Latest news with #AndrewKenningham
Qatar Tribune
01-07-2025
- Business
- Qatar Tribune
Eurozone inflation ticks up moderately in June
Agencies Eurozone inflation ticked up slightly to 2.0% in June, in line with analyst forecasts and also meeting the target of the European Central Bank (ECB), official data showed on Tuesday. Inflation in the single currency area rose from the 1.9% recorded in May due to a slower decline in energy prices. Core inflation, which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the ECB, was stable at 2.3% in May, as predicted by economists for Bloomberg. The bank expects eurozone inflation to be on target this year as U.S. President Donald Trump's tariff blitz exerts downward pressure on prices. The June rise in inflation was due to energy costs falling at a slower pace of 2.7% in June after a drop of 3.6% in May, Eurostat said. Food and drink price increases slowed slightly to 3.1% in June, compared to 3.2% in May. Inflation has significantly fallen from its record peak of 10.6% in October 2022 after Russia's invasion of Ukraine sent energy prices sky-high. With inflation under control, the ECB has shifted to cutting interest rates to boost the eurozone's sluggish economic growth. The ECB has cut interest rates eight times since June last year when it began lowering borrowing costs. The next rate-setting meeting is on July 24. While it seems the 'fight against inflation has been largely won,' according to Andrew Kenningham, chief Europe economist at Capital Economics, it leaves the bank 'with a difficult decision whether to call a halt to its easing cycle.' Kenningham said it was 'most likely' the ECB would leave its key deposit rate unchanged at 2.0% in July and make a final cut of 25 basis points in September. Tuesday's data also showed that consumer price rises in Germany, Europe's biggest economy, slowed in June to 2.0% in June from 2.1% in May. But in France, inflation accelerated to 0.8% in June from 0.6% in May. The Frankfurt-based ECB, however, warned Monday of 'new challenges' – from trade tensions to artificial intelligence – that could make inflation more volatile. 'The inflation environment will remain uncertain and potentially more volatile ... posing challenges for the conduct of monetary policy,' the ECB said.
Yahoo
27-03-2025
- Automotive
- Yahoo
Trump tariffs to hit European automakers hard
President Donald Trump's tariffs on auto imports will deal a heavy blow to European carmakers, especially German manufacturers, which rely on the US markets for a big chunk of their profits. The move comes as the continent's automakers have already seen their earnings slump in the past year, with some such as Volkswagen, Mercedes or BMW struggling in another key foreign market, China. European automakers exported 750,000 cars to the United States last years, worth in total 38.5 billion euros, according to the European Automobile Manufacturers' Association, known as ACEA. Starting on April 3, importers will have to pay a tariff of 25 percent for all cars produced abroad. The tariffs could "quickly cause several billion euros in losses and put as many as 25,000 jobs in Europe at risk", according to global consulting firm Kearney. - Ferrari price hike - American consumers may also pay a hefty bill: Car prices could increase by as much as $10,000, according to a Bank of America analysis. German automakers, which account for almost two thirds of European exports, would be badly hit. "A 25 percent tariff will be quite damaging for Germany, where auto exports to the US account for close to half a percent of value added in the economy," said Andrew Kenningham, chief European economist at Capital Economics research firm. "These sales could plausibly fall by 50% or so," he added. The German automakers association, VDA, said the tariffs send "a fatal signal for free trade" as they will "place a significant burden on businesses and global supply chains". Credit ratings firm Moody's said last month that automakers could absorb some of the tariff costs through their existing prices. This would be easier for pricier and more profitable models, but the size of the tariff leaves little space for profit margins. Italian sportscar maker Ferrari said Wednesday that, after the tariffs come into force, it would increase prices by up to 10 percent for models excluding the Ferrari 296, SF90 and Roma. - Relocate? - Porsche and Audi, luxury brands that are owned by Volkswagen, are all made outside of the United States. The VW group could decide to relocate production of some vehicles to plants used to assemble its other brands in the United States, but such a move would take time. BMW and Mercedes export sedans from Europe to the United States, but they also have factories in Alabama and South Carolina, where they produce sport-utility vehicles that are prized by American consumers. These SUVs would avoid US tariffs, but the US-made models are also exported abroad, exposing them to possible retaliatory duties. BMW said Thursday that there would be no benefits to a trade conflict, urging Europe and the United States to rapidly reach a deal. Mercedes called for an end to reciprocal tariffs. The Stellantis group, which owns US brands Jeep, Dodge and Ram along with French auto company Peugeot and Italy's Fiat, makes most of its sales in Europe but earns its biggest chunk of profits in North America. Stellantis has factories in Mexico and Canada, but it would be less affected by the US-EU trade spat as it exports few made in America Jeeps to Europe and few Fiat, Alfa Romeo and Maserati cars to the United States as well as, ironically, the US-marketed but Italian-made Dodge Hornet. Volvo Cars, which is owned by China's Geely Group, sells popular SUVs in the United States that are made in South Carolina since 2015. Volvo Cars CEO Jim Rowan told CNBC last month that the company was preparing itself "to see whether we need to start looking at production relocation or even supplier relocation to different parts of the world". bur-tsz/lth/cw Sign in to access your portfolio
