Former European Central Bank chief Mario Draghi warned in 2024 that the EU needed to better coordinate industrial policy, make quicker decisions and attract massive investment

International News via Reuters:

Europe must tap into trillions of euros of private savings to fund the economic transformation it needs to compete with the U.S. and China, investors and policy makers said on Tuesday at a Reuters Next event.

“We sit on €35 trillion ($40.7 trillion) of private savings, which is enough to make all of those transitions,” said Benoit Peloille, chief investment officer at Natixis Wealth Management. 

“We have to build enough confidence and stability to make sure that private savings don’t stay on very low risk assets and go and finance all of those transitions,” he added.

Former European Central Bank chief Mario Draghi warned in 2024 that the EU needed to better coordinate industrial policy, make quicker decisions and attract massive investment or face a “slow agony” as the U.S. and China’s more streamlined economies race ahead through innovation in AI. 

There are signs of political momentum and that European policymakers have heeded Draghi’s advice, said Alison Martin, chief executive officer for life, health and bank distribution at Zurich Insurance.

She cited initiatives such as the Digital Omnibus Agreement and the creation of savings and investment accounts as signs of the EU’s willingness to deregulate and encourage investment. 

“I think the next six months are going to really show us whether Europe will be stepping up,” Martin said.

The EU has a long way to go to catch up with the U.S. which has several competitive advantages including much cheaper energy prices, more flexible labour laws and a far faster rate of deployment of AI, said Nizar Trigui, chief technology officer at global logistics firm GXO.

BIGGER AND FASTER

   The U.S. accounts for 55% of all the world’s unicorns, or startup companies worth more than $1 billion, according to the UN’s World Intellectual Property Organization. That includes Space X, which on Tuesday became one of the world’s five most valuable companies following its initial public offering last week.

Peloille said this was due to the U.S. being an easier environment in which to raise capital.

The scarcity of unicorns in Europe was “absolutely not acceptable” given the weight of Europe in the world, he said.

Nadia Calviño, president of the European Investment Bank, agreed that the EU was on the right track but said it needed to “go bigger and faster.”

She said initiatives such as the European Tech Champions Initiative had created a dozen unicorns since it was created by the EIB in 2023.  

“European unicorns do exist. Now we need them to get larger and to have more,” Calviño said.

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($1 = 0.8607 euros)

Reporting by Yoruk Bahceli; Writing by Charlie Devereux; Editing by Alexandra Hudson

The ECB raised interest rates for the first time in nearly three years last week and left the door open to more tightening to prevent a surge in fuel costs caused by the Iran war from spreading to other prices

International News via Reuters:

The European Central Bank will continue to be “proactive” in its fight against high inflation even after a deal between the United States and Iran brought down energy prices, the ECB’s chief economist Philip Lane said on Tuesday.

The ECB raised interest rates for the first time in nearly three years last week and left the door open to more tightening to prevent a surge in fuel costs caused by the Iran war from spreading to other prices.

Lane said that oil prices remained above pre-war levels even after a fall this week and that the ECB would keep up its fight against inflation, which is now expected to be above its 2% target for a year.

“We will continue to be proactive in monetary policy in line with how the risks evolve,” he said in an interview at the Reuters NEXT Europe conference in London.

The interim agreement between the United States and Iran would extend a tenuous ceasefire and reopen the Strait of Hormuz, which Tehran has effectively blocked since it was attacked in February.

OIL PRICES CLOSER TO BASELINE AFTER DEAL

Lane noted that financial investors were betting that Brent oil prices would remain above $70 a barrel for years to come, standing between the ECB’s baseline and its milder scenario but closer to the former.

“It’s hovering between our baseline and the modest scenario. But in the end, I think on a multi-year perspective, closer to baseline,” Lane said.

The ECB sees inflation at 3.0% this year, 2.3% next year and 2.0% in 2028 in its baseline, while the milder scenario has inflation falling below target next year.

Investors are betting on at least one more ECB rate hike this year, most likely in September or October, with the slight risk of a further move in winter. The deposit rate is currently at 2.25%.

EURO ZONE ECONOMY IS RESILIENT

Lane said policy decisions will depend on oil prices and on the degree of uncertainty surrounding the geopolitical situation, which will influence decisions by companies, households and governments.

In comments that may be perceived as backing the case for more rate hikes, Lane listed a series of factors that would offset in part the energy shock on the euro zone economy.

These ranged from a recovery in construction to growing real earnings and more fiscal spending in Germany, Lane said.

“Lots of individual items are positive,” he said. “And so the clearly negative energy shock is in the context of this wider resilience.”

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Additional Reporting by Yoruk Bahceli; Writing by Francesco Canepa in Frankfurt; Editing by Alison Williams and Emelia Sithole-Matarise

U.S. President Donald Trump struck a deal with the European Union at his Turnberry golf course in Scotland last July

International News via Reuters:

The European Parliament approved on Tuesday cutting duties on many U.S. goods imports to fulfill the European Union’s side of a trade deal struck last year, and avert a fresh round of tariff conflict between the world’s largest trading partners.

U.S. President Donald Trump struck a deal with the European Union at his Turnberry golf course in Scotland last July under which the EU agreed to remove import duties on U.S. industrial goods and provide preferential access to U.S. farm produce in return for U.S. tariffs of 15% on most EU goods.

Almost 11 months after that framework agreement, the EU had yet to pass legislation to implement those duty reductions. Trump threatened to impose “much higher” tariffs if the EU did not act by July 4.

Reporting by Philip Blenkinsop; Editing by Sudip Kar-Gupta

Over 800 cases of the rare Bundibugyo strain, for which there is no proven treatment or vaccine, have been reported in Congo, 192 of them fatal

International News via Reuters:

A Red Cross official said on Tuesday that the Ebola epidemic in eastern Democratic Republic of the Congo had not yet peaked, and could last for a year.

Over 800 cases of the rare Bundibugyo strain, for which there is no proven treatment or vaccine, have been reported in Congo, 192 of them fatal. The disease, transmitted through body fluids even after death, is spreading fast across three provinces, government data shows. 

“It’s very difficult to know exactly to what extent the epidemic is spreading … but yes, the peak is, I think, not behind us, but in front of us,” Bruno Michon, operations manager for the International Federation of Red Cross and Red Crescent Societies, told reporters by video link from eastern Congo. 

“We are afraid that this could last one year, to end this disease.”  

The response has been hampered by a lack of treatment centres and by community resistance to stringent hygiene measures, and health officials say that, over a month since the outbreak was declared, the true scale is still unknown. 

Michon said that IFRC teams – which help with community engagement and safe and dignified burials of Ebola victims – had faced verbal abuse, threats and attacks in recent days.

“Building trust takes time. It requires honesty, patience, and humility, but in this outbreak it is not optional, it is life-saving,” he said.

Reporting by Emma Farge and Vincent Mumo Nzilani; Editing by Alison Williams and Kevin Liffey

The war, which began in late February, has largely halted shipping through the key route for around a fifth of the world’s oil and liquefied natural gas supply, along with products such as aluminum and urea

International News via Reuters:

Shipowners will not resume transit through the Strait of Hormuz for weeks until they are confident that the U.S.-Iran peace deal is “material”, the CEO of Japan’s Mitsui O.S.K. Lines told the Financial Times in an interview published on Tuesday.

The war, which began in late February, has largely halted shipping through the key route for around a fifth of the world’s oil and liquefied natural gas supply, along with products such as aluminum and urea.

“Given the experiences in the last couple of months, I think it’s reasonable to assume that it may take at least a couple of weeks or if not a month,” Jotaro Tamura told FT, before U.S. President Donald Trump announced a deal to end the war in Iran.

The agreement between Washington and Tehran has not changed Tamura’s view, the FT report said.

“We recognize that there are signs of movement toward a ceasefire. However, operations will not be resumed until safety has been sufficiently confirmed,” Mitsui O.S.K. said in an emailed statement to Reuters.

“The resumption of transit will require close coordination with the governments of the relevant countries, insurers, and other stakeholders,” the Japanese shipping giant added.

Mitsui O.S.K., one of Japan’s three biggest shipping firms, has a fleet of more than 900 vessels, including bulk carriers, tankers and ferries.

Trump in a Truth Social post on Monday said that ships loaded with oil are starting to move out of the strait, “going along the Southern ‘Highway,’ which is totally safe, secure, and pristine”.

Reporting by Anusha Shah and Abu Sultan in Bengaluru; Editing by Sonia Cheema