Business

ROME — Italy's government approved on Friday a 32-billion-euro ($38-billion-dollar) economic relief package for coronavirus-stricken businesses and workers.

It included 11 billion euros of grants to worst-affected firms that will be paid out by the end of April, Prime Minister Mario Draghi said in a news conference.

Draghi called the decree a "partial answer" to those who are struggling with the fallout from the pandemic, "but the best that we could do" given budgetary constraints.

Around 8 billion euros were earmarked for welfare support, including for furloughed and unemployed workers, and almost 5 billion euros for vaccinations and the health sector. 

A freeze on job dismissals, expiring in late March, was prolonged until the end of June, with a further extension until late October valid for some industries.

The measures were funded by public debt, and Draghi said the government would borrow even more this year to finance more economic stimulus measures. 

Friday's decree included an amnesty on unpaid tax bills, which was championed by Matteo Salvini's far-right League and opposed by leftists in the national unity coalition.

There were other measures for categories badly affected by mandatory shutdowns, including seasonal workers, theatre and cinema employees, and the ski industry. 

Italy, which 13 months ago became the first European country to be hit by the coronavirus pandemic, has been plunged into its worst recession since World War II. 

Last year, gross domestic product fell by 8.9 per cent, while almost 450,000 people lost their jobs, with disproportionately high numbers among women, young people and the self-employed. 

Draghi is hoping to provide some relief by ramping up a sluggish vaccination programme, and is drafting an economic relaunch plan to be funded by European Union grants and loans.

Italy is eligible for around 200 billion euros from the bloc's flagship virus recovery fund, but in return, it has to commit to an ambitious reform plan, subject to Brussels' approval.

Huge expectations are riding on Draghi, a former European Central Bank president famous for doing "whatever it takes" to save the euro, and installed as Italy's premier in February.

Since then, he has mostly worked behind the scenes, attracting some criticism. Friday marked his first news conference in more than a month in office. 

MOSCOW — Russia's central bank on Friday raised its key interest rate to 4.5 per cent in a surprise move, as authorities struggle to cap soaring food prices and the threat of new sanctions looms.

In recent months, Russia has faced accelerating inflation and a weak ruble, with authorities coming under pressure as the price of basic goods increased during the coronavirus pandemic.

"The fast recovery of demand and elevated inflationary pressure call for a return to neutral monetary policy," the central bank said in a statement, adding that further hikes could follow.

The increase by 0.25 percentage points — the first since late 2018 — surprised many analysts.

Economist Tatyana Evdokimova said the hike was a response to inflation exceeding forecasts.

"Looks like the regulator was caught by surprise as the hike happened despite no clear signal of upcoming tightening," Evdokimova tweeted.

Consumer prices started to climb in March 2020, driven by a slump in oil prices and a drop in the ruble's value after months of historically low inflation.

Timothy Ash, a strategist at Bluebay Asset Management, said he had expected a hike and pointed to rising geopolitical risks and the threat of new Western sanctions.

"This is nothing to do with inflation but all to do with geopolitics," he said in a note to clients, adding that the central bank was under pressure from the Kremlin.

"There are times it gets the call from the Kremlin and they tell them what to do. The message was 'sanctions are coming, macro financial risks are coming, Fortress Russia settings, hike rates'."

In February, inflation stood at 5.7 per cent in year-on-year terms.

The Bank of Russia expects it to peak in March before declining. 

It said inflation would return to its 4 per cent target in the first half of next year.

By Julie Chabanas
Agence France-Presse

WASHINGTON — Mortgage rates are finally ticking up in the United States, one year after the Federal Reserve cut its lending rate, a step taken to boost the economy as the COVID-19 pandemic arrived, but that is not expected to cool the hot housing market.

While the wider US economy has struggled after states restricted business to stop COVID-19, real estate was one of the few bright spots in 2020, boosted both by low mortgage rates and the shift towards remote work caused by the pandemic.

"We've seen mortgage rates move higher in the past month or so," Joel Kan of the Mortgage Bankers Association indicated.

The housing market is a key part of the world's largest economy, and mortgage rates are closely watched to gauge the ease with which Americans can buy property.

They are tied into the wider US Treasury bond market, where yields have been rising in recent weeks as traders fear that the economy's improving health could bring inflation with it.

Rates on 30-year mortgages are now ticking up and expected to hit 3.5 per cent by the end of the year, after dropping in July below three per cent, a low not reached before.

"In that sense, it is bad news for buyers, because now they are facing higher interest rates, higher monthly payments," said Lawrence Yun, chief economist at the National Association of Realtors.

'Incredibly low' rates 

Mortgage rates have hovered around four per cent for the past decade, but US homebuyers have seen much higher borrowing costs in the past.

Rates were around eight per cent in the early 2000s, and hit their record high of more than 18 per cent in the early 1980s, according to government-sponsored lender Freddie Mac.

Despite the recent uptick in rates, Yun says they remain "incredibly low," and predicts better economic growth that puts more money into Americans' pockets will help them overcome the increased borrowing costs and push real estate sales up 15 per cent this year.

Even with the expectation that offices will reopen as COVID-19 vaccinations become widespread, some employees could continue working remotely and look for new houses that accommodate that — a dynamic viewed as already boosting sales last year.

Kan said the market is "still looking pretty strong", and noted mortgage costs are only once component of the decisions that go into home buying, along with finding a property the buyer likes.

Supply squeeze

Yet, as more buyers have closed on homes across the United States, supply has grown short, pushing prices up and sending developers scrambling.

Sales of existing homes were up 5.6 per cent last year from 2019, their highest level since the booming housing market of 2006, just before the housing bubble burst and 2008-2010 global financial crisis began.

New homes have also seen brisk sales, pushing prices up from an average of $384,000 in January 2020 to $408,800 in January of this year, a gain of 6.5 per cent, according to the Commerce Department.

Rubeela Farooqi of High Frequency Economics predicted "record-low inventories are likely to support to building activity, especially in the single-family sector."

However, Chuck Fowke, president of the National Association of Home Builders, warned that increases in both interest rates and costs of lumber and other materials have already caused builders to slow some construction of single-family homes.

MILAN — Italian energy giant Eni said on Thursday it had filed a request with a Milan court to pay 14 million dollars (11.8 million euros) to settle an investigation into corruption in Congo-Brazzaville levied at the company and one of its managers. 

According to Italian media, the probe was first launched in 2017, and relates to payment of suspected bribes when oil licences in Congo-Brazzaville were being renewed in 2015.

To secure renewal, Eni was accused of agreeing to sell parts of its licence to a shell corporation maintained by Congolese public officials. 

In a statement, Eni said the request was not an admission of guilt, "but an initiative aimed at avoiding the continuation [of] a judicial process that would entail further expenditure of resources from Eni and all the involved parties".

The court reducing the alleged offence from international corruption to undue inducement had paved the way for a settlement, the company explained. 

Eni refused to divulge the name of the manager implicated. 

The news comes the day after an Italian court cleared Eni and Shell of charges related to a major oil exploration deal in Nigeria in which $1.1 billion allegedly ended up in the pockets of corrupt politicians and middlemen.

Among the 13 individual defendants was Eni's chief executive, Claudio Descalzi, for whom prosecutors sought an eight-year prison term.

Descalzi was targeted by another investigation by a Milan court in 2019, accused of not disclosing a potential conflict of interest regarding Eni's activities in Congo-Brazzaville, allegations dismissed by the company as "without any foundation". 

SAO PAULO — Brazilian aircraft-manufacturer Embraer said on Friday it cut its losses to $3.3 million in the fourth quarter, but ended pandemic-hit 2020 with a total net loss of $731.9 million, more than double the previous year.

Embraer, the world's third-biggest plane-maker, after Airbus and Boeing, has been gradually recovering from the devastation that COVID-19 restrictions wrought on the aviation industry last year, but its future remains murky.

It said it had opted not to release guidance on expected financial results or plane deliveries for 2021, "due to continued uncertainty related to the COVID-19 pandemic and its impacts on the industry”.

Still, things are looking better for the company than when it first suspended its guidance a year ago.

Its net loss of $3.3 million for the last three months of the year was an improvement on both the $209.8 million it lost in the same period in 2019 and its loss of $121.2 million in the third quarter of 2020.

The full-year result was more than double its net loss of $322.3 million for 2019.

"The company's aircraft deliveries in 2020 were negatively impacted principally by the COVID-19 pandemic that continues to affect the world, especially commercial air travel," Embraer said in a statement.

"Annual commercial jet deliveries [44] declined 51 per cent in 2020 as compared to the 89 jet deliveries the company registered in 2019," it said.

"Executive jet deliveries [86] were less impacted, falling 21 per cent relative to the 2019 deliveries of 109 jets."

Exacerbating its difficult 2020, Embraer suffered a break-up in April with troubled US aerospace giant Boeing, which announced it was abandoning plans for a $4.2-billion deal to buy the Brazilian company's commercial plane division.

However, in a sign of the recent uptick for Embraer, more than half its deliveries last year were in the fourth quarter — 71 out of a total of 130.

WASHINGTON — Google will invest more than $7 billion in the United States this year and create thousands of jobs, the tech giant's CEO said on Thursday.

"We plan to invest over $7 billion in offices and data centers across the US and create at least 10,000 new full-time Google jobs in the US this year," Sundar Pichai said in a statement.

Pichai said Google "wants to be a part" of America's economic recovery from the pandemic and is investing in some communities that are new to the company, as well as expanding in others across 19 states.

The announcement comes as Google faces pressure from dozens of US states that accuse the internet giant of abusing its search dominance to eliminate competition.

Google will spend $1 billion in its home state of California.

Outside of the San Fransisco Bay Area, Google said it would add thousands of jobs in Atlanta, Washington DC, Chicago and New York.

"This will help bring more jobs and investment to diverse communities as part of our previously announced racial equity commitments," Pichai said.

Google's parent company Alphabet last month reported a 50-per cent jump in quarterly profit to $15.2 billion as its digital ad business thrived.

LONDON — Andrew Bailey took over as governor of the Bank of England last year, just as Covid hit Britain like a storm, sinking the economy to uncharted depths.

The economy shrank by 9.9 per cent last year due to the effect of the global health crisis -- the biggest contraction on record.

But if that was not enough to deal with, Bailey's first 12 months in office has seen him come under repeated scrutiny about his past role as head of the country's securities regulator.

The coronavirus pandemic gave Bailey, 61, from Leicester, central England, no time to settle in.

"It was the third day of my term when the markets team came into the office and said, 'we need to talk'. That's never good," he told the Financial Times last May. 

Under his leadership, the bank lowered its key interest rates to an all-time low and increased its asset-purchase programme to prevent the economy from going under.

A year on, the overall picture looks markedly different.

Some 25 million people -- or half of all the country's adult population -- has received a first dose of a vaccine and there are tentative moves towards easing lockdown restrictions.

The economic situation, too, appears to be improving.

But 2021 could yet be as eventful for Bailey, as a series of scandals during his career in the City rear their heads.

Scandals 

Bailey, a more subdued figure to his charismatic predecessor Mark Carney, earned a doctorate at Cambridge University before becoming a researcher at the London School of Economics, where his wife Cheryl Schonhardt-Bailey teaches political science.

He joined Britain's central bank in 1985, and has spent most of his working life on Threadneedle Street.

The bespectacled father-of-two played a key role during the 2008 financial crisis, when he was in charge of the bank's special operations that oversaw the publicly-funded rescue of the Royal Bank of Scotland.

In 2016, he left the institution to join the Financial Conduct Authority (FCA) watchdog after being headhunted.

He has admitted the job was tough, although he had no regrets about taking up the position.

Under his tenure, the FCA was rocked by a series of scandals, including the collapse of former star investor Neil Woodford's fund and London Capital and Finance.

The fall of LCF, which cost thousands of investors their life savings, continues to dog the governor to this day.

Judge Elizabeth Gloster, who is conducting an inquiry into the FCA's responsibility for the collapse, has accused Bailey of pressuring her not to include his name in her report.

He has denied the allegation. But he has had to repeatedly defend his record.

Brexit 

Bailey also differs from his Canadian predecessor Carney on Brexit, Britain's divisive departure from the European Union last year.

While "leave" supporters accused Carney of being too pessimistic in his forecasts of the financial implications of leaving the bloc, Bailey has shown himself ready to defend the City at all costs.

The financial sector was virtually ignored in the last-gasp trade agreement secured in late December.

The EU is concerned that much of its financial activity will be channeled through London, which it no longer regulates.

But Bailey said he was prepared to "resist vigorously" to keep euro-clearing houses in Britain.

He has said it would be "unrealistic, dangerous and inconsistent with practice" to agree to never change UK financial regulation because of market changes and unforeseen risks.

But forcing Britain to march in lock-step with future EU regulations was "rule-taking, pure and simple", and failed to account for the outsized share of UK finance in the global economy.

He argues instead for an acceptance of healthy competition between London and the EU.

"I believe we have a very bright future competing in global financial markets underpinned by strong and effective common global regulatory standards," he added.

LONDON — World stock markets rose on Thursday on an upbeat outlook from the US Federal Reserve, with the focus now on the Bank of England's upcoming interest rate decision.

Frankfurt jumped 1.2 per cent to hit a fresh record, with sentiment boosted partly by the flotation of Vantage Towers, the German phone masts unit of British telecoms giant Vodafone.

Paris gained 0.2 per cent and London firmed 0.1 per cent before the Bank of England is expected to leave interest rates at a record low 0.1 per cent.

'Supportive' Fed stance 

"The Fed-inspired upbeat mood has broadly transferred to Europe," said OANDA analyst Sophie Griffiths. 

"The Dax is a clear outperformer, powering to a fresh all-time high. Cyclical stocks -- those closely tied to the economy's performance, such as automobiles, banks, miners and travel and leisure -- are leading the gains."

She cautioned however that traders were also weighing up "the Fed's supportive stance against concerns over the covid vaccination programme in Europe".

Asian equities rose after the Fed ramped up its outlook for the US economy and reiterated its pledge to maintain its ultra-loose market-friendly monetary policies for as long as needed.

With growth already expected to burst higher this year, huge stimulus spending kicking in and vaccines being rolled out, investors have in recent weeks grown worried about a surge in inflation that could force the US central bank to reconsider its dovish stance.

But the Fed's decision after its latest board meeting was music to the ears of traders.

Policymakers forecast the world's top economy to expand 6.5 per cent this year, a full two percentage points above their earlier projection.

The upward revision was thanks to trillions of dollars in government spending and the expected easing of lockdown measures that will allow people to get back to their daily lives.

'No hurry to raise rates' 

The Fed continued to pledge that the record low interest rates that have been a key pillar of the year-long markets rally will not be touched for the foreseeable future.

Investors were cheered by projections that borrowing costs will likely stay where they are until possibly 2024, even if inflation surges.

"The overarching message... was of greater optimism on the outlook but a central bank that is not in a hurry to raise rates," said Axi strategist Stephen Innes. 

Wall Street rallied on the news, with the Dow ending above 33,000 for the first time, while the S&P 500 also chalked up a record.