.

  • Hungarian Central Bank governor suggests two-tier euro exchange rate

    Hungarian Central Bank governor suggests two-tier euro exchange rate

    The post-World War II reconstruction of Western Europe, with the strategic support of the United States, created a Western economic rival for Washington. This was what the American financial and commercial warfare of the 1970s was trying to stop. German unification and the euro have already created a political and financial rival.

    This competition was halted by the US with the financial crisis of 2007-2009, which caused a crisis in Greece and then in the euro zone as well. The weak European response to Brexit and then to the current crisis indicates that the US will no longer have to face competition from a Western power of equal strength. One just has to make sure that the system of economic relations between Western Europe and Russia does not lead to a political alliance first and then a military alliance.

    Europe’s global influence loss continues

    If US turns strongly to Asia, then Europe – the former main battlefield – will lose its relevance. The East – the Middle East, India, the ASEAN Group, China, Japan and the two Koreas – will demand the full attention of the US.

    In terms of military power, diplomacy, financial and economic influence, investment and R&D, the EU continues to lose heft. The decisive reason for this is that in the 2020s, just as during the 1970s and 1940s, it lags behind in developing financial and commercial tools, and new types of warfare. The two main warring parties – the US and China – are making huge innovation breakthroughs in all areas of complex competition, but the EU is essentially on the outside looking in.

    The EU is not capable of integrating Europe

    Further enlargement of the EU to the east and southeast may also be a missed opportunity. The EU could, in principle, use this decade of war to integrate Europe almost completely in the east (Ukraine), south (Balkans), north (Norway) and central (Switzerland), but it does not have the necessary political and managerial capabilities, and there is insufficient money to implement this.

    The eurozone is expanding, but internal fault lines are deepening

    The EU’s strongest point is also its weakest area: common currency. The euro was created due to fear of a new war among the nations of Western Europe and the Eastern Empire. It was created at the moment (Maastricht, 1992) when the external threat ceased to exist (the collapse of the Soviet Union, 1992). Its birth coincides with the cessation of its cause of existence.

    Today, two euro groups live together in a euro zone: the North and the South. The current crisis management has definitively indicated that Europe is not united, not only in terms of economic development, but also in terms of lifestyle and perception of life. During the crisis, the North significantly increased its already significant advantage over the South. This will continue to be the case throughout this decade.

    The European Union is accumulating a triple debt

    During the crisis, the public debt of all member states increased. This is the first level of public debt.

    The European Central Bank has, quite rightly, significantly increased its balance sheet, saving the eurozone from economic collapse. This is the second level of indebtedness of states. Together, the eurozone governments and the common central bank spent roughly 40 percent of their GDP on crisis management, but this could not have prevented the strengthening of the internal development gap.

    Meanwhile, the EU has decided to get the whole community on the path to indebtedness: the current € 750 billion bond issue is just the first step. This is a new, third level of indebtedness.

    With this in mind, the EU embarked on a Japanese-type journey – one that brought two lost decades and an accumulation of public debt of 260 percent of GDP for the island nation of the Far East. It’s hard to get back from here.

    The double euro as a solution

    The European Union is, in fact, trapped in the euro because of the single currency. The common monetary policy brings development to the North, while the South continues to lose ground. Triple indebtedness does not help, because more money does not solve the quality disadvantage of money: the common monetary policy and the single exchange rate.

    The North and the South may need separate euros. This seems impossible today, but we are only at the beginning of the decade. Theoretically, the new digital central bank money will create a opportunity to widen the European monetary space and introduce a dual exchange rate regime.

    Just as the decision should not have been made thirty years ago to introduce the euro, but to create a single market for services, now the solution is not triple indebtedness, but the double euro.

    Title image: Central Bank Governor György Matolcsy. (MTI/Tamás Kovács)