Inflation hit 3% in April with further increases expected, and policymakers said they may need to raise interest rates if longer term price expectations rose or wage demands increased sharply

International News via Reuters:

The chance of a European Central Bank rate hike has risen as inflation pressures are high, board member Piero Cipollone said on Wednesday, even as negotiated wage data showed pay demands had yet to increase.

Inflation hit 3% in April with further increases expected, and policymakers said they may need to raise interest rates if longer term price expectations rose or wage demands increased sharply. 

“Overall, the current situation seems to be drifting away from our March baseline projections, which increases the likelihood that we may need to adjust our policy rates,” Cipollone said in a speech in Milan.

While inflation expectations remain firmly around target, memories of the previous energy shock around the time Russia began its invasion of Ukraine in 2022 are fresh, and could lead to a faster adjustment in inflation expectations, Cipollone added.

IRAN WAR HAS YET TO DRIVE UP WAGE DEMANDS

So far, wage trends, a worry for policymakers, are broadly unchanged since the start of the Iran war, suggesting that workers have yet to demand compensation for the inflation surge. 

Negotiated wage growth with smoothed and unsmoothed one-off payments are expected to both be 2.6% by the end of 2026, unchanged from the last projection in late March, the ECB said, based on data collected by the middle of April. 

Such a rate would be consistent with levels policymakers deem to be appropriate for inflation to return to the ECB’s 2% target in the medium term.

Still, financial markets expect three rate hikes from the ECB, with the first one fully priced in by July, to be followed by moves in the autumn or early 2027.

Cipollone also said that the economic impact of the war in the Middle East could be far larger than experienced so far as supply shortages could curtail industrial production.

“Europe could start running out of jet fuel and kerosene reserves by the end of May, potentially leading to material restrictions on the activity of several industries akin to those seen during the COVID-19 pandemic,” he said.   

Reporting by Balazs Koranyi; Editing by Andrew Heavens and Barbara Lewis

The Commission added that it would be beneficial if the main terms of that deal were in place ahead of its one-year anniversary at the end of July

International News via Reuters:

The European Union’s trade chief has urged the United States to swiftly restore the tariffs agreed in last year’s EU-US trade deal, the European Commission said on Tuesday.

The Commission added that it would be beneficial if the main terms of that deal were in place ahead of its one-year anniversary at the end of July.

Maros Sefcovic met U.S. Trade Representative Jamieson Greer in Paris on Tuesday, with U.S. President Donald Trump’s threat to increase tariffs on EU cars and trucks to 25% among the EU’s main concerns.

The Commission said the two men had held a one-and-a-half hour discussion on the most pressing aspects of the trade agreement. Trump says he is hiking car tariffs because the European Union is not complying with the deal’s terms.

The EU executive said Sefcovic had updated Greer on the likely timeline for the EU to implement the removal of EU duties on imported U.S. industrial goods, as the two sides agreed last year. That is unlikely to be before June.

“At the same time, he called for a swift return to the agreed Turnberry terms, i.e. a 15% all-inclusive tariff rate, with the agreed carve-outs for the EU,” the Commission said.

The U.S. Supreme Court struck down the previous global tariffs in February and Washington replaced them with a blanket 10% surcharge on top of existing duties. In some cases, EU goods therefore face a U.S. tariff above 15%.

“It would be beneficial for the main features of the deal to be in place ahead of its one-year anniversary,” the EU executive continued, adding that Sefcovic and Greer had agreed to step up engagement.

Reporting by Philip Blenkinsop and Makini BriceEditing by Gareth Jones

The job cuts will focus on white-collar and warehouse roles, a Nissan Europe spokesperson said, adding that the company’s current European headcount stands at about 9,300

International News via Reuters:

Nissan Motor will cut about 900 jobs in Europe, around 10% of the total, and consolidate production from two lines to one at its Sunderland plant in the UK as part of a global restructuring drive, the Japanese automaker said on Tuesday.

The job cuts will focus on white-collar and warehouse roles, a Nissan Europe spokesperson said, adding that the company’s current European headcount stands at about 9,300.

The company’s sweeping turnaround plan, launched last year under Chief Executive Ivan Espinosa, aims to restore profitability after heavy losses, reduce Nissan’s global manufacturing footprint and cut its total workforce by 15%.

“We have been taking decisive actions to enhance performance and create a leaner, more resilient business that adapts quickly to market changes,” Nissan said in a statement.

In addition to the layoffs, the Nissan Europe spokesperson said the carmaker, Japan’s fourth largest, was looking at other moves in Europe, including shifting to a distribution model managed by importer partners in Nordic markets.

“The proposals in the consultation include a headcount reduction across Europe of 900 jobs, the partial closure of our warehouse in Barcelona, and in the Nordics market we are going to change the distribution model,” the spokesperson said.

“We are also consolidating production in Sunderland plant from two lines to one line, because we are looking for opportunities with our parties to maximize our plant utilization.”

A Nissan Spain spokesperson said around 500 people in Spain work in the areas targeted by the layoffs, but added that the final figure will be negotiated with unions in the coming weeks and would likely be lower than that.

“This is a new disappointment by Nissan for which again the only solution that it seeks to adapt to a situation is to fire workers,” said Miguel Ruiz, leader of Spanish Nissan union USOC, adding that it was too early to know final job loss numbers.

In 2020, Nissan shut its main factories in Barcelona affecting around 3,000 jobs.

A spokesperson for Nissan Manufacturing UK confirmed that the focus was white-collar roles and said that there would be no production job losses at the Sunderland plant.

The Financial Times first reported the job cut plans.

Nissan is expected to update on the progress of its restructuring plan when it reports full-year financial results later this month, and has said it will announce further elements of its strategic direction later in the year.

Reporting by Rishabh Jaiswal in Bengaluru, Gilles Gillaume in Paris, Joan Faus in Barcelona and Paul Sandle in London; Editing by Shailesh Kuber and Bill Berkrot

The European Union resumes talks this month on streamlining the bloc’s 2024 AI Act, with the European Commission, the bloc’s executive arm, also due to present its “Tech Sovereignty Package” on May 27

International News via Reuters:

Europe’s AI regulations should be reduced and simplified, chief executives of seven of Europe’s top technology firms including Christophe Fouquet of the biggest, computer chip equipment maker ASML, said in an opinion piece published on Tuesday.  

The European Union resumes talks this month on streamlining the bloc’s 2024 AI Act, with the European Commission, the bloc’s executive arm, also due to present its “Tech Sovereignty Package” on May 27 — including plans still under negotiation to support the computer chip industry and AI infrastructure.

“More than three years after the ‘ChatGPT moment’, Europe is still debating regulation, while others have long shifted focus to scaling AI in physical systems and robotics,” the executives wrote in the op-ed.

The commentary, published in newspapers including Germany’s Handelsblatt and Italy’s Corriere della Sera, also called for stronger industrial policy, and M&A rules that would allow European companies to grow.

“We face fragmented markets and subsidized rivals with very strong market penetration in the EU,” the executives wrote.

It was signed by the CEOs of ASML, Airbus , Ericsson, Mistral AI, Nokia,, SAP AG and Siemens, and followed a meeting with European Commission President Ursula von der Leyen.

Reporting by Toby Sterling, Editing by William Maclean