Kwarteng told MPs that the Government is looking at all options when asked if the UK could adopt Spain’s policy of introducing a new tax on energy companies’ windfall gains. Earlier this week, energy providers Green and Avro collapsed as wholesale costs continue to rocket.
There is increasing concern that domestic customers across the UK and Europe will now face a winter of surging energy bills as coal, nuclear and gas plants put up their charges in the face of a supply shortfall.
In Spain, companies that make “excess profits” from rising energy prices will be taxed, with the funds generated to be invested in infrastructure.
In the UK, there is currently little evidence to suggest that any major power plants are profiting from the rising costs. Kwarteng said: "I'm not a fan of windfall taxes, let me get that straight, but of course, it's an entire system and we have to think about how we can get the energy system as a whole to help itself."
"I think what they’re doing in Spain is recognising that it’s an entire system, the energy system is an entire system. I’m in discussion with Ofgem and other officials, looking at all options."
Kwarteng has warned that the UK has to be ready for energy prices to remain higher over the coming months, with financial expert Martin Lewis warning that up to 30 UK energy firms could go bust.
US
In the US, all 50 states have declared emergencies with governments at the local, state and federal level taking action to ease the financial burden on Americans. Trump’s administration and Congress agreed on a $2 trillion stimulus package, which includes income support of $1,200 per adult and $500 per child and starts phasing out for individuals who earn $75,000 per annum or $150,000 for couples. Loans worth $367 billion have been offered to small businesses struggling with the immediate drop in revenue due to the pandemic. The government will not expect the businesses to pay the money back if they manage to retain most of their employees over the next six months.
In the form of loans, loan guarantees and purchases of companies’ corporate debt, the legislation provides a total of $454 billion which will help large and medium-sized business access capital during the crisis. $58 billion have been set aside to help American airlines through loans and grants and $17 billion will be provided to help companies that are critical to maintaining national security.
UK
In March, UK Chancellor Rishi Sunak announced a £350 billion emergency package for the economy[1] which consists of state loan guarantees worth £330 billion along with a further £20 billion of handouts for struggling businesses. He also promised £12 billion in emergency support in the budget, a one-year abolition of property taxes for all companies in affected sectors and suspended business rates for many firms.
The Chancellor also added a generous £9 billion scheme to support up to 3.8 million self-employed workers hit by the impact of the pandemic. 95% of the country’s self-employed people are able to access a grant of 80% of their recent average profit (capped at £2,500).
The government also announced a job retention scheme which offers compensation in full for employment costs of up to 80% of salary bills for workers that companies can’t provide work for, but are kept on payroll.
Germany
The German finance and economic ministers have vowed to make unlimited financing available to individuals and businesses as part of the country’s efforts to immunise Europe’s largest economy from the COVID-19 impact. The government promised that there will be no upper limit on the aid that will be offered to companies that are affected by the crisis.
The government has set aside a “supplementary” €156 billion budget for 2020[2], which includes a €50 billion plan to provide direct grants to small businesses and self-employed people who can’t access bank credit. Businesses with up to five employees are eligible for a one-off grant of €9,000 for three months, whilst those with up to ten employees will receive €15,000.
The government has also set up a €500 billion bailout fund to recapitalise big companies with more than 250 employees that face struggles due to the crisis. Landlords are also not allowed to evict tenants who fail to pay their rent due to the pandemic.
The country’s also expanding its programme of export credits and other additional guarantees to help struggling companies and has committed to deterring “billions of euros” in tax payments. Germany is also compensating individuals who are sent home by their employers due to the lack of work for them. The government anticipates that the scheme will cost the Federal Labour Office €10.05 billion.
France
Like many of his colleagues from across the globe, French President Emmanuel Macron has guaranteed that the French Government will offer unlimited support for individuals and companies that have been affected by the global pandemic, which will cost the country €45 billion. He’s also committed to offering grants to workers who have found themselves in unemployment due to the pandemic crisis. France’s Minister of the Economy and Finance has also promised €300 billion of French state guarantees for bank loans to companies, as well as €1 trillion of such guarantees from European institutions.
The government has also suggested the possible rescue of companies such as Air France, which have state shareholdings, and has deferred company tax and social security payments. It’s also offered sick leave payments to parents who have to stay at home to take care of their children due to school closures.
Economists have warned that the damage from the coronavirus crisis could be similar to that from the 2008 recession.
Italy
Italy has begun distributing funds from the fiscal rescue package, totalling up to €25 billion, promising that “nobody will be left alone”. €1.15 billion of this has been distributed to their health system and €1.5 billion has been offered to the civil protection agency, which has been working on Italy’s coronavirus response.
Additionally, self-employed people have been promised one-off payments of €500 per person, companies that pay redundancy payments to their employees have been offered support, there’s been a freeze on any worker lay-offs, and people who are still working during this time have been offered bonuses.
Businesses hit by the pandemic have been promised loan guarantees and a moratorium on loan and mortgage payments is expected to be put in place. Financial support will be offered to families with children, as well as taxi drivers and postal workers who have to continue working during lockdown. The government also announced plans to financially support Italian airline Alitalia.
Spain
Spanish Prime Minister Pedro Sánchez has described the government’s coronavirus rescue package as the “biggest mobilisation of resources in Spain’s democratic history”. It includes €100 billion of state loan guarantees for companies aimed at ensuring liquidity, specifically for small and medium-sized companies. The whole package will amount to €200 billion.
Mr Sánchez has also announced a moratorium on mortgage payments for people who have been hit hard by the pandemic and a similar moratorium for utility bills. He’s also suspended some social security payments and has set aside €600 million to help people who depend on social services.
[1] https://news.sky.com/story/coronavirus-330bn-of-government-backed-loans-for-businesses-11959156
[2] https://www.ft.com/content/26af5520-6793-11ea-800d-da70cff6e4d3
With views of both the Mediterranean Sea and the Sierra Blanca mountains from almost every corner of the town and an astonishing 320 days of sizzling sunshine, Marbella is sought after by the most rich and famous from across the globe. Earlier this year, Nobu opened its latest venture set on the Andalusian town’s glitzy Golden Mile. And despite Nobu Hotel Marbella’s central location, its impressive chic restaurants, bar and club scene will make you feel like you’re in the heart of the action without having to leave the hotel’s grounds. 
Stepping into Nobu Hotel Marbella, you instantly feel the weight and stress of your usual daily life left behind as you escape into a very private and exclusive haven that seems to offer everything you could possibly desire. The hotel shares grounds with one of Marbella’s original luxury resorts – Puente Romano, which means that guests of Nobu can make the most of all the Puente Romano facilities, which include a range of restaurants and cafes, three swimming pools, a world-class tennis club (where you can often bump into Novak Djokovic), the Six Senses Spa, lush walkways surrounded by tropical greenery and an elegant beach bar and restaurant with beach club sun loungers and day beds.
Perfectly blending traditional Andalusian architecture with Nobu’s signature SoCal-meets-Asia interiors, each of the 81 rooms and suites in Nobu Hotel Marbella is beautifully decorated – think clean lines, earth tones, natural fabrics and laid-back, refined luxury. Most of the rooms gaze out over the lively central plaza and its electric restaurants and bars, but you can also stay in a quieter block within the Puente Romano estate while still being just a short walk away from the party. With a tranquil balcony overlooking a superbly maintained garden, our room felt miles away from the brimming-with-life square, allowing you the option to disappear from the rest of the world without sacrificing all of Nobu’s luxuries. Bathrooms are spacious and airy, with sublime rainfall showers, his-and-hers sinks and luxe Natura Bissé toiletries. As we’re getting ready for dinner in our Nobu kimonos, two different members of staff bring us a glass of the ‘cocktail of the night’, as well as a slice of an incredibly gooey and decadent brownie. What could be a better way to start the night?
Nobu Marbella’s centrepiece is the hotel’s La Plaza courtyard and its exhilarating variety of restaurants and bars. And it’s not just the unmissable world-class Nobu Restaurant serving exquisite Japanese cuisine mixed with local influences (we’re still obsessing over their padrón peppers with miso dressing and sesame seeds as well as the must-try black cod miso) that makes the plaza a foodie’s dream. In addition, you can also dine in Michelin-starred Chef Dani Garcia’s restaurant, indulge in hearty Italian dishes, freshly made Thai specialties or mouth-watering tapas in a cosy brasserie - all whilst gentle Spanish guitar flows from Nobu Lounge at the centre of the courtyard. Finish the night off with a sake cocktail or head straight into the exclusive La Suite nightclub for a night of dancing.
During the day, laze around Nobu Hotel Marbella’s peaceful pool, sip on fresh coconut water or a delicious cocktail (holidays are for day drinking, aren’t they?) and order a poke bowl from the pool menu, which charming waiters will bring to your sunbed.
Offering a complete experience, Nobu Hotel Marbella’s all about the finer things in life and is the perfect place for all those who could use a break from buzzing iPhones, dull boardrooms and cranky clients. Work hard, play harder.
Nobu Hotel Marbella is part of Small Luxury Hotels of the World. Hotel rooms start from £521 per night including breakfast.
To book your stay, please visit: www.slh.com/nobumarbella
Refugee crisis, political turbulences, economic struggles brought on by austerity and Brexit. Katina Hristova explores the crisis that the European Union has found itself in.
"The fragility of the EU is increasing. The cracks are growing in size”, warns EU Commission Chief Jean-Claude Juncker. With Italy’s Government crisis finally being resolved and the country’s shocking rejection of NGO migrant rescue boats, it has been easy to detract from the political earthquake that the third largest EU economy experienced and the quick impact that it had on the Euro. But Europe’s problems go deeper than Italy’s political turbulences. A month ago, Spain, the fourth biggest Eurozone economy, was faced with a very similar crisis and even though the country now has a new leader, analysts believe that the Spanish instability is not over yet. With the shockwaves of both countries’ political uncertainty being felt on Eurozone markets, on top of migration pitting southern Europe against the north and as the UK marches on towards Brexit whilst Trump abandons the Iran Nuclear Deal, which could mean the end of the transatlantic alliance between the US and Europe, is the EU in serious trouble?
Why is it so serious?
Billionaire Investor George Soros is one of those people that can sense when social change is needed and when the current cultural and political processes are about to collapse. A month ago, in a speech at the European Council on Foreign Relations, Soros claimed that: “for the past decade, everything that could go wrong has gone wrong”, believing that the European Union is already in the midst of an ‘existential crisis’. The post-2008 policy of economic austerity, or reducing a country’s deficits at any cost, created a conflict between Germany and Greece and worsened the relationship between wealthy and struggling EU nations, creating two classes – debtors and creditors. Greece and other debtor nations had sluggish economies and high unemployment rates, struggling to meet the conditions their creditors set, which resulted in resentment on both sides toward the European Union. Back in 2012, the European countries that struggled with immense debt, malfunctioning banks and constant budget deficits and needed help from other member countries were Portugal, Ireland, Greece and Spain. In order to help them the creditors countries set conditions that the debtors were expected to meet, but struggled to do so. And as Soros points out: “This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based”.
Although Italy finally has a government, after nearly three months without one, the financial markets are apprehensive about what to expect next, considering the country’s €2.1 trillion debt and inflexible labour market. On 29 May, fearing the political crisis in the country, the Euro EURUSD, +0.6570% slid to a six-month low, whilst European stocks ended sharply lower, with Italy’s FTSE MIB I945, +1.43% ending 2.7% lower, building on the previous week’s sharp losses. Bill Adams, senior international economist at PNC believes that: “The situation serves as a reminder that political risk in the Euro area hasn’t gone away. Italy is not on an irrevocable road to anything at this point,” he said. “I think what is most likely is another election later this year, and what we’ve learned is that outcomes of elections are very unpredictable.”
Spain on the other hand has made huge progress since being on ‘EU life support’ when ‘its banks were sinking and ratings agencies valued its debt at a notch above junk, on a par with Azerbaijan’. Since receiving help, the country’s economy has been growing, unemployment is not as high and its credit rating has been restored. However, with the Catalonia separatism, and the parties, Podemos and Ciudadanos who have emerged to challenge the old duopoly between the Popular Party (PP) and the Socialists, the political uncertainty in the country is set to continue.
Greece has been in a permanent state of crisis for a decade now, with its current debt of 180% of its gross domestic product (in comparison, Italy's is 133%). In less than two months, on 20 August, the country is due to exit its intensive care administered by the European Central Bank and International Monetary Fund. The EU will then have to come up with a new debt relief offer on the $280 billion Greece still owes – which could be challenging, as the ‘creditors’ are not in a charitable mood.
In contrast, Poland and Hungary are financially stable, however, both countries seem to be in opposition to the EU with regards to immigration, the independence of the judiciary, ‘democratic values’ and freedom of the press. Both governments have dismissed EU plans to share the burden that the Mediterranean region carries in terms of migrants arriving into these countries. In addition to this, Hungary’s Prime Minister is promoting an ‘illiberal’ alternative to European consensus, whilst Poland has sided with the US and against its European partners on a range of subjects, including the Iran sanctions and Russian gas pipelines.
And of course, let’s not forget the EU’s list of unsolved issues – the main one being Brexit. With nine months until its deadline, the terms of Britain’s exit from the EU are nowhere near finalised.
Make the EU an association that countries want to join again
Today, young people across the continent see the European Union as the enemy, whilst populist politicians have exploited these resentments, creating anti-European parties and movements.
Since its establishment, the EU, an association that was founded to offer freedom, security and justice without internal borders, has survived many turbulences. Although the current crisis is based on a number of deep-rooted problems, odds are that these challenges will be overcome. To save the EU, Soros believes that it needs to reinvent itself via a ‘genuinely grassroots effort’ which allows member countries more choice than is currently afforded.
"Instead of a multi-speed Europe, the goal should be a 'multi-track Europe' that allows member states a wider variety of choices. This would have a far-reaching beneficial effect."
And even though he isn’t offering a proposition for a bill that someone needs to draft and pass as soon as possible, he has opened a conversation - a conversation about moving away from the EU’s unsustainable structure. “The idea of Europe as an open society continues to inspire me”, says Soros. And in order to survive, it will have to reinvent itself.
Oh Madrid! Elegant boulevards, lush parks, stunning architecture and thousands of hip cafés and restaurants – it’s very difficult not to fall in love with everything that this bustling with life city has to offer! Madrid’s countless attractions, museums and art galleries make it the ideal destination for a culture-rich weekend or city break. And even though this city never sleeps, you’d still need a welcome relief after a day of walking around, overdosing on culture and eating tapas. Only YOU Hotel Atocha is a conveniently located boutique bolthole, whose trendy industrial interiors and upscale comfort will make it hard to leave the hotel after a lazy brunch at the sunlit terrace.
Only YOU Hotel Atocha is the second Only YOU Hotel in Madrid and opened its doors in December 2016. Both hotels boast urban interior vibes, courtesy of Catalan interior designer Lázaro Rosa Violán. Brick walls, exposed pipes and wooden flooring are tastefully paired with modern industrial furnishings and funky artworks – Only YOU Hotel Atocha perfectly combines fresh contemporary atmosphere with state-of-the-art comforts. The hotel offers 205 rooms and suites, scattered across seven floors. For a truly lush experience, stay at the Terrace Suite on the top floor, which, naturally, comes with a fully furnished solarium terrace, a separate lounge, amenities kit by RITUALS and stunning views overlooking the busy streets of Madrid.
On the first floor, you’ll find the bar and restaurant area that features a giant bookcase serving as the centrepiece of the area, cosy armchairs and bright furnishing accessories. Sample’s the bar’s cocktail menu or grab a quick bite in the restaurant, whilst languid jazz is playing in the background.
On the seventh floor you’ll find the light-filled, stylish SÉPTIMA restaurant, where the hotel hosts music sessions and special events. This is also where breakfast is served. You can also enjoy your eggs and coffee on the beautiful terrace, if weather permits - which it normally does in sunny Madrid. The expansive buffet selection offers freshly made juices and smoothies, an extensive list of cheeses and cold cuts, homemade pastries and muffins and an omelette bar – you’ll find everything that you’d need to fuel up for a day of exploring the energetic streets of Spain’s capital.
Whether you’re visiting Madrid for business or pleasure, Only YOU Hotel Atocha’s characterful, contemporary luxe and central location make it an ideal place to stay in the never-stopping city of jamon and flamenco.
Double rooms at Only YOU Hotel Atocha start at £127 in low season; and from £170 in high (breakfast excluded).
The warning from Nigel Green, founder and CEO of deVere Group, follows the president of the Catalan government, Carles Puigdemont's, highly anticipated speech in which he said Catalans had “won their right to become an independent country” from Spain following the disputed referendum on 1st October. The Premier added that he will first seek to open a dialogue with Madrid.
Mr Green affirms: “The aftermath of geopolitical events of this magnitude have the potential to influence capital markets which, of course, drive investor returns.
“Up until now the chaos in Catalonia had been largely dismissed by global investors as a regional issue. However, now that Mr Puigdemont is effectively saying that Catalonia will become independent come what may, a considerably heightened game of cat and mouse between Barcelona and Madrid has been started – and this could have far-reaching economic consequences in the short and longer term.
“In the short term there will be ongoing and increasing uncertainty which is likely to create turbulence in the domestic and regional financial markets. In the longer term, if Catalonia splits, Spain’s economy – Europe’s fourth largest – could lose 20 per cent of its revenue. Plus the process could adversely affect investment into both Spain and Catalonia.”
He continues: “The Catalonia independence crisis could push Spain’s recent economic progress back. This would inevitably weaken the wider eurozone’s economic stability by pushing the bloc into another era of grinding uncertainty.
“This is perhaps especially concerning as we have recently had the German election, with Merkel returning but with a lower majority, and now we have the Austrian election, and the Italian one next year. And this is all against a backdrop of British PM, Theresa May, being urged to walk away from Brexit negotiations in Brussels if they fail to make progress this month.”
The deVere CEO says: “The chaos in Catalonia is a wake-up call for global investors to ensure that they are properly diversified across asset classes, sectors and regions, in order to mitigate the risks of the fall out of this and other key geopolitical events and also – crucially - to take advantage of significant opportunities that they simultaneously present.”
(Source: deVere Group)
Immediate market reaction to the illegal separatist referendum in Catalonia is likely to be muted – but what happens on the aftermath will be crucial, affirms the boss of one of the world’s largest independent financial services organisations.
Nigel Green, the founder and CEO of deVere Group, comments as Spanish police in riot gear moved in to prevent the ballot called by Catalonia’s regional government, but which Spain’s Constitutional Court banned from taking place.
Mr Green observes: “What is striking is how this chaos in Catalonia has been largely ignored to date by global investors, who last week appeared more preoccupied with Trump's proposed tax cuts and Angela Merkel's reduced political strength in the Reichstag.
“When global markets open Monday immediate reaction is likely to be muted too. The Spanish stock market is relatively small. The country represents just 5 per cent of the MSCI Europe index, compared to 28 per cent for the UK, 15 per cent for France and 14 per cent for Germany.
“Whilst it is a huge existential crisis for Spain and is a big geopolitical event, regional tensions such as these, rarely have the necessary might to considerably affect global trading. International commerce is stronger than all the sabre-rattling.
“It is unlikely that there will be immediate major portfolio rebalancing as a direct response to the events in Catalonia.”
He continues: “However, what happens next will be crucial for global investors. Neither Barcelona nor Madrid will back down on this issue. And now the genie of illegality is out of the bottle, there is little incentive for those supporting independence to put it back. Particularly if they can claim a majority of voters back their cause.
“Should the Catalans take further illegal action after the vote, and perhaps encourage civil disobedience, the uncertainty would create significant volatility and the outlook for the EU region's economy would darken and for Spain also. “The Catalan separatists’ ongoing campaign would also likely trigger a major destabilising effect as it would encourage other areas to vote for independence from the EU. Of course, against this backdrop, we could then expect the Euro would come under considerable pressure.”
Mr Green concludes: “Despite global financial markets largely shrugging off the events in Catalonia so far, it is important that investors keep their eyes on all major political events, including this one as how it plays out in the aftermath will be what matters.
“Investors must remain fully diversified across asset classes, sectors and regions, in order to safeguard and maximise their portfolios and to ensure they remain on track to achieve their long-term financial objectives.”
(Source: deVere Group)
The IMF has cut its global growth forecast for 2015 to 3.5%, down 0.3% from its October prediction. It expects a lower oil price to be positive for the global economy, but to be offset by negative factors.
The IMF believes a lower oil price will stimulate more growth in advanced economies that import oil rather than in emerging economies, as the benefit feeds more directly through to consumers. In many developing nations, like India, the government subsidises energy consumption, therefore the government tends to benefit from price drops.
However, the IMF believes the US will see strong growth in 2015, helping push the global economy upwards. The US is forecast to see 3.6% growth in 2015, up 0.5% from the IMF’s October forecast.
Meanwhile the IMF sounds notes of concern over Russia, and China. The Russian economy is expected to contract by 3% in 2015, while China is expected to grow by 6.8%, a 0.3% reduction from October's forecast. This follows on official data just released showing Chinese growth slowed to 7.4% in 2014, an enviable level of growth for advanced economies, but its lowest level in 24 years.
European growth has been downgraded and is now expected to come in at 1.2%, down 0.2% from October. However, Spain provides a European bright spot, with 2% growth expected this year, up 0.3% on October's forecast. The UK is expected to grow by 2.7% in 2015, unchanged from October.
“Economic forecasts of this nature are more like a dowsing rod than a GPS tracking system, but they do confirm what market behaviour suggests- that uncertainty has increased in recent months,” said Laith Khalaf, Senior Analyst for UK-based financial service company Hargreaves Lansdown.
“The falling oil price is of course a major source of instability, though as the IMF notes this should be a boost to global economic activity, albeit with winners and losers.
“The US remains teacher's pet, with the growth forecast for the world's most influential economy revised sharply upwards. At the other end of the spectrum Russia is expected to suffer a 3% contracting in its economy over 2015, as a result of its high exposure to oil and gas production.
“While the IMF strikes a largely negative tone, stock markets have already absorbed much, if not all of the information referred to in these forecasts. For instance Russian and Chinese stocks are already looking relatively inexpensive by historical standards, while US companies are more fully valued, reflecting the respective conditions and confidence in these economies.”
