Concerns over Europe economy as poll finds almost 23% of Spaniards have anxiety over cost of living – Europe live | Spain

Nearly one quarter of Spaniards feel anxiety or depression over inflation

Almost 23% of Spaniards have experienced “anxiety or depression” due to the rise in the cost of living, according to an opinion poll carried out for El País newspaper and SER radio network.

A further 57.7% said they feel discouraged or pessimistic due to inflation.

Almost all respondents – 90% – said they see inflation as the current biggest global threat, even more than war, energy instability, terrorism and the climate crisis.

Key events

Diminishing competitiveness main challenge for EU’s economy, analyst says

Philipp Lausberg, a policy analyst in the European political economy programme at the European Policy Centre, said today that “the main challenge to the EU economy is the bloc’s diminishing competitiveness”.

In an emailed note, Lausberg said: “In an increasingly confrontational global geo-economic environment, high energy prices, skills shortages, the regulatory burden, and a weakening of the single market are all threats to Europe’s competitive edge and economic success.”

He added:

The investment efforts in innovative green and digital industries as well as for the move towards greater economic security is not comparable to the ambitious industrial policy programmes in the US and China.

This also translates into a slower uptake of renewables to tackle the challenge of high energy prices.

Public investment is largely channelled through member states and not sufficiently through EU-wide funding, which creates inefficiencies and undermines the European single market, the EU’s biggest competitive asset.

Lausberg also noted that “the EU’s businesses have to grapple with increasing regulatory compliance costs, which can hamper innovation and reduce competitiveness, as the EU’s efforts to push ahead the green deal create increasing regulatory burdens and costs.”

“The decrease of skilled labour because of the demographic change and a lack of skilled immigration,” he noted, “poses another great challenge to the union’s economy.”

More large firms expect to relocate operations, ECB survey finds

The European Central Bank released results from a new survey today showing that “large firms expect to become more active in (re)locating operations over the next five years to make their businesses more resilient”.

In the survey, “companies were asked how the location of their production/operations had changed over the last five years and how they expected it to evolve over the next five years,” the ECB said, noting that “the replies indicate higher shares of firms expecting to (re)locate more production both into and out of the EU in the next five years than in the previous five years.”

Nevertheless, “there is still a higher proportion of companies expecting to move production out of the EU than into the EU,” the survey found.

A higher share of firms also said that they expected a tendency to (i) relocate more production geographically closer to the final production site or country of sales (“near-shoring”), (ii) diversify operations to a greater extent across countries, and/or (iii) (re)locate more production within/into countries politically closer to the main country of sales (“friend-shoring”) in the next five years than in the last five years.

The survey found that “geopolitical risk was the most frequently cited factor behind decisions to (re)locate production into the EU, while demand and cost factors motivate moves out of the EU.”

Eurozone business activity downturn accelerates

The downturn in eurozone business activity accelerated last month, a survey showed today, Reuters reported.

The final Composite Purchasing Managers’ Index (PMI) compiled by S&P Global fell to 46.5 in October from September’s 47.2, its lowest reading since November 2020.

“Final PMIs released today confirmed the preliminary estimates and are consistent with our forecast that euro-zone GDP will contract again in Q4,” said Adrian Prettejohn at Capital Economics, according to Reuters.

The outlook also looks very weak, with the new orders PMI falling to its lowest level since September 2012, excluding the early pandemic months, while exports were also particularly weak.

Tesla plans to build a 25,000-euro car at its factory near Berlin, a source with knowledge of the matter told Reuters today.

The carmaker plans to double the German plant’s capacity to 1 million vehicles a year, Reuters reported.

Simon Goodley

Middle East war could spark global recession, say Wall Street experts

A global recession could be set in motion by the conflict in the Middle East as the humanitarian crisis compounds the challenges facing an already precarious world economy, two of Wall Street’s biggest names have warned.

The downbeat comments come as the City braces for another gloomy update on the UK economy, with the Office for National Statistics due to provide an update on how it fared during the third quarter on Friday.

After barely growing during 2023, the UK economy is again expected to be almost at a standstill, according to estimates by City economists. There are also new downbeat figures on the housing market, with UK mortgage lending predicted to show decade-low growth during 2023 and 2024.

In terms of the global economy, Larry Fink, chief executive of the world’s largest asset manager, BlackRock, said a combination of the Hamas atrocities of 7 October, Israel’s resultant attack on Gaza and Russia’s invasion of Ukraine last year had pushed the world “almost to a whole new future”.

In an interview with the Sunday Times, Fink said: “Geopolitical risk is a major component in shaping all our lives. We are having rising fear throughout the world, and less hope. Rising fear creates a withdrawal from consumption or spending more. So fear creates recessions in the long run, and if we continue to have rising fear, the probability of a European recession grows and the probability of a US recession grows.”

Read the full story.

Alex Lawson

Alex Lawson

Ryanair to reward shareholders as it heads for record profits after fares rise

Ryanair is to hand its shareholders regular payouts for the first time after soaring air fares put the airline on track to make record profits.

The budget carrier said it expected to notch up profits of between €1.85bn (£1.6bn) and €2.05bn in the financial year to the end of March, far outstripping its previous highest profit of €1.45bn in 2018.

Ryanair has been helped by a 24% rise in average air fares to about €58 in the six months to the end of September, as the post-pandemic boom in demand for international travel helped Europe’s largest airline. A strong Easter, record summer traffic and the growth in air fares offset higher fuel costs.

UK construction output falls again as housebuilding shrinks – business live

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The Irish airline’s profits reached €2.18bn over the six months, 59% better than its previous record for the period, set last year. It expects “modest losses” over the winter season, when airlines typically struggle to make a profit.

Read the full story.

Hungary, meanwhile, is continuing to court Chinese investment.

Márton Nagy, the Hungarian minister of economic development, attended the China International Import Expo, where he “reaffirmed Hungary’s commitment to being the primary destination for Chinese investments in Central Europe,” according to a government spokesperson.

🇨🇳🤝🇭🇺Minister of Economic Development Márton Nagy, at the 6th China International Import Expo, reaffirmed Hungary’s commitment to being the primary destination for Chinese investments in Central Europe. 🤝The minister emphasized the country’s strategic position between East and… pic.twitter.com/VRJwkjWtEJ

— Zoltan Kovacs (@zoltanspox) November 6, 2023

After visiting Ethiopia, Czech Republic prime minister Petr Fiala is in Kenya today in an effort to build closer business and defence ties.

Opening of the Czech-Kenyan Business Forum in Nairobi. I am very pleased with the great interest, more than a hundred Kenyan businessmen have arrived.

The Czech Republic has strong security and defence relations with Kenya and we have much to build on. I see potential in the… pic.twitter.com/sHmXuGKYiU

— Petr Fiala (@P_Fiala) November 6, 2023

Spain’s services sector activity grows

Spain’s services sector activity grew at a slightly faster rate in October, Reuters reported today, citing the HCOB Spain Services Purchasing Managers’ Index (PMI) compiled by S&P Global.

Business people surveyed by S&P Global said their operating expenses kept on rising, but most of them protected their margins by raising their own prices.

“While the wider European service sector is experiencing continuous downward pressure in business activity, Spanish companies are kicking it up a notch and reviving growth,” said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

Inflation rise in Russia ‘almost certain’ to increase cost of war, UK says

The UK Ministry of Defence said today in a public intelligence update that inflation rose to 6% in Russia in September, up from 5.3% the previous month, addingthat “higher inflation is almost certain to increase the costs of funding Russia’s war in Ukraine”.

The British ministry said “it is highly likely” that Russia’s central bank “will maintain high interest rates through 2024” and “this is highly likely to increase borrowing costs for Russian consumers” while also likely affecting the Russian government’s debt servicing costs.

“The Russian economy is likely at risk of overheating,” the ministry said, adding that “continued high inflation is likely to erode real terms government spending, particularly in areas such as social care with below-inflation spending rises.”

“This further illustrates the reorientation of Russia’s economy to fuel the war above all else,” the ministry said.

Nearly one quarter of Spaniards feel anxiety or depression over inflation

Almost 23% of Spaniards have experienced “anxiety or depression” due to the rise in the cost of living, according to an opinion poll carried out for El País newspaper and SER radio network.

A further 57.7% said they feel discouraged or pessimistic due to inflation.

Almost all respondents – 90% – said they see inflation as the current biggest global threat, even more than war, energy instability, terrorism and the climate crisis.

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Good morning and welcome back to the Europe blog.

Today we will be delving into the state of the European economy.

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