ROME (Reuters) – Italy’s Leonardo said on Friday it was set to benefit from higher defence spending following the Russian invasion of Ukraine and that orders for the current year were spread widely rather than reliant on one big contract.

Executives from the state-controlled defence and aerospace group were commenting after the company beat its guidance for new orders last year and maintained its dividend.

Chief Executive Alessandro Profumo said guidance for new orders of around 17 billion euros this year was made up of “small orders” and not dependent on any one big deal.

Profumo also said the company saw significant growth in orders “in all the geographies.”

Shares in Leonardo traded 1.8% higher by 0830 GMT, bucking a negative trend in stock markets spooked by fears over the banking sector.

Leonardo General Manager Valerio Cioffi said the company was “very well positioned” to benefit from higher defence spending as governments respond to the conflict in Ukraine.

The guidance for new orders this year is broadly in line with the figure of almost 17.3 billion euros ($18.26 billion) last year.

Profumo said the company was targeting aggregate orders of around 90 billion euros in the 2022-2026 period, up from 80 billion under a previous plan.

($1 = 0.9443 euros)

(Reporting by Alvise Armellini,; Writing by Keith Weir, Editing by Angus MacSwan)

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WASHINGTON, D.C. – A 34-year-old man was found stabbed to death by police in the Fairlawn neighborhood of Washington, D.C., on Thursday.

Police reported at 2:40 am that they responded to a report of a stabbing in the 1600 block of 17th Place to find Johnathan Craig, 34, with a stab wound. Police investigated and determined Craig was dead at the scene. EMS transported his body to the Office of the Chief Medical Examiner as part of their investigation.

No suspects were identified and no arrests were made.

Anyone with information about this case is asked to call the police at 202-727-9099. Additionally, anonymous information may be submitted to the department’s TEXT TIP LINE by sending a text message to 50411.

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By Hari Kishan

BENGALURU (Reuters) – Home prices in several major markets will extend their decline this year, according to a global Reuters poll of property analysts who either predicted slightly steeper drops or kept their view steady from a survey three months ago.

Even greater drops may be in the offing, since the forecasts were collected before the Federal Reserve this week indicated that U.S. interest rates would likely climb higher and stay elevated for longer than previously thought.

Rising mortgage rates as central banks lift benchmark borrowing costs to curb inflation, and a historic house price boom during the COVID pandemic have pushed home ownership closer to impossible for many prospective first-time buyers.

That in turn has pushed up rents sharply in most markets, leaving the overall cost of housing much more expensive in just the past few years.

Predicted drops in house prices in the U.S., Canada, Britain, Germany, Australia and New Zealand will come off price surges of as much as 50% since the start of the pandemic in 2020.

Indeed, 50 of the 96 analysts in the polls, taken from Feb. 15 to March 8, said affordability would worsen in the coming year. They included nine who said it would do so significantly.

“Those markets that saw the strongest growth during the pandemic, so places like New Zealand, Canada, the Nordic markets, are probably likely to be most heavily affected,” said Kate Everett-Allen, head of international global residential research at Knight Frank.

House prices in Canada and New Zealand, which began to fall last year, were forecast to register a peak-to-trough drop of at least 20%, the poll showed.

Both countries have a considerably high household debt-to-income ratios.

Household debt as a proportion of net disposable income Household debt as a proportion of net disposable income, https://www.reuters.com/graphics/GLOBAL-PROPERTY/POLL/zjpqjyzrlvx/chart.png

Double-digit falls from recent peaks were also predicted for Australia (16.0%), Germany (11.5%) and the U.S. (10.0%). British home prices were expected to fall 8.0%.

Reuters Poll: Predicted fall in average home prices from pandemic peak to trough Reuters Poll: Predicted fall in average home prices from pandemic peak to trough, https://www.reuters.com/graphics/GLOBAL-PROPERTY/POLL/akpeqowqjpr/chart.png

Among the most commonly cited reasons for house prices to remain elevated were crimped supply, made worse during the pandemic, when construction activity came to a near-halt, and ever-rising demand.

“A slowdown in new housing construction and (a) drop in building permits are expected to deepen housing shortages in many countries across the world, with population growth continuing to outpace growth in new housing supply,” said analysts at JLL.

“A divergence in construction output is anticipated in 2023 with most markets seeing a fall in supply.”

However, activity in the crisis-hit China property market, which has seen mounting debt defaults over the past year, was forecast to recover this year as stimulus policies and the scrapping of COVID-19 curbs improve sentiment.

While India’s housing market will remain resilient despite rising interest rates, home prices in Dubai were also predicted to rise steadily.

(For other stories from the Reuters quarterly housing market polls:)

(Reporting by Hari Kishan; Other reporting and polling by Jonathan Cable, Indradip Ghosh, Sarupya Ganguly, Prerana Bhat, Vijayalakshmi Srinivasan, Milounee Purohit, Devayani Sathyan, Vivek Mishra, Anant Chandak and Susobhan Sarkar; Editing by Ross Finley and Bradley Perrett)

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SYRACUSE, NY – Police officers in Syracuse are being hailed as heroes after rescuing a baby held at knifepoint by her own father on Wednesday.

Police said Alexander Ortiz, 33, was contacted by police inside his home in the 100 block of East Brighton Avenue after receiving reports of a physical domestic complaint.

“Upon arrival, officers located a female victim, who stated that her child’s father had assaulted her,” the Syracuse Police Department said in a statement on Thursday. “At that time, information was learned that the child’s father, Alexander Ortiz, 33, of Syracuse, was inside the residence with an infant child and armed with a knife.”

Officers entered the home and located Ortiz in the dining room near a bedroom in the rear of the house.

He was observedOrtiz was holding his infant child in his left hand and a large kitchen knife in his right hand.

“Despite several commands from police officers, Ortiz refused to drop the knife or release the child and stated numerous times that police officers would have to kill him,” police said. “Eventually, the officers convinced Ortiz to release the infant child, which he did, and then proceeded to retreat into a bedroom with the knife and shut the door.”

The baby was evaluated by police and EMS at the scene and found to be unharmed.

Ortiz was arrested and taken into custody.

Officers exited the residence with the infant child and facilitated a medical evaluation.

He was charged with Criminal Contempt in the First Degree, Criminal Contempt in the Second Degree, Two counts of Endangering the Welfare of a Child and Harassment in the Second Degree.

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COLUMBUS, OH – Police in Columbus have charged Gene Scott and charged him with murder and other related charges. Scott allegedly killed his girlfriend and dumped her body in waste processing facility in Brown County.

Police suspect Scott strangled Benedetti to death on January 29th. She was reported missing on February 1st.

After killing Benedetti, Scott fled to Kentucky.

On Wednesday, police were alerted after her body was found at Rumpke Waste and Recycling facility.

Scott was arrested by police in Kentucky in late February. He was extradited back to Ohio on February 23rd.

The CPD said the investigation into Benedetti’s murder is ongoing.

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By Susana Vera and Ceyda Caglayan

ANTAKYA/ISTANBUL (Reuters) – Mehmet Alkan, a shoe-sole manufacturer in Turkey’s earthquake-hit south, doesn’t know what will become of his company after some of his 220 employees died and half fled, reflecting the difficult transformation ahead for industry in the region.

Forty of his workers and some families sheltered for a while in the undamaged Alkan Taban factory in Antakya after the massive quakes on Feb. 6.

“We only have 110 workers after some died and others left the city, so production capacity dropped,” said Alkan, the manager.

Turkey’s deadliest disaster in modern history struck a region rich in textile production and agriculture that accounts for 16% of total employment and around 11% of industrial production, a report by the Istanbul Chamber of Industry showed.

It forced millions to leave 11 southeastern provinces that were home to some 14 million people. Some say they may not return despite Ankara’s plan to swiftly rebuild hundreds of thousands of damaged or collapsed buildings.

Hundreds of businesses that re-started operations a month after the quake face shortages of staff who moved to nearby villages, relatives in other cities or to government-sponsored accommodation of tents and container homes, interviews show.

“We turned our showroom into a dormitory” for employees, Alkan said. “Most of their families left the city or moved to safer village areas. They are afraid. We are waiting for others to come back.”

He said the company’s shuttle used to drive up to 50 km (30 miles) to collect workers from their homes, but it now drives double that distance to reach the villages.

The disaster, which killed more than 52,000 people in Turkey and Syria, is a challenge to President Tayyip Erdogan’s plan to transform Turkey into a competitive manufacturing power. Business groups and economists estimate quake fallout costing some $100 billion and shaving one to two percentage points off the country’s gross domestic product (GDP).

Some funding meant to boost production, employment and exports under Erdogan’s economic plan will be directed towards aid and rebuilding efforts in the area, they say.

RESHUFFLING

To ease the fallout, the government has rolled out short-work allowances for workers and easier access to loans for affected companies.

In Antakya, the hardest-hit city where dozens of blocks were flattened, only around a third of production capacity is being used a month after the earthquake, sector officials and experts say. It could take years to return to normal, bringing about a shift in demography in the area.

“We need urgent government support to start reverse migration for businesses. We are losing qualified workforce. A safe environment with facilities like schools and social spaces needs to be set up,” said Hikmet Cincin, the head of Antakya’s Chamber of Trade and Industry.

More than 600,000 homes collapsed or were severely damaged across the region, official data shows, while the government promised to build at least 250,000 units of accommodation within one year.

“It is very difficult to predict when housing and businesses will return to normal in the region. Permanent accommodations and reopened schools will be crucial,” said Serdar Sayan, director of the centre for social policy research (SPM) at Ankara-based TOBB University.

The region could also see industries reshuffled as construction sector workers arrive, Sayan said.

“People who started new, permanent lives in other cities are mainly from the middle- and upper-income classes,” while those who stayed tend to earn lower incomes and need state aid, Sayan said.

Seher Icici, who handled logistics and accounting at a textile machinery company in Kahramanmaras, near the epicentre of the earthquake, moved some 250 km to the west with her two small children, to the city of Mersin.

“We are staying temporarily since we do not have a home to return to now. We had to leave the city as we could not find temporary accommodation,” Icici said.

Families she knew had already left the area and enrolled their children in schools elsewhere, she said, and most won’t return at least until the end of the academic year.

“I cannot work right now but I am lucky as my boss paid my salary and some support money,” Icici said. “We are getting by with it for now.”

(Additional reporting by Ezgi Erkoyun; Editing by Jonathan Spicer, Daren Butler and Nick Macfie)

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LONDON (Reuters) – Demand for U.S. dollars in the currency derivative markets surged on Friday to its highest since mid-December, after a meltdown in U.S. banking stocks ignited a wave of investor risk aversion.

Three-month euro/dollar cross currency basis swap spreads traded as negatively as -17 basis points, the most since December 14, reflecting a pickup in demand for hard cash. They were last trading at -14.

An index of European banks was heading for its biggest one-day fall since last June, as shares in the region’s biggest lenders dropped in sympathy with a steep decline in the value of Wall Street’s biggest lenders on Thursday.

(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)

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ZURICH (Reuters) -Credit Suisse shares hit a new all-time low in early trading on Friday as the European banking sector suffered the fallout from a sharp sell-off in U.S. financial stocks.

The embattled bank’s stock fell to 2.463 Swiss francs on the Swiss Market Index amid the sell-off.

Rival UBS was down 4.7% as European banking stocks headed for their largest one-day fall in nine months.

Europe’s STOXX banking index was down 4.2% and set for its biggest one-day slide since early June, with declines for most major names including HSBC down 4.5% and Deutsche Bank off 7.9%.

U.S. lender SVB Financial Group scrambled on Thursday to reassure its venture capital clients their money was safe after a capital raising led to its stock collapsing 60% and contributed to wiping out over $80 billion in value from bank shares.

(Reporting by John Revill; editing by Jason Neely)

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By Eloisa Lopez

ABOARD PHILIPPINES COAST GUARD PLANE, South China Sea (Reuters) – As a Philippine coast guard aircraft flew over the disputed Spratly islands in the South China Sea on Thursday, a message came in over the radio telling it to immediately leave “Chinese territory”.

Such warnings, from a Chinese coast guard ship, have become an almost daily ritual around one of the world’s most contested archipelagos, where China is one of five countries claiming the strategic islands – or at least some of them – as their own.

“Calling China coast guard vessel. You are transiting inside Philippine territorial sea,” the Philippine pilot radios back.

“Request identify yourself and state your intention to prevent misunderstanding,” he said.

China claims sovereignty over almost the entire South China Sea and has for years permanently deployed hundreds of coast guard and fishing vessels in disputed areas like the Spratlys, where it has dredged sand to build islands on reefs, and equipped them with missiles and runways.

Malaysia, Vietnam, Brunei and Taiwan also have claims in the Spratlys. The Philippines occupies nine features there, and has accused China of aggression and “swarming” by fishing vessels that it says are militia, including near the tiny Thitu island occupied by Manila since the 1970s.

A Reuters journalist joined the Philippine flight on Thursday and observed some of those Chinese boats dotted in the waters around Thitu, an island of 400 people. The Philippines last week accused the vessels, including a navy ship, of “slowly loitering”.

China said on Friday it has sovereignty over the Spratly Islands, known in China as the Nansha Islands, and its adjacent waters.

“Therefore, it is reasonable and legal for Chinese ships to carry out normal activities in waters under China’s jurisdiction,” Chinese foreign ministry spokesperson Mao Ning told a regular briefing.

The fly-by came amid repeated complaints by the government of President Ferdinand Marcos Jr against China’s actions, including its use of a laser that Manila said temporarily blinded crew members of a coast guard vessel last month.

The Philippines under Marcos has stepped up its rhetoric to challenge China and is seeking closer ties with former colonial power and defence ally the United States, including plans to hold joint sea patrols.

The plane flew over another hot spot for China-Philippines tensions – the Second Thomas Shoal – where the military grade laser was last month used to target a coast guard crew supporting a military resupply mission.

The Philippines has long maintained a small contingent of military aboard a rusty former U.S. navy ship that it ran aground on a reef there to preserve Manila’s territorial claim.

China’s coast guard challenged the plane again as it flew over the shoal, located inside the Philippines 200-mile exclusive economic zone.

“This is the Philippine Coast Guard,” the pilot responded.

“We are conducting a routine maritime patrol within our national airspace, and monitoring the safety of our fishermen,” it said.

(Writing by Karen Lema; Additional reporting by Joe Cash in BEIJING; Editing by Martin Petty, Ed Davies)

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By Elaine Lies

SHINCHIMACHI, Japan (Reuters) – A chilly dawn paints the sky magenta and purple as Japanese fisherman Haruo Ono unloads his catch of flounder, crab and sea bass from his boat at the small port of Shinchimachi.

A third-generation fisherman, Ono, 71, has been putting to sea for half a century from Shinchimachi, 55 km (34 miles) north of the Fukushima Dai-ichi nuclear plant, the scene in 2011 of one of the world’s worst nuclear disasters.

On March 11 that year, a 9 magnitude earthquake struck offshore sending tsunami waves smashing into Japan’s east coast. Ono rode out the waves at sea on his boat but on land, the waves devastated Shinchimachi and obliterated Ono’s home.

The tsunami also crashed into the nuclear plant just down the coast, setting off explosions and meltdowns that released radiation over a wide swathe and shut down fishing for more than a year due to worries about radiation.

More than a decade later, Shinchimachi is still recovering as is its fishing industry but a new threat spawned by the disaster could wipe out the progress made.

The Tokyo Electric Power Co (Tepco), which runs the crippled nuclear power station, plans to soon start releasing more than a million tons of radioactive water from the plant into the sea.

“It’s been 12 years and fish prices are rising, we’re finally hoping to really get down to business,” Ono said.

“Now they’re talking about releasing the water and we’re going to have to go back to square one again. It’s unbearable.”

The water was mainly used to cool reactors in the aftermath of the disaster. It is enough to fill about 500 Olympic-sized swimming pools and is being stored in huge tanks at the plant.

Officials say the tanks have to be removed for reconstruction.

The water is treated, filtered and diluted and Tepco and the government say it is safe. But it does contains traces of tritium.

Even though the radioactive isotope is considered relatively harmless, the region’s fishermen, like its farmers, have been struggling for years to restore the reputation of their produce and now fear the dumped water will kill their business.

“We here in Fukushima have done absolutely nothing wrong, why do they have to mess up our ocean?” Ono said. “The ocean doesn’t belong to only us humans – and it isn’t a garbage can.”

Countries in the region have also been worried about the release though some concerns have been easing.

‘WHY NOT TOKYO’

Fukushima has a long, proud fishing tradition. The area used to send its flounder in tribute to feudal lords.

But the waves nearly ended all that.

Ono was left with virtually nothing. Though his immediate family survived, a brother was killed in the roiling sea.

Ono’s new home stands high inland, surrounded by other new houses on straight roads laid out after the disaster.

His bright main room contains pots of pink geraniums and a photograph of Ono taking part in the 2021 Olympic torch relay.

The area where he used to live has been turned into a park.

“In the tsunami I lost my house, I lost all my possessions, I lost my younger brother. Then we had the nuclear accident,” Ono said.

“Our pain has been two or three times higher than anybody else’s. Why are they still giving us a hard time? Why release water into the Fukushima ocean, why not Tokyo or Osaka?”

Experts like Toshihiro Wada, an associate professor in environment and radiation studies at Fukushima University, said the timing of the release of the water, and the alarmist talk it will bring, was unfortunate.

“Given how carefully fishing has been expanded, and that it’s just approaching past levels, it’s only natural this timing is a problem for fishermen who fear the impact of rumours,” he said.

Tepco and the government cite radiation testing standards they say are stricter than those of other countries that also release treated water. The release has also been approved by international atomic regulator the IAEA.

“What we say to the fishermen is that we have equipment to treat the water safely,” Tomohiko Mayuzumi, a Tepco spokesperson, told Reuters at the plant.

To prove how harmless it is, Tepco has been raising flounder in tanks at the plant. A live feed of the flat fish is broadcast on Tepco’s YouTube channel.

Outside, work is underway to extend a pipe into the ocean to release the water from rows of stacked metal tanks.

Ono is gloomy about prospects for the next generation of fishing folk.

“It’s OK for me. I’m 71, I’ll keep on working at sea until I die,” he said. “But what about the kids in primary and junior school? It’s way too unstable for them to make a living from this.”

(Additional reporting by Chris Gallagher; Editing by Robert Birsel)

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VATICAN CITY (Reuters) – Following are some of the major events of the life and ministry of Pope Francis, who marks the 10th anniversary of his election as pontiff on March 13.

1936

Dec. 17 – Jorge Mario Bergoglio is born in Buenos Aires, Argentina, the son of Italian immigrants.

1969

Dec. 13 – Ordained a priest.

1973

July 31 – Becomes head of the Jesuits in Argentina.

1992

May 20 – Appointed Bishop of Auca and Auxiliary of Buenos Aires.

1998

Feb. 28 – Appointed Archbishop, Primate of Argentina. He becomes famous for commuting to work on public transport, not living in the archbishop’s palace and cooking his own meals.

2001

Feb. 21 – Appointed a cardinal by Pope John Paul II.

2005

April 19 – Cardinal Joseph Ratzinger elected pope after four ballots, takes the name Benedict. Subsequent leaks show that Bergoglio came second in all the secret ballots.

2013

March 13 – Bergoglio is elected pope after the shock resignation of Pope Benedict. He takes the name Francesco (Francis) and is the first non-European pope in 1,300 years.

July 8 – Makes first pastoral trip outside Rome, visiting the Italian island of Lampedusa and condemns the “globalisation of indifference” to the plight of migrants.

July 29 – During his first news conference onboard the papal plane, Francis says: “If someone is gay and he searches for the Lord and has good will, who am I to judge?” — seen as the most conciliatory attitude to LGBT people by a pontiff.

Nov. 26 – Calls for a deep renewal of the Church in a major document (apostolic exhortation) setting out his papacy.

2014

Feb. 24 – Creates a new body within the Vatican to coordinate economic and administrative affairs.

May 24-26 – Visits the Holy Land. He becomes the first pontiff to lay a wreath at the tomb of the founder of modern Zionism. He also prays in front of the Israeli security wall that is despised by Palestinians.

2015

June 18 – Releases first papal document dedicated to the environment, the encyclical “Laudato Si”, urging world leaders to hear “the cry of the earth and the cry of the poor”.

2016

April 8 – In a document on family life, Francis urges priests to be more accepting of divorced or remarried Catholics and to welcome single parents and LGBT people. But he rejects the notion of same-sex marriage.

June 26 – Says Christians owe apologies to LGBT community and others who have been offended or exploited by the church.

Nov. 2 – Tells reporters the Catholic ban on female priests is forever.

2017

Jan. 2 – Pope Francis says in a letter bishops must show zero tolerance to clergy who sexually abuse children. He begs forgiveness for “a sin that shames us”.

June 28 – Cardinal George Pell, appointed Vatican economy minister by Francis, is charged with multiple historical sex crimes in his native Australia. He is initially convicted in Dec. 2018, but then found not guilty in April 2020 on appeal.

July 1 – In major shake-up, Francis replaces Catholicism’s top theologian, a conservative German cardinal who has been at odds with the pontiff’s vision of a more inclusive Church.

2018

Jan. 30 – Just days after defending a Chilean bishop accused of sex crimes against minors, the pope sends top sexual abuse expert to Chile to investigate. In April, Francis says he made “grave mistakes” in handling the Chile crisis, asks forgiveness.

May 18 – In unprecedented move, all Chile’s bishops offer to resign after attending crisis meeting with Pope Francis. In coming months he accepts many of the resignations.

July 28 – Accepts resignation of U.S. Cardinal Theodore McCarrick. In Feb. 2019, Francis expels him from the priesthood after the Church finds him guilty of sexually abusing minors — the first time a cardinal has been defrocked for sexual abuse.

Aug. 25-26 – Visits Ireland, says Church failure to adequately address “repugnant” clerical child abuse crimes in Ireland is a source of shame for Catholics. He begs forgiveness.

Aug. 26 – A former top Vatican official, Archbishop Carlo Maria Vigano, accuses the pope of knowing for years of sex abuse allegations against Cardinal McCarrick; says Francis should resign. Months later, the Vatican accuses Vigano of calumny.

Sept. 22 – The Vatican signs a landmark agreement giving it a long-desired say in the appointment of bishops in China. Critics label the deal a sellout to the Communist government.

2019

Feb. 21 – Pope opens an unprecedented four-day meeting with Catholic leaders from around the world on child sex abuse. Calls for “concrete and efficient measures” to tackle the abuse.

April 19 – Meets South Sudan’s previously warring leaders and kisses their feet. Urges them to not return to a civil war.

May 24 – Appoints women to a key Vatican department for the first time. In January 2020, he appoints the first woman to hold a high-ranking post in the Secretariat of State. In August 2020 he appoints six women to Vatican finance council. In November2021 he names a woman to the number 2 position in the governorship of the Vatican City. In March 2022, he introduces a reform saying Catholic women could in future take charge of most departments.

June 2 – During a visit to Romania, the pope asks forgiveness in the name of the Catholic Church for the mistreatment of the Roma people.

2020

Feb. 12 – In an apparent victory for conservative clergy, the pope dismisses a proposal to allow some married men to be ordained in remote areas of the Amazon.

March 7 – The pope cancels all regular public appearances because of the COVID-19 pandemic. Planned trips are also cancelled. On March 27, he holds a solitary prayer service in the vast, empty St. Peter’s Square.

Sept. 24 – The pope fires Italian Cardinal Giovanni Angelo Becciu from powerful Vatican post after accusing him of embezzlement and nepotism. Becciu denies wrongdoing. He is indicted for alleged financial crimes in July 2021.

Nov. 5 – Shakes up running of Vatican funds after London property scandal.

Dec. 31 – Suffering a flare-up of a sciatica condition that causes pain in his right leg, the pope misses New Year’s Eve and New Year’s Day services — the first time health problems caused him to skip major religious events.

2021

Jan. 11 – Pope Francis, in another step towards greater equality for women in the Roman Catholic Church, changes Church law, saying they can serve as readers at liturgies, altar servers and distributors of communion.

Jan. 21 – A Vatican court convicts Angelo Caloia, a former head of the Vatican bank, on charges of embezzlement and money laundering, making him the highest ranking Vatican official to be convicted of a financial crime.

March 5 – Resuming trips after the COVID crisis, Francis makes first visit by pontiff to Iraq.

July 4 – Has surgery to remove part of his colon, spends 11 days in hospital to recuperate.

July 16 – In blow to conservatives, Francis overturns the decisions of his two predecessors and re-imposes restrictions on the old-style Latin Mass preferred by traditionalist Catholics.

Oct. 29 – U.S. President Joe Biden says after meeting the pope that the pontiff had told him he was a “good Catholic” who can receive communion, widening gulf with conservative prelates.

2022

Feb. 25 – Departing from protocol, the pope visits the Russian embassy to the Vatican to relay personally his concern over Russia’s invasion of Ukraine. In the following weeks and months he repeatedly calls for an end to the war and grows increasingly critical of Moscow for launching the invasion.

July 24 – Starts six-day visit to Canada where he repeatedly asks forgiveness for sexual abuse at schools for indigenous children run by Catholic orders.

Dec. 31 – Pope Benedict dies in the Vatican monastery where he had lived since his resignation in 2013.

2023

Jan. 11 – The conservative Cardinal Pell dies in Rome. It is later revealed that he had penned an anonymous 2021 memo condemning Francis’s papacy as a “catastrophe”.

(Reporting by Crispian Balmer; Editing by Philip Pullella and Frances Kerry)

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LONDON (Reuters) – European banking stocks headed for their largest one-day fall in nine months on Friday, a day after a sharp sell-off in U.S. banks.

Europe’s STOXX banking index fell 4.2%, set for its biggest one-day slide since early June, with declines for most major names including HSBC down 4.5% and Deutsche Bank down 7.9%.

S&P 500’s bank index finished down 6.6% on Thursday after tech-industry lender SVB Financial Group launched a share sale to shore up its balance sheet due to declining deposits from startups struggling for funding.

(Reporting by Alun John; Editing by Amanda Cooper)

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Legislation sponsored by Senator Anthony M. Bucco that encourages homeowners and businesses to make their property more bee friendly cleared the Senate Environment and Energy Committee.

Sen. Bucco’s bill that encourages homeowners and businesses to make their property more bee friendly cleared the Senate Environment and Energy Committee. (Flickr)

“New Jersey is the Garden State, but gardens don’t flourish without pollinators including bees,” said Bucco (R-25). “Unfortunately, our bee populations continue to fall at an alarming rate, which puts everything from home gardens to commercial agriculture at risk. This legislation encourages homeowners and businesses to install bee-friendly habitats to help stop the decline.”

Researchers at Rutgers University recently published a study that highlighted concerns about the sharp decline of bee populations in New Jersey. When bees lack the necessary habitats they require to survive, it can have severe impacts on the entire ecosystem as bees, certain insects, and even birds account for pollinating more than 80% of all plants.

Sen. Bucco’s bill, S-3643, establishes a pilot program within the New Jersey Department of Agriculture to offer reimbursement to homeowners and businesses for certain costs associated with converting their lawns and gardens into bee-friendly habitats.

The program would offer eligible homeowners up to $250 in reimbursement while businesses could receive up to $500. Under the bill, the Agriculture department would be required to develop a webpage with information about the pilot program, as well as guidelines and a list of plants that qualify homeowners and businesses to receive reimbursement.

Additionally, the department is instructed to deliver a report to the governor and the legislature within six months of completing the pilot program to highlight its success and the number of homeowners and businesses that received reimbursement.

The bill appropriates $1 million from the General Fund to establish this pilot program.

“Bees and other pollinators are essential for developing a healthy ecosystem that supports every aspect of our lives,” Bucco added. “This bill encourages New Jerseyans to develop a more habitable environment for bees to thrive in this state. That’ll be good for our environment, our economy, and for food security for New Jerseyans.”

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Senator Joe Pennacchio’s legislation to help homeowners remedy dangerous lead and asbestos in their homes has been approved by the Senate Environment and Energy Committee.

Sen. Joe Pennacchio’s legislation to help homeowners remedy dangerous lead and asbestos in their homes has been approved by the Senate Environment and Energy Committee. (Pixabay)

“This bill will make it easier for homeowners to do the right thing and have trained professionals remediate toxins and carcinogens from their property ensuring a healthy environment for current and future residents of the property,” said Pennacchio (R-26). “For the health of residents, it is crucial to mitigate the risks of lead and asbestos in the home, but hazard abatement is costly.”

Pennacchio’s bill (S-2200) would allow taxpayers to deduct up to $45,000 from gross income for lead paint and asbestos abatement expenses, the cost of replacing water lines that contain lead.

“Exposure to asbestos has been linked to lung cancer and other serious conditions. This bill will help eradicate these silent threats from our communities,” added Pennacchio. “These unhealthy issues can still be found in homes across the state. Lead can contribute to behavioral and learning issues and slowed growth in children, problems for pregnant women, and cardiac and blood pressure issues in adults.”

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When a Dog Behaviorist reacts to the most expressive dog 👀😅

Keep up with Harper on TikTok: https://thedo.do/mygirlharper and Instagram: https://thedo.do/harperbrobst3. Check out more of Dorian’s work on Instagram: https://thedo.do/dorianthedogguy and TikTok: https://thedo.do/Dorianthedogguy.

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Mom watches her son take his first steps… and they’re not towards her!

Special thanks to Vito, Luca & Gianna! Keep up with them on TikTok: https://thedo.do/vitotheboxer & Instagram: https://thedo.do/VitoTheBoxer

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Weatherman rescues a chicken who was stranded in a blizzard! Watch how she does something incredible for him in return 🧡

Keep up with David on Facebook: https://thedo.do/davidn1

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By Greg Torode and Jessie Pang

HONG KONG (Reuters) -Hong Kong’s top Catholic cleric, Bishop Stephen Chow, will visit Beijing in April, the first such visit in nearly 30 years.

Chow’s five-day trip, to start on April 17, follows an invitation last year by the Bishop of Beijing, Joseph Li Shan, the Hong Kong Catholic Diocese said in a statement on Thursday.

It cited Chow saying the visit “underscores the mission of the Diocese of Hong Kong to be a bridge….and promote exchanges and interactions between the two sides”.

A Diocese spokesperson on Friday confirmed to Reuters that it will be the first time since 1994 – when Hong Kong was still a British colony – that a Hong Kong bishop has officially visited Beijing.

Chinese foreign ministry spokeswoman Mao Ning said that China was not aware of Chow’s upcoming visit.

Hong Kong has for decades been a strong Catholic beachhead on the edge of a mainland China under officially atheist Communist Party rule, and is seen by some Catholics as a source of friction in a habitually tense Sino-Vatican relationship.

Vatican officials say Hong Kong is not part of a secret but provisional 2018 agreement between the Holy See and Beijing over the appointment of bishops.

That accord was a bid to ease a longstanding divide across mainland China between an underground flock loyal to the pope and a state-backed official church. For the first time since the 1950s, both sides recognised the pope as supreme leader of the Catholic Church.

Some local priests and missionaries, however, fear that Beijing has been trying to tighten its control over Hong Kong Catholics, in part because of the deal, extended in October for a further two years.

Pope Francis named Chow as bishop of Hong Kong in May, 2021 — a long-delayed appointment amid growing Western concern over human rights and freedoms in the city.

Cardinal Joseph Zen, one of Chow’s predecessors and a prominent critic of the Sino-Vatican deal, was found guilty in November for failing to register a now-disbanded fund for democracy protesters. He was fined HK$4,000 ($512).

(Reporting by Greg Torode and Jessie Pang, Hong Kong newsroom; Editing by Bernadette Baum and Kim Coghill)

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HANOI (Reuters) – Vietnam’s automaker VinFast on Friday said it will push back its plan to start operations of its electric vehicles factory in the United States until 2025, citing a procedural delay.

The unit of conglomerate Vingroup JSC flagged the plan to build a $4 billion EV factory in North Carolina’s Chatham County on 712 hectares (1759 acres) of land in March last year, with commissioning targeted for July 2024.

“We need more time to complete administrative procedures,” VinFast said in a statement on the delay, which did not specify when in 2025 the plant was expected to start operations.

Once the facility assembles VinFast EVs, customers may be entitled to incentives under terms of the Inflation Reduction Act signed by U.S. President Joe Biden.

VinFast last month was awarded an Air Permit from local authorities to start construction. It still needs a permit from the U.S. Army Corps of Engineers designed to minimise damage to water quality and wetlands.

The plant, with phase one including capital expenditures for the construction of $1.4 billion, is expected to create more than 7,000 jobs and churn out 150,000 vehicles a year, according to the company’s latest prospectus released on Thursday.

Last year VinFast filed for an initial public offering in the United States to list on the Nasdaq to fund its the plant construction.

VinFast started its first sales outside Vietnam last week, delivering its first 45 cars in California on the first day.

Its revenue in 2022 was 14.9 trillion dong ($631 million), down about 6.9% against 2021. Net losses rose 55% to 49.8 trillion dong from 32.2 trillion dong, its latest prospectus showed.

($1 = 23,670 dong)

(This story has been refiled to remove extraneous text in the headline)

(Reporting by Phuong Nguyen; Editing by Martin Petty)

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BERLIN (Reuters) – German consumer prices, harmonised to compare with other European Union countries, rose by 9.3% on the year in February, the federal statistics office said on Friday, confirming preliminary data.

Compared with January, prices rose by 1.0%, the office added.

The statistics office offers a breakdown for February on its website.

(Reporting by Rachel More; Editing by Paul Carrel)

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By Josh Smith

SEOUL (Reuters) – Workers at an apartment construction site in the North Korean capital, Pyongyang, have discovered more than 110 bombs, shells, mines, grenades and other explosives that it says are U.S.-made weapons from the Korean War, state media said on Friday.

The devices were detected and disposed of by experts with the Pyongyang City Public Security Bureau, state news agency KCNA reported.

“The explosives, found at the housing construction site in the Hwasong area, were rusty but at risk of going off at any time,” the report said.

Leader Kim Jong Un has launched projects to build 50,000 new apartments in Pyongyang as part of a push to improve lives in the impoverished nation.

Its economy has been hammered by self-imposed border closures to curb COVID-19, natural disasters, and international sanctions for its nuclear weapons and ballistic missile programmes, which the United States says draw limited resources away from meeting people’s needs.

Explosives left over from the 1950-1953 Korean War have long been a danger to citizens in both Koreas. In past years, experts from the International Committee of the Red Cross’s Weapon Contamination Unit have trained North Korean teams in bomb disposal.

During the Korean War, U.S. warplanes attacked wide swaths of the country, dropping more bombs on North Korea than the United States dropped in the entire Pacific theatre during World War II, according to U.S. researchers.

That bombing campaign and other attacks have been a prominent feature in education and government messaging in North Korea.

“Witnessing the disposal of explosives, the army and civilian builders felt surging hatred toward the U.S. imperialists,” KCNA said in Friday’s report.

(Reporting by Josh Smith. Editing by Gerry Doyle)

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By Engen Tham, Xie Yu and Ziyi Tang

SHANGHAI/HONG KONG (Reuters) -China’s push to revive the economy this year by increasing infrastructure spending while warding off financial risks is facing headwinds from massive local-government debt, which is more than $9 trillion and growing.

As debt obligations mount, some local governments are pushing banks to extend maturities and cut interest rates, sources said. Local Government Financing Vehicles (LGFVs) have 5.5 trillion yuan ($790 billion) worth of onshore bonds coming due this year, the highest since 2021, according to Fitch.

A sharp drop in income from mainstay land sales and fewer options for raising fresh funds have fuelled concerns about LGFVs’ ability to meet debt obligations and its impact on the broader banking sector and markets.

The ability of fiscally stretched local governments to follow through on spending will also be a key test for China’s modest economic growth target of around 5% this year, as LGFVs play a key role in funding infrastructure projects, one of the biggest growth drivers for the world’s second-largest economy.

So far, they have been no public reports of an LGFV default, but some have had loans extended.

“BLACK HOLES”

“The LGFVs have become the black hole of the Chinese financial system. They have been used to fill the gap between local government revenue and expenditure,” said Andrew Collier managing director at Orient Capital Research.

“They have little or no profit, and cannot pay back their debt owed,” he said. “I expect many LGFVs to collapse, or to be quietly recapitalized by banks, putting some rural banks and some bondholders at risk of defaults.” 

The total debt of China’s LGFVs has swelled to a record 66 trillion yuan ($9.5 trillion), equivalent to half of the country’s economy, from 57 trillion yuan last year, according to an International Monetary Fund (IMF) report last month.

Concerns about their worsening credit profile come as the government is trying to lift the economy from the grip of a property debt crisis in the last couple of years, which saw a number of developers default on their debt and land sale revenues plummet, forcing Beijing to roll out a slew of supportive measures.

“LGFVs are under considerable pressure on debt repayment this year, because their income is often associated with real estate and land sales,” said Wang Tao, chief China economist at UBS.

CAUTIOUS LENDERS

Chinese Premier Li Keqiang listed “preventing and defusing local government debt risks” as one of the major tasks for the government in the upcoming year, when he delivered the government report on Sunday as China’s two sessions kicked off.

That priority comes as some Chinese banks with exposure to LGFVs are increasingly getting requests to extend their near-term maturities by as much as six months and reduce interest rates, three sources with knowledge of the matter said.

The sources, who declined to give details, could not be identified due to the sensitivity of the matter.

Chinese banks and other financial institutions have been cautious on new lending to LGFVs over the past years.

In recent months, some state-owned banks, asset managers, and insurers have been looking into their portfolios to screen LGFV borrowers with weaker creditworthiness and dispose them, separate financial sector sources told Reuters.

Faced with tighter credit criteria at home, LGFVs turned to offshore markets and raised a record $39.5 billion via dollar bonds last year, according to rating agency S&P. Offshore branches of Chinese financial institutions have been major buyers of the bonds, industry sources said.

Since late 2022, however, authorities have sharpened scrutiny of LGFVs dollar bond issuance. The National Development and Reform Commission (NDRC) turned down requests from units with lower credit ratings, said two separate sources with knowledge of the matter, as part of its efforts to stem financial sector risks.

The NDRC and the China Banking and Insurance Regulatory Commission didn’t immediately respond to requests for comment.

DEFAULT WORRIES

A deterioration in capital-market access can increase refinancing risk and deepen the liquidity crunch for the LGFV sector, Fitch Ratings said in a report last month, adding units in less economically developed regions are more at risk.

The worsening outlook for LGFVs has also made some shadow banks — lenders for sectors that are unable to tap bank funding directly — worried about their exposure to such units and averse to fresh lending.

“LGFVs used to be financed in the shadow banking (sector) but increasingly it has moved to the onshore bond market and, in some cases, offshore,” said Alicia García Herrero, chief economist for Asia Pacific, at Natixis.

“It seems clear to me that a number of projects may default with consequences for bondholders, specially offshore ones.”

Some analysts believe that Chinese authorities would avoid large scale of defaults by LGFVs as that would make debt market access tougher for both public and private issuers at a time when efforts are being made to revive the economy after the dismantling of three years of tough COVID-19 measures.

“LGFV debt itself as a share of GDP is still manageable at this stage. The key issue is to stop the fast growth and avoid default to trigger panic in the market,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

(Reporting by Engen Tham, Xie Yu and Ziyi Tang; Editing by Sumeet Chatterjee and Kim Coghill)

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JAKARTA (Reuters) – Indonesia’s election commission on Friday launched an appeal against a controversial court ruling that ordered it to delay the 2024 presidential and general polls, officials said.

The commission will argue against a court decision that has reignited debate over extending President Joko Widodo’s time in office, which is limited to two five-year terms by the constitution and should end next year.

Senior politicians, activists and legal experts have warned delaying the 2024 election could threaten nearly 25 years of democratic reforms brought in after decades of authoritarian rule.

National Election Commissioner August Melasz said the agency known as the KPU had submitted its appeal, which will be heard and ruled on by the Jakarta High Court. He did not elaborate on the commission’s arguments.

The KPU has previously said it will forge ahead with preparations for presidential and general elections in the world’s third-largest democracy.

President Joko Widodo, who has said he is against extending his term, said this week he supports the election commission’s appeal.

Legal experts have said the lower court overstepped its jurisdiction in ruling on a complaint by an obscure party about election procedures, saying it is the jurisdiction of Indonesia’s supervisory body (Bawaslu) and administrative courts.

(Reporting by Ananda Teresia; Editing by Kanupriya Kapoor)

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By Mike Dolan

LONDON (Reuters) – After six weeks of frantic forecast changes, world markets seem to have lost the plot on where interest rates will go in this cycle – mainly because the central banks are in the same boat and both groups seem to have lost confidence in a lodestar.

Difficulty figuring out just where the Federal Reserve’s year-old tightening cycle is going to end – and where it pans out after that – is replicated far and wide, but the U.S. central bank puzzle sits at centre stage as usual.

The problem is simply that long-term visibility has disappeared in the face of distortions related to the pandemic and war-related energy shock, and forward policy guidance has been effectively ripped up – with everyone now flying blind from economic data update to update.

Fed Chair Jerome Powell basically admitted as much this week – suggesting just two February reports on jobs and inflation over the next week could dictate whether the central bank would return to 50-basis-point rate hikes from the slower 25-basis-point pace to which it had only last month confidently agreed to gear down.

Such jumpy ‘data dependency’ speaks poorly of the guiding light of policy models or faith in quasi-scientific assessments of ‘natural’ long-term real rates of interest – the so-called ‘r*’ from algebraic models that denotes the sustainable interest rate that neither stimulates nor reins in the wider economy.

A chronic inability to gauge economic slack and potential in real time means no one’s quite sure what that new equilibrium is or should be – and, by extension, whether the Fed’s policy rate path is overkill in fighting inflation or still way short.

The upshot has been wastebaskets full of crumpled forecasts.

Since the start of February – when economists and policymakers alike were confounded by a new year boomlet in retailing, hiring and a resurgence of core inflation – peak interest rate bets seem to be changing almost by the week.

Bond volatility has returned to the highs of late last year, with 2-year Treasury yields briefly back above 5% for the first time in 15 years, 10-year yields back above 4% and the 2-10 year yield curve inverting to its deepest since 1981.

By Feb. 17, Goldman Sachs and Bank of America upped so-called ‘terminal rate’ calls by an additional quarter of a percentage point to 5.25%-5.50%. Just three weeks later, Goldman raised it yet again and BofA and BlackRock were talking about a chance of a 6% peak all of sudden – some 120 basis points above what markets were pricing only in January.

Others followed and the rethinks were not just about the Fed, with JPMorgan lifting its peak European Central Bank policy rate forecast twice in the space of just two weeks to 3.75% – and still a quarter of a percentage point below where markets are now indicating.

So is everyone now just second guessing a Fed that is itself less than sure anymore?

US real yields since 1900, https://fingfx.thomsonreuters.com/gfx/mkt/znvnbxanzvl/One.PNG

Fed long-run rate projections, https://fingfx.thomsonreuters.com/gfx/mkt/gdpzqmlbdvw/Two.PNG

Climbing US Terminal Rate, https://fingfx.thomsonreuters.com/gfx/mkt/jnpwyadbapw/Three.PNG

‘DARK SKY’

For its part, Fed policymakers’ quarterly projections of long-term neutral policy rates have remained remarkably stable during such a turbulent and unpredictable four-year period.

Barring a one-quarter downtick early last year, the median long-term Fed projection has stayed at 2.5% since April 2019.

Any upward revision in that projection at the March 21-22 policy meeting would signal the Fed thinks the economy has indeed moved to a different sustainable plane – resilient to more than 400 basis points of rate hikes in a year – and would suggest it needs to do even more today to cause sufficient drag on activity to sap inflation.

But the debate is all over the shop.

Based on traditional and long-abandoned fixed policy models, Cleveland Fed researchers reckon policy is already more aggressive than any of those rules suggest. And estimates from San Francisco Fed economists suggest the real impact of policy, modelled by the current 6.3% ‘proxy’ rate, which combines Fed rates and broad financial conditions, is harsher than it looks.

What all that means for R-star is another question. If the macro volatility hinges on temporary supply distortions, then not much may have changed longer term – even if that’s hard to assert. The wild economic swings of the pandemic forced New York Fed staffers to simply abandon regular updates on their estimates of the R* natural rate in late 2020.

In a deep-dive review into a variety of R-star models this week, JPMorgan’s Joseph Lupton and Dan Weitzenfeld concluded they were all basically flawed as policy-setting tools – “uncertain at best and useless or misleading at worst.”

In a report called “Dark sky: On the ill-fated search for R-star,” Lupton and Weitzenfeld said lack of clarity points to greater data dependence for gauging the policy stance.

“This is not ideal as it points to central banks feeling around in the dark,” they wrote. “It also diminishes the power of forward guidance as reaction functions can shift with incoming data.”

What are investors to do? Work it out themselves.

Ashok Bhatia, deputy chief investment officer for fixed income at Neuberger Berman, reckons there is a structural “multi-year” change going on in the bond markets that at least means the era of zero or negative real, inflation-adjusted, yields is over.

The political and policy appetite for zero interest rates or quantitative easing – which seemed to chase estimates of R-star ever lower over the past decade – is gone. At the same time, real yields above 4% have proven unsustainable historically.

Bhatia feels real yields somewhere in the middle is where markets will settle. Given the economy-wide accumulation of debt over recent years, real 10-year yields in a 1.5%-2.0% range probably works. And if inflation returns to 2.5%, then 10-year nominal yields of 4.0%-4.5% may be around for some time to come.

But he too knows that’s a shaky assumption on R-star.

“We’d all admit there’s a lot of uncertainty about where that number should be.”

Supply chain pressures ease to pre-pandemic levels, https://www.reuters.com/graphics/NY-FED/SUPPLY%20CHAINS/klpygnlkapg/chart.png

VIX and MOVE part ways, https://fingfx.thomsonreuters.com/gfx/mkt/akpeqowxnpr/Four.PNG

The opinions expressed here are those of the author, a columnist for Reuters.

(by Mike Dolan, Twitter: @reutersMikeD; Editing by Paul Simao)

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By Balazs Koranyi

FRANKFURT (Reuters) – “We’ve been short-changed for too long,” is how many of Europe’s top labour unions are framing wage claims this year, promising industrial action if those demands go unheard.

The euro zone’s 165 million workers have watched their wages slip behind inflation for a third year running even as companies rake in profits by jacking up prices faster than costs rise.

Now, record-high employment and widespread labour shortages are giving workers rare leverage – and many see an opportunity to recoup some of the spending power lost in past years. While central bankers may sympathise, it also adds to their problems.

“Part of the wage increase is understandable,” said Jens Ulbrich, chief economist at Germany’s Bundesbank.

“It’s a partial catch-up and the share of wages in economic output is not increasing. But these trends point to more persistent inflation and slower disinflation,” he said of efforts to bring price growth down from a current 8.5%.

For workers across the 20 countries that share the euro, real compensation per hour has dropped by more than 7% since the start of 2021. That, combined with the fact that employment is at a record high – 3.6 million above the pre-pandemic peak – gives them solid grounds on which to push for rises.

Yet the rapid wage growth underway now will hamper the European Central Bank’s efforts to get inflation back to its 2% target, and possibly force it to keep interest rates high for longer.

Trade union demands for compensation for the impact of past inflation cause particular concern for monetary policymakers because so-called backward-looking wage-setting tends to embed higher inflation in the longer term.

Amsterdam’s Schiphol Airport, which saw thousands of cancelled flights and 4-5 hour wait times last summer, may be a case study in how workers are leveraging their power.

FNV, the largest trade union in the Netherlands, last week secured an 8% pay increase for this year at Schiphol plus a 2,000 euro one-off payment, along with a raft of other benefits.

“High (corporate) profits are largely paid for by consumers facing rising prices,” FNV’s José Kager said. “Everything is getting more expensive, but wages are lagging. Wages have been lagging behind for a long while so it’s high time for working people to get their share.”

“We are taking a first step, but much more is needed to reverse the years of lopsided wage growth,” Kager added.

The deal comes as Schiphol is still being forced to curtail traffic below 2019 levels because of labour shortages.

(Graphic: Labor shortages acute in the euro zone, https://fingfx.thomsonreuters.com/gfx/mkt/lbvggleldvq/Pasted%20image%201678373659531.png)

STRIKES?

In Germany, more than half of companies are struggling to fill vacancies, the highest level on record, despite a recession in Europe’s biggest economy, the German Chambers of Commerce and Industry says.

This is shifting power to workers and strikes are becoming more widespread.

United Services Union ver.di is asking for a 10.5% pay increase for around 2.5 million federal and local government employees. Workers from airports to public transport have already held warning strikes in response to pay offers worth just a fraction of their demands.

“The inflation trend, food and especially energy prices are tearing deep holes in our workers’ budgets,” ver.di Chairman Frank Werneke said. “Many of them don’t know how they can keep themselves and their families afloat, and some can no longer pay their rents or heating costs.”

Ver.di has already warned that if pay deals fail, Germany will face “another chaotic summer,” a reference to last year’s debilitating bottlenecks in the services sector.

On Thursday, meanwhile, workers at German mail and parcel firm Deutsche Post, parent of DHL, overwhelmingly backed an indefinite strike in a vote because their demands for a 15% pay increase have not been met.

Labour markets are not as tight in southern Europe but even there, movement is apparent. In Spain, the percentage of workers covered by collective agreements with indexation clauses has almost doubled over the last two years to over 27%.

(Graphic: Euro zone real wages fall, https://fingfx.thomsonreuters.com/gfx/mkt/byvrlqwqnve/Pasted%20image%201678373410332.png)

PROLONGED INFLATION

While the much-feared “wage-price-spiral” is not underway as inflation is still slowing, price growth is set to be more persistent.

This “stickiness” is why markets have swiftly increased their rate hike bets over the past month. Investors now see the peak rate above 4%, up another 1.5 percentage points, suggesting rate hikes through the summer.

Philip Lane, the ECB’s chief economist, says the wage-adjustment process could put upward pressure on inflation for the next two or three years, but expects a return to normal beyond that.

“The high levels of wage growth projected for 2023 and 2024 can be expected to make wages an increasingly dominant driver of underlying inflation in the euro area,” Lane says.

Commerzbank economist Joerg Kraemer takes a less benign view, arguing that more expensive labour will offset the drop in materials costs, pointing to stubbornly high core inflation and further ECB interest rate increases.

“Labour is likely to remain unusually scarce, especially in the core euro area countries, also for demographic reasons, unless there is a deep recession,” Kraemer said. “The bargaining position for unions and employees should remain strong.”

(Additional reporting by Anthony Deutsch, Chris Steitz, Klaus Lauer, Belen Carreno and Leigh Thomas; Editing by Mark John and Catherine Evans)

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