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EULER HERMES UPGRADES 11 COUNTRIES RISK RATINGS

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Euler Hermes, the worldwide leader in trade credit insurance, announces the upgrade of 11 countries risk ratings. These are Côte d’Ivoire, Greece, Hungary, India, Ireland, Italy, Nicaragua, Nigeria, Portugal, Serbia, and Spain.

“Global GDP growth is expected to pick up slightly in 2014 (+2.8%), though the pace of the recovery should remain below 3% for the third year in a row,” said Ludovic Subran, Euler Hermes’ chief economist. “Against a gradually improving global economic outlook, Euler Hermes has upgraded 11 countries ratings. However, while global insolvencies are projected to decrease by -8% in 2014, they remain 13% above the pre-crisis level, meaning the 2009 crisis has not been absorbed yet.”

Advanced economies are back in the game with an expected growth of almost +2% in 2014, the fastest since 2010. The eurozone should improve (+1.0%) after two years of contraction, with all major countries registering positive growth. In the southern eurozone, exports should help countries exit recession. Most central European economies will benefit from the eurozone recovery.

Emerging markets remain crucial contributors to global growth (+4.3% in 2014), despite slowing growth outlooks for several large economies such as Brazil, China, Russia, South Africa and Turkey. India should be the exception, with growth forecast to accelerate to +5.6% in 2014.

OVERVIEW ON UPGRADED COUNTRY RATINGS

​Country             New EH rating   Previous EH rating

​Côte d’Ivoire     D3                    ​D4

​Greece              ​B3                    ​B4

​Hungary            B2                    ​C3

​India                 B1                    ​B2

​Ireland              BB2                  ​BB3

​Italy                  A2                    A3

​Nicaragua         ​D3                    ​D4

​Nigeria              D3                    D4

​Portugal            B2                    B3

​Serbia               D3                    D4

​Spain                A2                    A3

COMMENTS ON UPGRADED COUNTRY RATINGS

Ireland: upgraded to BB2 from BB3. Better economic prospects, and insolvencies falling since 2013, but levels remain high. Financial independence has been achieved, and the restructuring of the banking sector has been completed, but vulnerabilities remain. The excessive stock of debt is the main medium-term challenge.

Côte d’Ivoire: upgraded to D3 from D4. Recovery has gained momentum, reflecting improved political stability. Foreign exchange reserves and import cover are nominally comfortable and external debt ratios and servicing are low, following debt forgiveness and rescheduling initiatives.

Greece: upgraded to B3 from B4. Better economic prospects, stabilization of the insolvency trend. Financial pressure eased significantly and a long-term bond issuance was conducted in April, the first since 2010. Falling consumer prices and the state of the banking sector remain high downside risks short-term.

Hungary: upgraded to B2 from C3. External imbalances and growth prospects have steadily improved. New credit growth is under control and inflationary pressures have declined, allowing two years of continued monetary easing to support the recovery. Nonetheless, the economy remains somewhat vulnerable to external shocks.

India: upgraded to B1 from B2. Improved growth forecast, strong monetary policy response. The recent rebound in capital inflows should be maintained, sustaining the domestic investment recovery.

Italy: upgraded to A2 from A3. Better economic prospects and insolvencies expected to decline from the second half of 2014 onward. Companies should benefit from a pick-up in credit and consumer spending in 2015. The country enters a period of political stability but medium term challenges remain.

Nicaragua: upgraded to D3 from D4. Fiscal policy has improved. A wide-ranging tax reform implemented in 2012 improved tax collection and administration, set spending restrictions, and increased fiscal revenues. External vulnerability remains significant, however.

Nigeria: upgraded to D3 from D4. External liquidity and debt indicators in Africa’s largest economy have improved to comfortable levels and GDP growth is robust, resulting in improved short-term risk. However, a number of vulnerabilities continue to weigh on medium term prospects, including personal and corporate security risk and a weak business environment.

Portugal: upgraded to B2 from B3. Better economic prospects driven by a recovery in domestic demand and exports, mainly due to improving competitiveness. Insolvencies are falling since 2013. Exit from the joint EU/IMF program in May remains challenging in view of the large public debt and fiscal deficit. The inflation rate is set to remain at very low levels, which could hamper the deleveraging of public and private sectors.

Serbia: upgraded to D3 from D4. The economy has emerged from recession. The exchange rate has stabilized and inflation is forecast to remain low until 2015. Foreign exchange reserves are adequate. The country is still characterized by a number of structural weaknesses (e.g. export structure), ongoing weak domestic demand against the backdrop of credit contraction and high unemployment, deteriorating public finances and a high external debt burden.

Spain: upgraded to A2 from A3. Better economic prospects with insolvencies falling since 2013, after six consecutive years of strong increase. Domestic demand is expected to strengthen and drive growth. Public finances will remain at critical levels, though, with public debt standing above 100% of GDP and fiscal deficit above -6% of GDP in 2014. The inflation rate is set to remain at very low levels, which could hamper the deleveraging of public and private sectors.

“Euler Hermes monitors 242 countries and territories using about 40 short-term and medium-term indicators to measure the risk of payment disruptions in a given country that are outside the control of companies, ,” explained Manfred Stamer, senior economist at Euler Hermes. “The assessment results in a medium-term rating (on a scale of AA, A, BB, B, C, D) and a Short-Term Rating (on a scale of 1, 2, 3, 4) which are combined in an overall Country Rating (from AA1 = best to D4 = worst).”

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UK seeks G7 consensus on digital competition after Facebook blackout

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UK seeks G7 consensus on digital competition after Facebook blackout 1

LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.

Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.

“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.

“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”

Dowden said recent events had strengthened his view that digital markets did not currently function properly.

He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.

“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.

Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.

“Nick strongly agreed with the Secretary of State’s (Dowden’s) assertion that the government’s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.

Britain will host a meeting of G7 leaders in June.

It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.

The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.

Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.

(Reporting by William James; Editing by Gareth Jones and John Stonestreet)

 

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Britain to offer fast-track visas to bolster fintechs after Brexit

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Britain to offer fast-track visas to bolster fintechs after Brexit 2

By Huw Jones

LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.

Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.

“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.

Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.

Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.

The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.

“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.

Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.

The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.

It also recommends more flexible listing rules for fintechs to catch up with New York.

“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.

“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”

SCALING UP

Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.

“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.

The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).

“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

($1 = 0.7064 pounds)

(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)

 

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G20 to show united front on support for global economic recovery, cash for IMF

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G20 to show united front on support for global economic recovery, cash for IMF 3

By Michael Nienaber and Andrea Shalal

BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.

Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.

In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.

“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.

A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)

The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.

German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.

“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.

“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.

BIDEN DEBUT

Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.

“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.

But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.

Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.

Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.

The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.

($1 = 0.8254 euros)

(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)

 

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