this is what I call permanent deindustrialization
European Economics Thread
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this is what I call permanent deindustrialization
Some of the industries likely switched from gas to burning fuel oil. Others (many) closed down. Basically nearly all energy intensive industries closed down. Glassworks, brickworks, metalworks, etc. Instead of using European glass and steel to assemble a car, maybe you will import the glass and steel instead and just assemble cars. Now with OPEC+ announcing yet another oil production cut, it will be interesting to see what will happen to these industries which remain, to say the least.
Also, while gas storage is still high, if there is a double whammy where summer is hot with no wind, just like what happened a couple of years ago, with a winter that is colder than usual, all bets are off. The closing down of nuclear power plants in Europe does not help either.
Also, while gas storage is still high, if there is a double whammy where summer is hot with no wind, just like what happened a couple of years ago, with a winter that is colder than usual, all bets are off. The closing down of nuclear power plants in Europe does not help either.
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EU’s ‘de-risking’ plan for China meets resistance from some members
- Several western European states take issue with a presentation of European Commission President Ursula von der Leyen’s proposal for a new China strategy
- Some are troubled by national security justifications for the new stance; ‘we aren’t interested in a gung ho approach to China,’ one official says
in BrusselsPublished: 1:25am, 10 Jun, 2023 Updated: 5:51am, 10 Jun, 2023
European Commission President’s Ursula von der Leyen strategic “de-risking” proposal for China is drawing objections from some EU member states. Photo: AFP
As European Union chief Ursula von der Leyen prepares to unveil a road map for “de-risking” economic ties with China, big member states have warned against “mimicking” the “gung ho” approach of United States.
At a breakfast meeting in Brussels on Wednesday, diplomats from France, Germany, Italy and the Netherlands were among those expressing concern about “national security” references von de Leyen’s chief of cabinet, Bjorn Seibert, made in a presentation, according to five diplomats and others party to the discussion.
While there is broad support for reducing Europe’s dependencies on China and finding alternative suppliers for critical goods, there are worries that von der Leyen’s European Commission is moving too quickly and too expansively.
The “cool and cautious” feedback from some the bloc’s most powerful members, said a senior official, was: “We are Europe, not the United States.”
Some capitals worry that Brussels is veering onto their turf by conflating trade policy with “national security”.
“National security means national security,” one western European diplomat said, a reminder that the EU has no domain over its members’ individual policies in this area.
An early-stage proposal for the new economic security strategy – which will not directly target China, but which has been drafted with it in mind – is due on June 20, having been first announced by von der Leyen during a speech on China at the end of March.
At that time, she warned of the need to wean Europe off Chinese supplies of critical minerals, and to keep cutting-edge European technologies out of the hands of China’s military.
It is evident […] that she did not consult EU governments before rhetorically aligning with the Biden administration on this David Kleimann, Bruegel
The policy will include outbound investment screening, which would restrict European firms from investing in some sectors of the Chinese economy.
The concept has made western European capitals jittery about Brussels moving too close to Washington, where security has trumped economic rationale when it comes to Beijing, a second diplomat said.
A third added that while Seibert presented “a good overall plan, we need to be careful not to mimic the American in their posture and their words”.
“The overall response was pragmatic, we aren’t interested in a gung ho approach to China,” said a fourth.
The lukewarm response could set the tone for an EU leaders’ debate on China later this month, as the 27 top officials mull over an updated policy towards Beijing.
“It is evident from member states’ reactions that she did not consult EU governments before rhetorically aligning with the Biden administration on this subject,” said David Kleimann, a visiting fellow at the Bruegel think tank in Brussels.
“This is surprising, because limitations to outbound capital flows are subject to unanimity in the European Council. Moreover, member states have exclusive competence for national security matters,” he added.
The von der Leyen camp is unfazed by the blowback and points to a series of trade weapons pointed at China that were unpopular with EU members initially, only to eventually pass into law.
An anti-coercion instrument designed to tackle China’s perceived economic bullying was formally agreed upon this week, less than two years after it was proposed. Initially, free market-minded member states had been extremely uncomfortable with the concept.
Also, von der Leyen’s supporters note, she has said that the national security elements of her de-risking proposal would be very limited, to specific tech industries like quantum computing, artificial intelligence and semiconductors.
The vast majority of trade and investment is deemed unrisky, and would not be affected.
Western Europe’s anxiety has crept into other areas of EU-China relations as well.
Some members are frustrated that Beijing was not consulted earlier about proposed EU sanctions on eight Chinese companies – some of which have bases in Hong Kong – for funnelling banned European goods to Russia’s military.
Relevant EU officials only met with Chinese interlocutors to explain why the firms had been targeted this week, according to a senior EU source, despite reaching out earlier to other countries in a similar position.
“We don’t need to tell them everything, but we need to stay engaged, I mean it is China,” said a western European diplomat about the delayed approach to Beijing. “We need to explain [things] to China – as always, it’s more about respect than consent with them.”
The measures, which have been negotiated for the past month, could be finalised as soon as Wednesday as part of a broader package of sanctions, mostly on Russia.
China’s ambassador to the EU, Fu Cong, has complained about the lack of consultation and suggested in a recent interview that if presented with evidence he could help close the loopholes through which hi-tech goods used in cruise missiles were being sold to Russia.
Not everyone shares anxieties over a sharper EU turn on China. Many member states from central and eastern Europe are very comfortable with a tougher approach and with greater alignment with the US.
“What we see right now is that the western European capitals tend to regard China-related challenges primarily through the lens of economic security. This is the order of the day and the key discussion,” said Grzegorz Stec, an analyst of EU-China relations at the Mercator Institute for China Studies in Berlin.
“In turn, central and eastern European capitals are closer to the [Ukraine] war, making the traditional security lens comparatively stronger,” he added.
“Beijing’s relationship with Moscow impacts these countries’ fundamental safety and brings in more geopolitical dynamics given that Nato and the US act as security guarantors in the region.”
Didn't Homer say something like that?
Not the Homer who works for Mister Burns in the power plant, excellent, but the original Homer from Greek antiquity.
The strong do what they can, the weak suffer what they must.
Ahh ... who needs classical music and antiquity anyways?
Heh!
What did I tell you? The weather got a bit hot, people ran their air conditioners in Europe, and gas price basically doubled in no time flat.
MOSCOW, June 15. /TASS/. The price of gas in Europe on Thursday reached around $500 per 1,000 cubic meters, according to London’s ICE.
The price of July futures at the TTF hub in the Netherlands rose to $499 per 1,000 cubic meters, or 44.59 euro per MWh (based on the current euro/dollar exchange rate, ICE prices are presented in euro per MWh).
Gas prices in Europe nearly halved in the spring to roughly $282 per 1,000 cubic meters, owing to a large amount of gas in storage, record liquefied natural gas supply, and mild weather. Thus, storage capacity is more than 72% filled, and LNG supplies from terminals into Europe's gas transmission system in May reached an all-time high at 12.16 bln cubic meters.
Fresh reports that the Netherlands is to follow through with plans this year to close its Groningen gasfield — once Europe’s largest single source of domestic supplies — triggered the rally on Thursday, while forecasts for hotter weather and supply outage extensions at key fields in Norway continue to support prices.
...
Hans Vijlbrief, the Dutch state secretary for mining, told the FT in January that Groningen will be shut by October 1 but if necessary, it would remain open until October 2024.
Production at the Groningen gas was reduced to 2.8 bcm per annum last year, the minimum to keep its pumps working, with tremors blamed on drilling causing damages to property in the area.
Gas price in Europe reaches around $500 per 1,000 cubic meters
Gas prices in Europe nearly halved in the spring to roughly $282 per 1,000 cubic meters, owing to a large amount of gas in storage, record liquefied natural gas supply, and mild weatherMOSCOW, June 15. /TASS/. The price of gas in Europe on Thursday reached around $500 per 1,000 cubic meters, according to London’s ICE.
The price of July futures at the TTF hub in the Netherlands rose to $499 per 1,000 cubic meters, or 44.59 euro per MWh (based on the current euro/dollar exchange rate, ICE prices are presented in euro per MWh).
Gas prices in Europe nearly halved in the spring to roughly $282 per 1,000 cubic meters, owing to a large amount of gas in storage, record liquefied natural gas supply, and mild weather. Thus, storage capacity is more than 72% filled, and LNG supplies from terminals into Europe's gas transmission system in May reached an all-time high at 12.16 bln cubic meters.
European gas prices double in 10 days as traders remain on the edge
...Fresh reports that the Netherlands is to follow through with plans this year to close its Groningen gasfield — once Europe’s largest single source of domestic supplies — triggered the rally on Thursday, while forecasts for hotter weather and supply outage extensions at key fields in Norway continue to support prices.
...
Hans Vijlbrief, the Dutch state secretary for mining, told the FT in January that Groningen will be shut by October 1 but if necessary, it would remain open until October 2024.
Production at the Groningen gas was reduced to 2.8 bcm per annum last year, the minimum to keep its pumps working, with tremors blamed on drilling causing damages to property in the area.
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The HCOB Eurozone Composite PMI fell to 50.3 in June 2023, the weakest since January, down from 52.8 in the previous month and below the market consensus of 52.5, a preliminary estimate showed. The reading indicated a sharp slowdown in private sector expansion, which was only marginal due to a combination of a slower rise in the services sector and a deepening downturn in manufacturing. New orders dropped for the first time in five months, employment growth slowed to a four-month low, and backlogs of work fell at the steepest rate in seven months. On the price front, input costs rose the least since December 2020 and average selling prices for goods and services rose at the weakest rate since March 2021. Finally, business optimism about the year ahead fell the most since September to its lowest level so far this year, due to concerns over demand growth, and in particular the impact of higher interest rates.
source: Markit Economics
source: Markit Economics
Puts into perspective how competition to European car brands can directly damage their economies.How Important are Car Brands to Their Countries’ GDPs? (2022)
In 2022, one carmaker is nearly in the double digits—the revenue from Dutch automobile manufacturer Stellantis is equivalent to approximately 9.95% of the Netherland’s GDP.
Founded in 2021, Stellantis is comprised of 16 different international car brands, including well-known Europeans brands like Vauxhall and Citroen, as well as some American manufacturers like Dodge and Chrysler.
Other countries also have a large combined output from automakers, including Japan (11.91%) and Germany (13.97%).
Global revenue to national GDP is a very bad way to measure the economic impact of car brands on their home country. Half of those German car revenues are made in China by local joint ventures. If they disappear overnight, the German economy isn't going to shrink by 7%