European Economics > Unemployment hits ten-year high in Germany; France consigning next generation to a lifetime of debt

 

German unemployment hits ten-year high

The country’s economy is facing a third consecutive year without growth

© Getty Images / skynesher

Unemployment in Germany has risen to its highest level in a decade, official figures released on Friday show. The labor report comes as the country’s faltering economy risks contracting for a third consecutive year.

The figures show the number of unemployed individuals topping 3 million in August for the first time since 2015. The month-on-month increase came in at 46,000 to put the tally at 3.02 million in seasonally unadjusted terms, or 6.4% of the population.

Federal Employment Agency chief Andrea Nahles blamed the labor market struggles on Germany’s weak economy. The EU’s largest economy shrank by 0.2% in 2024 after contracting by 0.3% in 2023. This year, following a 0.3% expansion in the first quarter, output fell by 0.3% in Q2 as uncertainty grew over new US tariffs. The International Monetary Fund recently warned that Germany could face a third consecutive year without growth.

Germany’s economic downturn has coincided with Berlin’s decision to halt imports of low-cost Russian energy, which was vital for its industry. European gas prices rose sharply after Russian pipeline deliveries largely stopped and the Nord Stream pipelines were sabotaged later that year. Before the sanctions, Germany sourced 55% of its gas from Russia, but has since shifted to pricier liquefied natural gas (LNG) imports from the US and Qatar.

READ MORE: EU sanctions against Russia don’t work – Bild

Moscow has denounced the Western sanctions as illegal and ineffective, arguing they have instead backfired on the countries that imposed them.

Chancellor Friedrich Merz stated last week that Germany is facing a “structural crisis” rather than temporary “weakness,” and said steering the economy toward growth has proven more difficult than expected. Key industries such as the automotive segment are “no longer truly competitive,” he added.

The country’s automotive sector has shed more than 51,000 jobs just in the past year alone, according to recent data.

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French PM admits debt will devastate next generation

Paris has spiraled into uncontrolled borrowing for the comfort of “boomers,” Francois Bayrou has said

French Prime Minister Francois Bayrou in Paris, France, August 28, 2025. © Getty Images / Adnan Farzat/NurPhoto

France has saddled the younger generations with debts they’ll be paying off their entire lives, French Prime Minister Francois Bayrou has said. Paris continuously borrows in the interest of “boomers” and “certain political parties,” he added.

On Monday, Bayrou said he urged President Emmanuel Macron to reconvene parliament by September 8 for a confidence vote to gauge support for his €43.8 billion ($50.9 billion) austerity measures plan. The prime minister has long sounded the alarm over the country’s spiraling budget deficit, which hit 5.8% of GDP last year – almost double the EU 3% ceiling.

The primary victims of the government debt will be the “youngest French people,” Bayrou said in an interview with French broadcaster TF1 on Wednesday.

“They’re the victims; they’re the ones who will have to pay the debt for the rest of their lives,” he said, adding that Paris is trying to convince them that more borrowing is needed.

READ MORE: French debt ballooning by €5,000 a second – PM

“All this for the comfort of certain political parties and for the comfort of the so-called boomers.”

His proposals to battle France’s $3.98 billion government debt have included scrapping public holidays, slashing public sector jobs, as well as welfare and pensions cuts. The program has been criticized by left-wing parties, who have accused Paris of prioritizing military spending over social welfare.

Macron has promised to increase France’s military budget to €64 billion by 2027, citing external threats. Paris has warned of a potential war scenario within the next five years, naming Russia as one of the principal threats – claims which Moscow has dismissed.

READ MORE: Macron wants ‘boots on the ground’ in Ukraine

Bayrou’s proposed budget has not been well received by the French public, polls suggest. While most French people agree with the prime minister’s alarmism about the national debt, 76% believe his budget will not help, and 82% see it as socially unfair, according to an Elabe survey from Tuesday.

Around 81% want a new prime minister to be elected, and 67% called for Macron’s resignation, according to Elabe’s poll. Nearly three-quarters say they want Bayrou to fail in the vote on September 8, which is to be his ninth no-confidence motion.

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Economics - Trump Style > Trump ate von der Leyen for breakfast in biggest deal ever - Orban

 

Is there a big difference between Trump's trade deals and the old Mafia protection rackets - Pay me what I want and I won't destroy you!

‘Dark day’: French PM says EU’s Trump trade deal is a ‘submission’

By Uday Rana  Global News

Posted July 28, 2025 9:25 am

 Updated July 28, 2025 9:31 am

 2 min read

The European Union’s trade deal with the United States is “submission” to U.S. President Donald Trump and marks a “dark day” in the history of the bloc, French Prime Minister Francois Bayrou said on Monday.

Trump announced a trade deal between the U.S. and the EU on Sunday after meeting with European Commission chief Ursula von der Leyen in Scotland.

Bayrou took to social media to criticize the deal, which would see an across the board 15 per cent tariff on most goods from Europe.

“Von der Leyen-Trump Agreement: it is a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resolves to submission,” Bayrou posted in French on the social media platform X.

2:04

What Trump’s EU trade deal reveals about talks with Canada

The response from French government officials stands in contrast to some other European nations. German Chancellor Friedrich Merz welcomed the deal.

“We have been able to safeguard our core interests,” Merz said in a statement on Monday.

A 15% tariff is safeguarding? Someone please explain that to me.

Also, explain to me how weakening the economy of all your friends and trading partners doesn't come back to bite you. What goes around, comes around!

On the other hand, French President Emmanuel Macron has not reacted to the announcement of a trade deal, while other senior French officials have been cautious in their reactions.

“The trade agreement negotiated by the European Commission with the United States will bring temporary stability to economic actors threatened by the escalation of American tariffs, but it is unbalanced,” French deputy minister for European Affairs Benjamin Haddad said in a statement on X.

“The current situation is not satisfactory and cannot be sustainable. The free trade that has brought shared prosperity to both sides of the Atlantic since the end of the Second World War is now rejected by the United States, which is choosing economic coercion and complete disregard for WTO rules,” Haddad added.

The private meeting between Trump and von der Leyen culminated months of bargaining, with the White House deadline Friday nearing for imposing punishing tariffs on the 27-member EU.

“It was a very interesting negotiation. I think it’s going to be great for both parties,” Trump said. The agreement, he said, was “a good deal for everybody” and “a giant deal with lots of countries.”

Von der Leyen said the deal “will bring stability, it will bring predictability that’s very important for our businesses on both sides of the Atlantic.”

Trump said the EU had agreed to buy some $750 billion worth of U.S. energy and invest $600 billion more than it already is in America, as well as making a major purchase of military equipment.

“We are agreeing that the tariff straight across for automobiles and everything else will be a straight across tariff of 15 per cent,” Trump said. “We have a tariff of 15 per cent. We have the opening up of all of the European countries.”

Von der Leyen said the 15 per cent tariffs were “across the board, all inclusive” and that “indeed, basically the European market is open.”

Except, you are restricted to buying American LNG at twice the price of Russian gas. And you have been bullied or fooled into thinking you need trillions of dollars worth of American-made weapons systems. Orban is right, as usual.

— With files from Associated Press

Global Economics > Is EU rethinking abandoning Russian energy plan? Hong Kong will stop all shipping to or from the USA; China's cancelling of Boeing contracts could cost $35BN

 

EU delays Russian energy withdrawal plan

– FT

The postponement is reportedly linked in part to discussions over the future of the sabotaged Nord Stream pipelines

© Getty Images / Fahroni

The EU will once again delay plans to eliminate its dependence on Russian energy, amid ongoing debates within the bloc over the future of the Nord Stream 1 and 2 pipelines, the Financial Times has reported.

Nord Stream 1, which once delivered Russian natural gas to Germany, and Nord Stream 2 were damaged in a sabotage attack in 2022. However, one string of Nord Stream 2 remains intact. Talks of potentially reviving the pipelines have resurfaced amid recent joint efforts by Russia and the US to end the Ukraine conflict.

Originally slated for release in February, a roadmap detailing steps for cutting the EU’s energy reliance on Russia by 2027 was first put off until March and is now expected to be unveiled in May, the outlet said on Tuesday.

Uncertainty over US President Donald Trump’s proposed tariffs has also reportedly contributed to the postponement, as the energy trade could become a key issue in EU-US negotiations.

“It’s a mess,” an EU diplomat told the FT. “How does the US fit in all this? How do we diversify?’‘

Brussels is also reportedly seeking legal mechanisms that could enable EU companies to break long-term Russian gas contracts without facing hefty penalties from Moscow.

READ MORE: EU industry bosses want Russian gas supplies restored – Reuters

There are also concerns that any resulting legislation could be vetoed by Hungary and Slovakia, which are now receiving the bulk of the remaining Russian pipeline gas delivered to the EU.

The EU declared its intention of weaning itself off Russian energy following the escalation of the Ukraine conflict in 2022. Supplies of US gas have replaced much of the cheaper pipeline gas previously delivered by Russia.

Although Russian pipeline gas supplies to the EU have plummeted since 2022, the bloc ramped up imports of liquefied natural gas (LNG) from the sanctioned country last year. In 2024, Russia still accounted for around 19% of the bloc’s total gas and LNG supply, according to various estimates.

Brussels has yet to specify the measures it intends to propose to speed up the phasing-out of Russian energy. Some experts have reportedly suggested imposing tariffs on its gas imports as one possible tool.

The development comes as EU industry leaders have suggested a resumption of gas purchases from Russia. According to Reuters, Germany’s chemical industry is facing a “severe crisis” and urgently needs a return to affordable Russian gas. French energy giants Engie and Total also said they could envision resuming Russian energy imports.

And when you consider the Ruble is the strongest currency in the Western World right now, you have to admit that the conspiracy to end Russia's oil and gas exports is largely a failure. Unlike Canada, where the Liberal government has cooperated with the scheme to keep Canada's oil and gas from reaching tidewater.

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Hong Kong ‘suspends’ U.S. package shipments over ‘bullying’ tariffs

By Sean Previl  Global News

Posted April 16, 2025 8:59 am

 1 min read

In the latest escalation of U.S. President Donald Trump’s global trade war, Hong Kong says it will no longer handle packages coming from or shipping to the U.S.

The Hong Kong government says in a statement that the move comes after the U.S. announced last week that it would eliminate the “duty-free de minimis” exception for items that would normally be shipped to Americans.

That exception applied to all international postal goods that were valued at or under US$800 that entered the country from China and Hong Kong, according to a fact sheet published by the White House on the change.

“For sending items to the U.S., the public in Hong Kong should be prepared to pay exorbitant and unreasonable fees due to the U.S.’s unreasonable and bullying acts,” the statement reads.

“The U.S. is unreasonable, bullying and imposing tariffs abusively.”

1:36Trump hikes tariffs on China to 125%

The Hong Kong government went on to say it would suspend the acceptance of any items shipped by sea starting immediately, while items shipped by air will no longer be accepted after April 27.

Senders who have posted items that have not yet been shipped will be contacted to arrange the return of items and a refund on postage starting April 22.

Postage containing only documents, however, will still be accepted.

It’s the latest ripple effect being seen amid tariffs imposed by each country on the other.

As of Wednesday, U.S. tariffs on Chinese imports sit at 145 per cent, while China’s on U.S. products are at 125 per cent.

China orders all airlines to refuse delivery of any airliners from Boeing

As reported yesterday:

Now this really has to hurt!

My conservative estimate of cancelling 179 airliners ordered by China's 3 major airlines would run in the vicinity of $35BN. Yikes!

Don't be surprised if China enters into agreements with a couple of other countries to build their aviation industries and take on Boeing globally. With the quality problems Boeing has been having, it could spell disaster for the industry in America

Perhaps Mr. Trump needs to watch Shogun, or read the book to learn that you do not bully the Chinese, it's a lose-lose occupation.

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Global Economics > Investors dumping US gov't bonds - a disturbing sign

 

Investors dump US government bonds as faith in America falters

Business

Investors are dumping once-reliable US government bonds, sparking fears that major banks and traders are losing faith in America as a safe place to store their money. That could be bad news for US President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets. 

The upheaval in stocks has been grabbing all the headlines, but there is a bigger problem looming in another corner of the financial markets that rarely gets headlines: Investors are dumping US government bonds.

Treasury bonds are essentially IOUs from the US government, and they’re how Washington pays its bills despite collecting less in revenue than it spends. Investors normally rush to them at any whiff of economic chaos – but now they are selling them, as not even the lure of higher interest payments on the bonds is luring buyers.

The freak development has experts worried that big banks, funds and traders are losing faith in America as a stable, predictable place to store their money.

“The fear is the US is losing its standing as the safe haven,” said George Cipolloni, a fund manager at Penn Mutual Asset Management. “Our bond market is the biggest and most stable in the world, but when you add instability, bad things can happen.”

But it is not just American bonds, most other countries have been shafted by the USA with their on-again off-again tariffs that change every three days. How can anyone invest in any economy when Damocle's Sword is hanging over that country's heads? Trump is creating a global investment disaster that will hurt everyone, including America.

That could be bad news for taxpayers paying interest on the ballooning US debt, consumers taking out mortgages or car loans – and for President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets. 

A week ago, the yield on the 10-year Treasury was 4.01%. On Friday, the yield shot as high as 4.58% before sliding back to around 4.50%. That’s a major swing for the bond market, which measures moves by the hundredths of a percentage point. 

Among the possible knock-on effects is a big hit to ordinary Americans in the form of higher interest rates on mortgages, car financing and other loans.

“As yields move higher, you’ll see your borrowing rates move higher, too,” said Brian Rehling, head of fixed income strategy at Wells Fargo Investment Institute. "And every corporation uses these funding markets. If they get more expensive, they’re going to have to pass along those costs customers or cut costs by cutting jobs.”

To be sure, no one can say exactly what mix of factors is behind the developing bond bust or how long it will last, but it’s rattling Wall Street nonetheless.

Bonds are supposed to move in the opposite direction as stocks, rising when stocks are falling. In this way, they act like shock absorbers to 401(k)s and other portfolios in stock market meltdowns, compensating somewhat for the losses.

“This is Econ 101,” said Jack McIntyre, portfolio manager for Brandywine Global, adding about the bond sell-off now, “It’s left people scratching their heads.”

The latest trigger for bond yields to go up was Friday's worse-than-expected reading on sentiment among US consumers, including expectations for much higher inflation ahead. But the unusual bond yield spike this week also reflects deeper worries as Trump’s tariffs threats and erratic policy moves have made America seem hostile and unstable — fears that are not likely to go away even after the tariff turmoil ends. 

“When the issue is a broader loss of confidence in the United States, even a much fuller retreat on trade might not work” to bring yields down, wrote Sarah Bianchi and other analysts at investment bank Evercore ISI. “We’re not sure any of the tools remaining in Trump’s toolkit will be sufficient to fully staunch the bleeding.”

US Treasury Secretary Scott Bessent has said the yield spike is not unusual or worrisome, pinning the blame on professional investors who had borrowed too much and needed to sell.

“I think that it is an uncomfortable but normal deleveraging that's going on,” he told Fox News Thursday, adding that it “happens every couple of years.”

Speaking to reporters on Air Force One Friday night, Trump said "The bond market’s going good. It had a little moment, but I solved that problem very quickly. I’m very good at this.”

Trump acknowledged that the bond market played a role in his decision Wednesday to put a 90-day pause on many tariffs, saying investors “were getting a little queasy.”

If indeed it was the bond market, and not stocks, that made him change course, it wouldn't come as a surprise.

The bond market's reaction to her tax and budget policy was behind the ouster of United Kingdom’s Liz Truss in 2022, whose 49 days made her Britain’s shortest-serving prime minister. James Carville, adviser to former U.S. President Bill Clinton, also famously said he’d like to be reincarnated as the bond market because of how much power it wields.

The instinctual rush into US debt is so ingrained in investors it even happens when you’d least expect.

People poured money into US Treasury bonds during the 2009 financial crisis, for instance, even though the US was the source of the problem, specifically its housing market.

But to Wall Street pros it made sense: US Treasurys are liquid, stable in price and you can buy and sell them with ease even during a panic, so of course businesses and traders would rush into them to wait out the storm.

Yields on US bonds quickly fell during that crisis, which had a benefit beyond cushioning personal financial portfolios. It also lowered borrowing costs, which helped businesses and consumers recover.

This time that natural corrective isn’t kicking in.

Aside from sudden jitters about the US, several other things could be triggering the bond sell-off. 

Some experts speculate that China, a vast holder of US government bonds, is dumping them in retaliation. But that seems unlikely since that would hurt the country, too. Selling Treasurys, or essentially exchanging US dollars for Chinese yuan, would make China's currency strengthen and its exports more expensive.

Another explanation is that a favored strategy of some hedge funds involving US debt and lots of borrowing — called the basis trade — is going against them. That means their lenders are asking to get repaid and they need to raise cash. 

“They are selling Treasurys and that is pushing up yields — that’s part of it,” said Mike Arone, chief investment strategist at State Street Global Advisors. “But the other part is that US has become a less reliable global partner.”

Wells Fargo's Rehling said he’s worried about a hit to confidence in the US, too, but that it's way too early to be sure and that the sell-off may stop soon, anyway.

“If Treasurys are no longer the place to park your cash, where do you go?” he said. “Is there another bond out there that is more liquid? I don’t think so.”

(FRANCE 24 with AP)

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