World news of the week – March 13-19
ECB announces an increase in the prime rate
The ECB Governing Council signed a resolution in this regard on Thursday, March 16. From March 22, the three key rates will be higher by 50 basis points.
The prime refinancing operations will have an interest rate of 3.5%, 3.75% for the interest rate on the marginal credit line, and 3% for the deposit line.
The main reason for another raise was the excessively high inflation rate. Analysts now expect it to be 5.3% in 2023 and 4.6% even non including energy and food. This is higher than the forecasts made at the end of last year, hence the mechanisms of containment have been activated.
The ECB also notes that the banking sector in the euro area is extremely resilient. The experts assure that financial institutions have sufficient capital and liquidity reserves. This is especially relevant given the recent bank failures in the U.S.
No-confidence motion in France
The French opposition, after all, introduced a motion of no confidence towards Macron's government. Shortly before that, the cabinet had taken advantage of a legislative procedure that allows it to pass a bill without a mandatory vote in parliament.
The decision further ignited an already boiling crowd that has been protesting for two months. In March alone, several hundred thousand people participated in demonstrations and strikes.
A similar reform was already planned to be implemented by Macron in 2019. There were protests then, too, and the law was postponed, though not because of popular discontent, but because of the outbreak of a pandemic.
The matter of raising the retirement age figured in Macron's election campaign for his second term. Nevertheless, the people of France, one would assume, expected a more coherent dialogue with the authorities.
The retirement age in France remains one of the lowest in Europe. At present (before the adoption of the amendments) the French take a well-deserved retirement at the age of 62. The state spends 14% of its GDP on pensions. Only Greece and Italy have a higher figure.
Obviously, such high costs have a negative impact on the country's economy, however, the libertine French do not seem ready to make amends.
By the way, this is not the first increase in retirement age. The previous one occurred in 2010 and added 2 years to the last figure. The former government also did not make concessions to society, which, with a high degree of probability, prevented Sarkozy's re-election in 2012.
Macron may be a little more liberal in this respect since his presidential term is, in any case, his last. Consequently, he no longer needs to fear the victory of his opponents in the election race, which means that he can still introduce even the most controversial changes.
