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Meloni, One Year in, is Defying Critics to Reshape Italy

Trusting her gut and relying on a what-you-see-is-what-you-get approach have been hallmarks of Giorgia Meloni’s political tenure, and it’s helped her become the first woman to secure Italy’s top job. After just over a year in power, she’s had her share of missteps, but it’s clear the 46-year-old has boxed in rivals, consolidated power and reshaped the center-right almost entirely in her nationalist image, while at the same time demonstrating flexibility and pragmatism. She has the last word on every initiative, from corporate deals to foreign policy, senior government officials tell us. Her fingerprints are all over appointments at Enel, the decision to take a stake in Telecom Italia’s network business and the move to back out of an investment pact with China. Read more on her eventful year in power and how she draws support domestically and abroad.

What’s Happening

Energy Extension | The EU is set to propose extending emergency rules first aimed at stemming an unprecedented energy crisis last year as conflict in the Middle East and concerns about the security of the region’s gas infrastructure pose new risks. Europe remains exposed to energy shocks, Energy Commissioner Kadri Simson told lawmakers in the European Parliament yesterday.

Modest Rebound | Europe’s economy, while in a period of weakness, is on course for a modest rebound next year, Commission Vice President Valdis Dombrovskis said yesterday ahead of the euro-area finance ministers meeting in Brussels today. The bloc’s executive branch is due to publish its twice-yearly economic forecast next week.

Rate Talk | Bundesbank President Joachim Nagel has warned against chatter about when the ECB can start lowering borrowing costs. As long as underlying inflation in the eurozone tops 4%, it’s “not helpful” to talk about cutting interest rates, he said yesterday in London, adding that the “last mile” of bringing inflation down to 2% will be the hardest.

EIB Urge | Belgian Finance Minister Vincent Van Peteghem said he will inform European colleagues today about how much progress has been made in finding a successor for Werner Hoyer as EIB president. He said he wants to apply some pressure as making a decision becomes more urgent. Nadia Calvino of Spain and Margrethe Vestager of Denmark are considered the favorites.

Green Alliance | The EU and Canada will seek to form a “Green Alliance” at a summit later this month, we’ve learned. Canada will pledge to triple its renewables capacity and double its energy efficiency by the end of the decade, and Brussels will join the “Global Carbon Pricing Challenge” with an aim of putting a specific carbon-dioxide price on 60% of the world’s emissions.

Swiss Accord | Switzerland is looking to resume talks with the EU about developing a new relationship more than two years after pulling the plug on previous negotiations. The decision follows months of exploratory conversations between Swiss and EU officials about contested issues such as the freedom of movement.

Around Europe

Portugal Election | Portugal’s president is set to call a snap election after the country was thrown into a political crisis following the resignation of Prime Minister Antonio Costa earlier this week. The vote — likely in early 2024 — is part of the messy fallout from the turmoil that unfolded at breakneck pace on Tuesday after police raided government offices as part of an investigation into allegations of government corruption.

German Outlook | Chancellor Olaf Scholz’s advisers from the German Council of Economic Experts downgraded their outlook for the domestic economy, cutting this year’s forecast to a contraction of 0.4% and predicting a significantly weaker-than-expected recovery in 2024. The global economy’s sluggish recovery was the main reason for the lagging rebound.

China’s Warning | The Chinese government issued a warning to Estonia after the Baltic nation said it would allow Taiwan to open a non-diplomatic office for cultural and economic relations. China opposes any official exchange with Taiwan, a self-ruled island that Beijing claims as its own, Chinese Foreign Ministry spokesman Wang Wenbin said yesterday.

Slow Adoption | Fast fashion retailers like H&M and Inditex are buying too little of an innovative fiber that could help make fashion advance in its use of sustainable materials, according to Renewcell, the textile recycling supplier to both brands. Chemical recycling, the process by which old textiles can be transformed and reused, faces significant barriers to scale.

Number Crunching | German regulatory agency BaFin has been leading what’s arguably Europe’s biggest clampdown on non-traditional finance firms, having announced sanctions on about a dozen payment companies and other financial enterprises over the past year. The actions have hit hard and compounded the drop in valuations brought about by the sudden end of cheap money.

Russian Strike | A commercial ship was struck by a Russian missile while entering the port of Pivdenny in the Black Sea — a key hub for Ukrainian grain shipments, Ukraine’s military said yesterday. The rocket hit the vessel ship under the Liberian flag, killing one person and injuring four, including three Philippine citizens

Chart of the Day

European Economies Face Subdued Growth in Coming Years

Europe’s economy is unlikely to crash — despite a string of interest rate hikes that have lasted over a year, according to the IMF. “The outlook for Europe is for a soft landing, with inflation declining gradually,” the Washington-based lender said yesterday in a report, predicting GDP growth in the wider region will slow to 1.3% in 2023 and improve slightly to 1.5% in 2024. It also warned that restoring consumer prices to normal levels following their surge in the wake of Russia’s attack on Ukraine, which triggered the steepest rate hikes since the euro was implemented, may take several years.

Source: Bloomberg