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There is a limited risk of another housing bubble developing in Ireland due to stricter rules that have reduced risk in the financial system, the European Commission has found in an in-depth review.

The review was triggered in 2021 because during the height of the Covid-19 pandemic European Union officials identified Ireland as having macroeconomic imbalances due to high private and public debt levels.

However, Ireland is no longer experiencing such an imbalance, partly due to an exceptional economic growth of 13.5 per cent last year, the commission found. Ireland was the only EU country to avoid recession, bolstered by the strong performance of multinational companies, and the economic outlook remains positive as the country is relatively sheltered from the effect of the war in Ukraine.

Overall, effective macro prudential policy settings suggest risks of another housing bubble remain limited, the review found.

Overall, the financial sector looks much healthier compared to the run-up of the great financial crisis. Since then Irish banks have become significantly more resilient and the introduction of stricter rules and requirements contributed to addressing many pre-crisis vulnerabilities of the banking sector.

House prices are expected to continue to increase this year due to a combination of factors including inward migration, households funnelling increase savings into real estate, and pent-up demand following the pandemic.

House price growth is expected to remain high in 2022 as demand continues to outstrip supply, the report stated.

The influx of refugees from Ukraine is expected to increase housing demand pressures. Population growth was concentrated in urban areas where the shortage of housing was most acute.

A sharp increase in mortgage approvals in 2021 suggests that a backlog has built up, which may contribute to continued house price inflation in 2022, it found.

Measures introduced by the Government have had an overall positive impact on housing availability, according to the review, which found that public investment in social housing and reforms of the planning and development process will increase the housing supply.

However, labour shortages and inflation in the cost of building materials will challenge the governments Housing for All plan, by delaying projects and making them less affordable.

Illustrating the pressure, it noted that the price of rough timber rose by 43 per cent while reinforcing metal rose by 35 per cent in 2021, due to a combination of higher shipping costs, Covid-19 factory closures, price increases in iron ore and energy and the pre-selling of stock materials.

The knock-on effects on raw material prices from the war in Ukraine and strong competition from large-scale retrofitting projects may continue to keep prices amongst the highest in the EU, it predicted.

The extraordinarily marked economic growth of the past decade in Ireland has decreased both private debt and public debt, the review found.

There are risks to the Governments finances ahead, however, including the public spending required to address the persistent undersupply of housing.

In addition, the economy requires major intervention to become more sustainable and bring down net greenhouse gas emissions per capita that are 80 per cent higher than the EU average, which will require significant action over this decade.

Originally posted here:
Limited risk of another housing bubble in Ireland, says European Commission - The Irish Times

The European Central Bank is signaling the end of its grand experiment with negative interest rates, which it started in 2014.

Some critics say that policymakers there kept rates too low for too long. Thats making it harder to combat inflation, which is hitting Europe just like it is the United States. But policymakers had their reasons.

Most of us grew up in a world where if you put money in the bank, youd get interest maybe not a lot, but something. Think of negative interest rates as the opposite: You pay the bank to hold onto your money.

The idea behind that is to make savings so unattractive that banks hand out more loans, and that households no longer save but start investing or just consuming, said Carsten Brzeski at ING Research.

Until 2014, when the European Central Bank became the first major central bank to try it, making interest rates negative seemed kind of like defying economic gravity.

I think most of us thought, You know, thats a nice idea, but could never really happen,' said David Wessel, a senior fellow at the Brookings Institution.

But it did happen, and it helped push the value of the euro lower. That, in turn, boosted the European economy by making its goods more attractive to foreign buyers. Just like the Federal Reserve, the European Central Bank is now trying to phase out access to easy money.

ECB has a pretty tricky job here much, harder than the Federal Reserve, Wessel said. The Fed has a strong economy and too much inflation. Europe in part because of whats going on in Ukraine has a weak economy and too much inflation.

That means Europes central bank will probably move a lot more gingerly than policymakers here in the U.S., Wessel said.

And, according to Claus Vistesen at Pantheon Macroeconomics, economists will be watching for whether it can stick with a slow and steady approach.

If the ECB raises interest rates now, and then if youre speaking six, nine months time, maybe theyre lowering interest rates again, that would be a disaster for the ECB, Vistesen said.

Its a real risk for the European Union economy, which is still dealing with the pandemic and a war just over its borders.

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European Central Bank likely to end its negative interest rate experiment - Marketplace

This paper responds to Moldovas request of 3 March 2022 to accede to membership of the European Union. The European Council meeting at Versailles on 10-11 March endorsed the Councils invitation to the European Commission to produce an Opinion on this request. The present paper gives our opinion on the position that we would like to see the Commission take, namely that the EU should extend candidate status to Moldova.

Progress in implementing the Association Agreement and Deep and Comprehensive Free Trade Area between the EU and Moldova means that there is already a substantial degree of preparedness for the accession process. While Moldova has an important reform agenda to sustain, especially on the judiciary and rule of law, its democratic electoral processes have been of impressive quality since 2020. There is good coherence between the presidency, government and parliament on the reform and European integration agendas. Moldovas common history, border and partly overlapping citizenship with EU Member State Romania is also relevant.

With Russias ongoing aggression in Ukraine, Moldova is next at risk on account of political, economic and security vulnerabilities. Recent explosions in Transnistria point to the possibility of this separatist region being instrumentalised by Russia to destabilise Moldova. These factors further underline the case for comprehensive EU support and the need for geostrategic clarity, which should be framed by an EU decision to extend candidate status to Moldova.

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Opinion on Moldova's application for membership of the European Union - CEPS

On the International Day against Homophobia, Transphobia and Biphobia (IDAHOT), the European Union reaffirms its strong commitment to respect, protect and fulfil the full and equal enjoyment of human rights and fundamental freedoms of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons.

Across the world, over 2 billion people live in countries where homosexuality is illegal, while death penalty is retained as a legal punishment for consensual same sex relationships in 11 jurisdictions.

Over the last 10 years, we have seen signs of progress worldwide. Yet, discrimination and exclusion because of sexual orientation and gender identity persist, and we are witnessing a worrying pushback of the rights of LGBTI persons. Levels of violence against LGBTI persons are also alarming, even though largely underreported.

Armed conflicts and humanitarian emergencies put LGBTI persons at particular risk. Russias unprovoked and unjustified aggression against Ukraine has put the spotlight on LGBTI persons trying to flee the war. There have been reports of transgender persons that have been hindered from leaving the country as well as incidents of violence against LGBTI-persons. More needs to be done to offer them support, protection and safe spaces.

Young persons, in particular, face rejection by their families, homelessness and harassment online and offline based on their sexual orientation and gender identity. This year 2022 is the European Year of Youth: young persons need to be accepted and valued for who they are. We must strive to build peaceful, inclusive societies, where everyone can thrive and feel safe.

The EU stands with all LGBTI persons and will not compromise. We will continue to speak up for the human rights of LGBTI persons. We will combat discrimination, violence and hate speech based on sexual orientation and gender identity in times of peace and times of conflict. We will continue our efforts to promote legal, political and financial anti-discrimination measures in close co-operation with civil society.

Equality, respect for dignity and respect for diversity are at the heart of our Union. Everyone should be free to be who they are and love whom they choose without fear.

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International Day Against Homophobia, Transphobia and Biphobia, 17 May 2022: Declaration by the High Representative on behalf of the European Union -...

BRUSSELS Treasury Secretary Janet L. Yellen urged European nations on Tuesday to step up their spending to support Ukraine as Russias attacks on the countrys critical infrastructure showed few signs of abating.

The United States and Europe have coordinated closely in enacting sweeping sanctions against Russia in the nearly three months since its president, Vladimir V. Putin, ordered an invasion. But they have been less aligned on the need to help prop up Ukraines economy and to assist with its rebuilding once the war ends.

Congress has already approved a $13.6 billion emergency spending package for Ukraine and is expected to approve another $40 billion worth of aid. While the European Union and international financial institutions have also been making large aid contributions, Ms. Yellen said that more must be done.

I sincerely ask all our partners to join us in increasing their financial support to Ukraine, Ms. Yellen said in a speech at the Brussels Economic Forum, according to her prepared remarks. Our joint efforts are critical to help ensure Ukraines democracy prevails over Putins aggression.

The Treasury secretary is in the midst of a weeklong trip to Europe, with stops in Warsaw, Brussels and Bonn, Germany, where she will meet her counterparts at the Group of 7 finance ministers summit. Aid to Ukraine is expected to be a central topic at that meeting.

Ms. Yellen said that Ukraines financial needs are immediate and that it lacks funding to pay soldiers, pensioners and employees to keep its government running.

Whats clear is that the bilateral and multilateral support announced so far will not be sufficient to address Ukraines needs, even in the short term, she said.

Whether her call will be heeded remains to be seen. European nations are facing their own economic strain, including rapid inflation and soaring energy costs, and big challenges lie ahead as they look to wean themselves off Russian energy.

Ms. Yellen said that the United States would help break Europes dependence on Russian energy, in part by increasing American exports of liquefied natural gas. She acknowledged some climate goals to reduce emissions could be set back by the need to rely on coal and fossil fuels, but she said the current predicament should be a reminder of the need to redouble our efforts on clean and renewable energy.

Energy is another major issue that policymakers will discuss at the Group of 7 finance ministers summit in Bonn later this week. The United States is expected to press the European Union to consider alternative options ahead of its plan to phase in a Russian oil embargo by the end of the year.

Treasury Department officials said on Tuesday that they wanted Europe to consider pricing mechanisms such a price cap or tariff that would eat away at much of Russias oil profits while still giving the country enough incentive to keep producing.

The Treasury officials declined to share their estimates for what impact an embargo would have on the price of oil, but they said that constraining global oil supplies risked pushing prices sharply higher at a time when inflation is already running hot.

Following a meeting with Ursula von der Leyen, president of the European Commission, Ms. Yellen told reporters that she believes that tariffs on Russian oil could be enacted quickly and combined with the phaseout proposal that Europe is considering.

In Mariupol. The bloodiest battle of the war in Ukraine ended in Mariupol, as the Ukrainian military ordered fighters holed up at a steel plant in the city to surrender. Ukraines decision to end combat gave Moscow full control over a vast sweep of southern Ukraine, stretching from the Russian border to Crimea.

NATOs show of strength. Although planned before the invasion of Ukraine, NATO held a large military exerciseon Russias doorstep in Estonia. The drills come as Finlandand Swedenconfirmed that they would cast aside decades of strategic neutrality and apply for membership in the alliance.

Theyre talking about next year as a time frame and in the meantime it might be possible to combine a phaseout with a price mechanism, Ms. Yellen said, referring to a tariff or price cap. It is critically important that they reduce their dependence on Russian oil; were very supportive of it.

She added that the United States would help to ensure that Europe has energy supplies to meet its needs.

In her speech, Ms. Yellen said Russias decision to cut of gas supplies to Poland and Bulgaria should be a lesson that Western nations should not trade national security for cheaper resources. That situation has now left them vulnerable to countries that can use their abundance of natural resources to disrupt markets.

She cited China as a concern in that regard because of its supply of rare earth minerals that are used to make airplanes, cars and high-tech batteries.

China is building a consequential market share in certain technology products and seeks a dominant position in the manufacture and use of semiconductors, Ms. Yellen said. And China has employed a variety of unfair trade practices in its efforts to achieve this position.

Still, Ms. Yellen made clear that she was not calling for more protectionism or a reversal of globalization. Instead, she said, nations should not put all their eggs in one basket when it comes to international trade.

My point is to suggest that we should consider ways to maintain free trade and at the same time lessen some of these risks, she said.

More here:
Yellen Calls on Europe to Boost Ukraine Aid - The New York Times