Latest news with #euro-area
Business Times
13-06-2025
- Business
- Business Times
Homeowners battle insurers over US$2.9 trillion climate risk
[PARIS] When Bernard Weisse first noticed a tiny crack in the outer wall of his house on the outskirts of Paris, he dismissed it as little more than a nuisance. But in the four years since, a spiderweb of fissures has spread from floor to ceiling and snaked into virtually every corner of his home. 'We can hear loud cracking noises especially when it's warm outside,' said the retired salesman and father of three. 'Sometimes, I think we should get all our stuff together and leave.' Like a growing number of people around the world, Weisse is grappling with subsidence – a term for the sinking land that's causing damage to homes and other structures built on it. The slow-moving climate disaster has already caused tens of billions in damage and has the potential to affect 1.2 billion people in areas accounting for more than US$8 trillion of economic output. While groundwater extraction, mining and earthquakes also cause the ground to shift, global warming vastly increases the risks. What happens is that soil swells with winter rain and then shrinks as it dries in the heat, cracking foundations in the process. Because of its soil and its status as the world's fastest-warming continent, Europe is particularly exposed. The European Central Bank estimates the region's potential damage from sinking land at more than 2.5 trillion euros (S$3.69 trillion) across all euro-area financial institutions. Although most of that is classified as 'low risk,' this summer is forecast to be one of the hottest and driest on the continent, creating perfect conditions for subsidence damage. For Weisse, the cost for repairs could climb to as much as 200,000 euros to keep his two-story home from crumbling. That would be part of the estimated 43 billion euros in damage that households face by 2050 in France alone, according to insurance trade group France Assureurs. With that much money at stake, it's set off a battle over who will ultimately have to pay. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Weisse's town of Presles-en-Brie has teamed up with 14 nearby villages and sued the state to have their subsidence issues recognised as a natural catastrophe like flash floods and wildfires. That would trigger payments from insurers and the government, powerful opponents for the municipalities. 'It's David against Goliath,' said Dominique Rodriguez, who's been mayor of the pastoral community of 2,300 people for more than three decades. So far, the big guys are winning. In Presles-en-Brie, at least 40 homeowners have sought subsidence compensation since 2020, and while two houses were granted recognition under a public-private insurance programme called CatNat, others were rejected. Europe is the epicentre because of its clay-rich soil and relatively high population density. Also, buildings from the 1970s and 80s – when a postwar housing construction boom was still underway – are particularly susceptible. While Presles-en-Brie is an early victim, the issues are global. Jakarta has sunk more than 2.5 metres in a decade, and Teheran drops as much as 22 centimetres a year. In the US, Houston is most affected, with 40 per cent of the city subsiding more than half a centimetre a year. More than 425,000 Dutch houses will be exposed over the next decade, with subsidence already lowering house prices by as much as 5 per cent, according to a recent study by the Tinbergen Institute. Repair costs can exceed 100,000 euros per home and are rarely covered by insurance. 'The situation is urgent,' said Karsten Klein, director of advocacy at Vereniging Eigen Huis, a Dutch homeowners association. 'Waiting until homes become uninhabitable is not an option.' In London, shifting ground levels over the next five years are set to affect two-fifths of the housing stock, or more than a million homes, according to the British Geological Survey. Across the UK, there have been a half dozen 'surge years' for subsidence over the last two decades. With the country experiencing one of its driest springs in a century, 2025 could end up as another 'high risk' year, according to Geobear, a company that undertakes repairs. Insurance claims for the hazard jumped 78 per cent between 2019 and 2023 and the average payout rose 40 per cent over that period, according to data provided by the Association of British Insurers. While the UK is one of the few countries in the world where insurers cover subsidence damage, it's tricky to manage because the impacts can be affected by local conditions like trees soaking up water. A few years ago, central London suffered the most from subsidence, but now it affects eastern neighbourhoods more, according to satellite data from Geobear says its data supports the shift of the subsidence burden to eastern London, where the surface is less built up and so more exposed. If movements are related to clay shrinkage, then it makes sense that places like Barking are hit harder, said Otso Lahtinen, Geobear's chief executive officer. In France, half of all single-family homes could be affected by subsidence by the end of the decade, according to Paul Esmein, head of the French insurance lobby. Since 2016, the country's insurers have paid about 1 billion euros a year for subsidence claims. That amount tripled in 2022, when European temperatures hit their second-highest level. To cope with rising losses from natural disasters and provide protection for homeowners, France launched a public-private insurance programme in 1989 called CatNat – a system that puts the state and the industry on the same side as costs surge. Homeowners are compensated for damage after their municipality has been awarded a CatNat certification. Otherwise, insurers are free to reject claims. Despite the challenges faced by communities like Presles-en-Brie, France's system is close to a best-case scenario for homeowners, which have little to no recourse to have subsidence damage covered in most other countries. 'Since its creation, the French system for recognising natural disasters has constantly adapted to the damage suffered by the population,' the French interior ministry said in response to Bloomberg questions, adding that the criteria for subsidence recognition was relaxed last year. In the case of Presles-en-Brie, the interior ministry said natural disaster conditions was recognised for part of 2020 as soil moisture was determined to be abnormal. It didn't comment on the ongoing dispute. Allianz France says that over the last decade subsidence constituted 60 per cent of all CatNat damages in the country, almost double the rate of the previous 15 years. 'The trend is getting more complicated with climate change,' said Pierre Vaysse, chief underwriting officer for property and casualty at the French insurer. 'The forecast is that claims will at least increase by 50 per cent and probably double by 2050.' France's CatNat system lost 49 million euros in 2024, its eighth straight annual deficit. Known as the Central Reinsurance Fund, the programme is paid for by a national surcharge on insurance policies, which was raised by eight percentage points in January to account for climate change. For homeowners, the strained system means higher premiums but with no certainty of coverage, and there's a risk that insurers abandon vulnerable areas as has happened in parts of the US prone to hurricanes and wildfires. Potential repairs include foundation reinforcements known as micropiles and injecting compounds into the soil to stabilise the clay. In some cases, the costs can approach the value of the home. With selling hardly a viable option, owners have little choice but to fork out the money themselves. 'There is a real threat that the damage will end up dislocating our entire house,' said Weisse, the owner of the damaged house in Presles-en-Brie. Burdened by the impact of climate change, the insurance system is 'on its last legs,' said Regis Thauvin, who handles subsidence issues for the town council and is also affected. 'We can't just tell people to wait a year and a half for a decision to be made before doing the necessary work.' The legal fight with the state has been going on since late last year and the towns, which represent about 72,000 people in total, are still waiting for a court date. As of early June, the government hadn't sent experts to review local damage. The municipalities are prepared to take their case to the European Court of Human Rights if they lose, according to Rodriguez, the mayor of Presles-en-Brie. 'We have little hope that our legal appeal will eventually succeed,' he said. 'But the residents welcome our action and the fact that we're at least trying to make ourselves heard.' BLOOMBERG
Yahoo
30-05-2025
- Business
- Yahoo
Analysis-German Bund anchor can shield euro area from excessive curve steepening
By Stefano Rebaudo (Reuters) -A global selloff in government bonds due to concerns over high debt and bond sales has not left the euro zone unscathed, but Germany's growing safe-haven status should shield the bloc from an excessive rise in long-term borrowing costs. Major bond markets from the United States to Japan and Europe have seen their bond curves steepen sharply - meaning long-term bond yields have risen faster than short-term yields - a challenging environment for issuers. Germany's 30-year bond yields have jumped around 40 basis points so far this year, in a move largely driven by the creation of a 500 billion euro ($546 billion) infrastructure fund and an easing of strict borrowing rules to help lift defence spending. Yet investors and analysts say that a sharp steepening across euro-area bond markets is likely to fade from here, as a relatively better debt trajectory for Germany and global tariff uncertainty bolsters the safe-haven appeal of Bunds. In an early indication of the trend, the gap between 2-year and 10-year German bond yields looks set to end May with its first monthly drop in over a year, sliding seven basis points (bps) to 74 bps. An increase in the curve slope can create challenges for highly indebted countries, which will face higher costs when they issue new bonds, as recent weak auction results in Japan and the United States highlight. It can also complicate the monetary policy outlook by triggering an unwanted tightening of financial conditions. But in Germany's case, the steepening pressure is easing for a few reasons. Higher bond supply is now priced in. Tariff uncertainty means the European Central Bank is likely to remain in easing mode. And, compared to its peers, German debt dynamics make it a better place to park cash in times of stress. Amundi's global fixed income investment officer Gregoire Pesques said Europe's biggest asset manager had taken profit on some curve steepening trades. "In Germany, we are short 2-year bonds, short the 30-year bond, and long the 10-year bond," he said. Pesques mentioned the possibility of a more dovish than expected ECB outlook given low energy prices and a strong euro, adding there was a lack of appetite for 30-year bonds as a repricing of expectations for more bond supply is under way. The euro is up around 9% this year against the dollar, and oil prices have fallen around 13%, helping dampen inflation. Konstantin Veit, portfolio manager at bond giant PIMCO, said he saw a plausible new range of 2.5 to 3.5% for 10-year Bund yields given German fiscal plans, assuming an ECB policy rate of 2%. Germany's 10-year Bund yield is trading around 2.5%, up around 15 bps so far this year, while its UK and U.S. peers are down eight and 15 bps respectively. Germany's yield curve is currently steeper than the United States' because the ECB has almost completed its easing cycle, while the U.S. Federal Reserve is expected to cut rates mostly in 2026, analysts said. STRONGEST LINK Debt sustainability is also on investors' minds after the U.S. suffered a sharp bond selloff in early April, with investors questioning the safe-haven status of U.S. Treasuries. Since then, ratings agency Moody's has stripped the United States of its remaining triple-A credit rating and a recent 20-year bond sale was met with tepid demand. In contrast, though German debt is also rising, Europe's biggest economy is the only G7 member with a debt-to-GDP ratio below 100%, bolstering its safe-haven credentials. Notably, when U.S. and other major bond markets sold off in April, the Bund market held firm. Ratings agency S&P argues that German fiscal stimulus, expected to bolster long-term growth, supports the country's triple-A credit rating. Consultancy Saltmarsh Economics estimates that even without any nominal GDP growth, an extra 325 billion euros of debt would push Germany's debt-to-GDP ratio up to 70%, from current levels around 63%. And an extra 750 billion euros of debt would increase it to a still very low 80%. "Germany is unique in its fiscal conditions and has room to do more, but other (European) countries will have to compensate for higher defence spending in their budget," said PIMCO's Veit. We don't think European fiscal policy will be very expansionary in the next couple of years," he added. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Post
28-05-2025
- Business
- Business Post
Digital Business Ireland call for AI allowance
The government is being urged to introduce an Accelerated Capital Allowance (ACA)... Inflation expectations of euro-area consumers increased for a second month in April,... UniCredit SpA has raised its holding in the Greek ba2805 LIVE ALnk Alpha Services... RTÉ Director General Kevin Bakhurst will lead a delegation of the broadcaster's... Shein is working toward listing in Hong Kong after the online-fashion retailer did... Egis, an engineering and operations firm, has announced the completed installation... DUBLIN The Iseq All Share opened in the red on Wednesday, bucking market trends by...
Bloomberg
22-04-2025
- Business
- Bloomberg
ECB's Rehn Sees Tariffs Pushing Inflation Down in Short Term
European Central Bank Governing Council member Olli Rehn said US tariffs will push euro-area inflation down in the short term, though the overall impact will be 'modest.'
Bloomberg
17-04-2025
- Business
- Bloomberg
Denmark Cuts Rate to Match ECB as Krone Slide Tests Peg
Denmark 's central bank lowered its benchmark interest rate by a quarter point to defend its peg to the euro in a move that matched its euro-area counterpart after recent turbulence on the financial markets. Nationalbanken, which pegs the Danish currency to the euro, reduced its current account rate to 1.85% from 2.1%, according to a statement on Thursday. The decision, anticipated by analysts, marks the seventh rate cut in the current cycle and follows a reduction from the European Central Bank by the same margin earlier in the day.
