Germany’s relief plan could trigger a UK-style bond meltdown in euro nations

Published

3 years ago

October 7, 2022

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German Chancellor Olaf Scholz last week announced a package worth 200 billion euros ($198 billion) designed to help with soaring energy prices. The “defensive shield” includes a gas price brake and a cut in sales tax for fuel.

Steffi Loos | Pool | Reuters

Amid downbeat predictions of a recession in Germany and the wider region, analysts at one Wall Street bank have shared wider concerns about violent bond market moves and European governments looking to borrow vast sums of money.

The proposals could cut 2 percentage points off inflation in the next year, according to Citi, but they are unlikely to prevent an economic contraction. The package “may soften the coming recession but also poses risks, in our view,” Citi analysts said in a note released last Friday.

Those risks relate to the question of how the package will be financed and what that could do to inflation, to Germany’s sovereign bond yields, to the European Central Bank’s benchmark rate, and to the borrowing plans of other euro nations that may do the same.

Germany’s example

“The risk is that others may follow that example,” Christian Schulz, deputy chief European economist at Citi, told CNBC’s “Street Signs Europe” on Monday.

Schulz noted the U.K.’s recent bond market blowup after unfunded tax cuts by the British government. Rate expectations and bond yields surged in Britain last month after a swathe of tax announcements. It caused the Bank of England to unleash a new bond-buying plan, mayhem in the mortgage market and talk of a housing crisis.

Schulz said Germany could “afford” any debt financing thanks to its low debt-to-GDP ratio and lower external funding needs, but the package could open the door for less fiscally prudent countries to want to borrow large amounts and issue new debt — potentially leading to trouble like that seen in the U.K. Citi predicts that German debt financing could also force tighter ECB policy, which could then also send yields surging in the euro area.

“The risk is that this same dynamic [seen in Britain] evolves on the continent as well now,” Schulz said.

Berenberg: German mid-cap exposure to a recession is substantial

“The way [Germany] want[s] to do it is by using an existing SPV [special purpose vehicle], an off balance sheet fund …. whether that’s going to lead to borrowing or whether it’s going to lead to guaranteed loans — because this fund can do both — we shall see,” he added, referring to the 200 billion euro plan.

Germany’s Federal Audit Court criticized the government and suggested it had dodged tax rules to fund the package, according to Politico.

Other banks and institutions pointed to the difficult environment in Germany — the largest European economy and an engine room for euro area growth — which is now trying to abruptly wean itself off of Russian fossil fuels.

Berenberg Economics said in a recent note that consumer confidence in Germany, and the euro zone more generally, has plunged to a record low, which it said is “a prelude to recession.” Indeed, the Institute for Economic Research predicts investment will plummet by 25% and expects a German recession in 2023.

Deutsche Bank analysts estimate that the “defensive shield” could boost household income and limit the projected GDP decline in 2023 to around 2%. That’s better than their previous forecast of a 3.5% contraction.

Recession may be on the cards

ECB President Christine Lagarde hinted at further interest rate hikes, saying on Sept. 28 that the bank was “not at neutral rates yet.”

More pain in the pipeline for Germany, economist warns

Speaking at the Frankfurt Forum, Lagarde said the latest hikes — most recently an unprecedented 75 basis point increase in September that demolished the region’s track record of negative rates — were just “the first destination on the journey.” The ECB president said the institution would “do what [it has] to do” in order to return to its 2% inflation target in the medium term.

While the EU and U.S. will see positive growth this year overall, “the signs are there of a slowdown and a recession can no longer be ruled out,” European commissioner for economy, Paolo Gentiloni, told CNBC’s Annette Weisbach at the Frankfurt Forum. “We are entering a phase of stagnation and possible recession,” Gentiloni said via video link.

That sentiment was echoed by World Trade Organization director-general Ngozi Okonjo-Iweala. “My worry is that all indicators are going in the wrong direction,” Okonjo-Iweala told CNBC’s Julianna Tatelbaum in Brussels at an emergency energy meeting last month — but she said she disliked the word “recession.”

“Let’s say ‘slowing’ and let’s say we are inching towards the ‘R’,” she said.

WTO chief: All the indicators are going in the wrong direction

Environment

The era of cheap Chinese solar + storage is ending – here’s why

Published

19 mins ago

October 2, 2025

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The era of cheap Chinese solar + storage is ending – here’s why

Trinasolar Chinese solar storage — Photo: Trina Solar

Solar and storage prices are about to rise after a year and a half of record lows, according to new data from Wood Mackenzie. Equipment procurement costs for solar and energy storage will jump around 9% starting in Q4 2025, marking the end of the bargain pricing developers have enjoyed for the last 18 months. That’s because China is changing the rules.

Why solar +storage prices are going up

Wood Mackenzie points to three major drivers behind the coming spike:

Polysilicon consolidation. China’s polysilicon production exploded between 2022 and 2024, creating a glut and pushing prices to unsustainable lows. But new government guidelines are now forcing producers to slow down, cutting utilization rates to 55-70%. As a result, polysilicon prices surged 48% in September 2025 alone.
Production cuts across the value chain. Solar module makers are also reducing operating rates, with major producers running at just 55-60% capacity by mid-2025. Outdated PERC cell lines are being phased out, further shrinking available capacity.
The end of China’s export tax rebate. Starting in Q4 2025, China will scrap its 13% VAT export rebate on solar modules and storage systems. This fiscal change will ripple through global pricing since China supplies over 80% of the world’s solar modules and 90% of lithium iron phosphate (LFP) battery packs.

That policy shift means developers worldwide will face higher costs. In the US, storage and solar projects relying on Chinese equipment will likely see about a 9% cost increase in Q4. Analysts expect inverters to lose their export rebate soon, too, adding more upward pressure.

From price war to market correction

For the past year and a half, Chinese manufacturers have been selling solar modules and storage systems at rock-bottom prices, trying to move oversupply even while posting losses. Modules hit record lows of $0.07-$0.09 per watt in 2024 and early 2025. But with government intervention, that price war is ending.

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“This is about to change,” said Yana Hryshko, senior research analyst and head of Global Solar Supply Chain at Wood Mackenzie. “The Chinese government has intervened to stabilize the market, and developers globally will have to adjust their procurement expectations accordingly.”

Wood Mac says the shift represents a “structural correction” toward sustainable margins, not just a temporary market adjustment. “This shift will ultimately benefit the industry’s long-term health,” said Hryshko. Manufacturers will finally have room to reinvest and innovate, but developers will need to revisit budgets and renegotiate supply deals for production scheduled after November 2025.

Bottom line is, ultra-cheap solar and storage gear is on its way out. The next phase of the energy transition will likely come with higher but more sustainable prices.

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Environment

Jeep vehicles still qualify for the $7,500 EV credit past the deadline, for now

Published

1 hour ago

October 2, 2025

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Jeep vehicles still qualify for the ,500 EV credit past the deadline, for now

Jeep, Dodge, Chrysler, and Fiat vehicles will remain eligible for the credit after the deadline expires. Stellantis confirmed it will replicate the offer for EV and PHEV models.

Stellantis extends credit for Jeep EV and PHEV models

Stellantis is looking for a comeback in the US. The company sold 324,825 vehicles under the Jeep, Ram, Chrysler, and Fiat brands in the US in the third quarter, notching its highest monthly market share in 15 months.

Although it currently offers only a few all-electric vehicles, including the Jeep Wagoneer S and Dodge Charger Daytona EV, Stellantis also provides a range of plug-in hybrids (PHEVs).

Through July, the Jeep Wrangler 4xe remained the best-selling PHEV in the US. Stellantis doesn’t provide a breakdown of Wrangler sales by model, but total sales rose 18% in the third quarter to nearly 45,000 units.

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Through September, Stellantis has sold over 128,000 Wranglers. Jeep also offers the Grand Cherokee 4xe, another PHEV. The Wagoneer S, Jeep’s first all-electric SUV, racked up 4,163 in sales in the third quarter, bringing its yearly total to 10,426.

To compensate for the loss of the federal tax credit, Stellantis will honor it for EVs and PHEVs. The offer is good on the lease or purchase of a new EV or PHEV, but there’s a catch.

The deal is only for vehicles currently in the dealer’s inventory, meaning it could run out at any point, if it hasn’t already.

Jeep isn’t the only brand, Stellantis is extending the credit to all PHEV and EV models. Dodge offers the electric Charger Daytona BEV and Hornet R/T PHEV. Chrysler only sells one vehicle, the Pacifica minivan, but it is available with a plug-in hybrid powertrain. And don’t forget the Alfa Romeo Tonale, the luxury brand’s first PHEV.

All will still be eligible for the credit while inventory lasts. Stellantis follows other automakers, including Ford, GM, and Hyundai, which will continue to offer the EV tax credit beyond the deadline.

Interested in checking one out for yourself? You can use our links below to see what’s available in your area.

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Environment

96 DC fast chargers are coming to Western Canada’s highways

Published

1 hour ago

October 2, 2025

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96 DC fast chargers are coming to Western Canada’s highways

fast chargers Western Canada — Photo: Wallbox

Wallbox’s Supernova DC fast chargers will power a major new EV charging network across Western Canada.

Public charging network operator SureCharge Corp is rolling out up to 24 high-speed public charging sites with 96 Wallbox Supernova 180 kW DC fast chargers across Alberta and British Columbia. The new network will fill critical charging gaps along key travel corridors, linking northern, central, and southern Alberta with British Columbia.

The initiative is backed by over $4.7 million from the Government of Canada through Natural Resources Canada’s Zero Emission Vehicle Infrastructure Program and $400,000 from the Government of British Columbia. SureCharge is leading the project, with SureTek Electric & Technologies, a certified Wallbox partner, handling installation, commissioning, and maintenance.

Each site will feature Wallbox’s 180 kW Supernova fast chargers. The Supernova line aims to keep costs low for operators while ensuring drivers have consistent access to high-speed charging.

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SureCharge says the project will connect communities in Western Canada that have never had access to fast chargers. “From the northern stretches of British Columbia to the southern reaches of Alberta, we’re enabling a fast-charging corridor that connects communities across the region,” said Michael Palarchio, SureCharge’s vice-president. “By building a network that’s owned, installed, and maintained by Western Canadians, we’re creating a locally powered solution that works for the people who live, work, and travel here.”

Canadian officials say the project will help ease range anxiety and encourage more people to drive EVs. “With this funding, Canadians traveling on Alberta and British Columbia highways will have access to more EV chargers where they need them most,” said Tim Hodgson, Canada’s minister of energy and natural resources. “These chargers give peace of mind to current EV drivers and help address charging anxiety for those considering an EV purchase.”

The first sites will go live by late 2025 in Red Deer, Lacombe, and Enoch Cree Nation, followed by rapid expansion into Whitecourt, Grande Prairie, Jasper, Fort St. John, Fernie, Edson, and other towns, including Grand Cache, Hinton, Rocky Mountain House, Valleyview, and Diamond Valley.

The project is part of a larger plan to create a long-term, regionwide charging network in partnership with retail, hospitality, and convenience brands committed to sustainable transportation.

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