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EU moves to cut $7.5bn funding for Hungary over corruption | European Union News

The 27-nation EU bloc has three months to decide on the suspension of funding for Hungary over charges of damaging democracy.

The European Union executive recommended suspending some 7.5 billion euros ($751bn) in funding for Hungary over corruption, the first such case in the 27-nation bloc under a new sanction meant to better protect the rule of law.

Relations between the EU and Hungary have been on thin ice for months as Brussels suspects that nationalist Prime Minister Viktor Orban’s government is undercutting the rule of law and using EU money to enrich its cronies.

Two years ago, the EU introduced new financial sanctions in response to what it says amounts to the undermining of democracy in Poland and Hungary.

During more than a decade in power, Orban subdued courts, media, NGOs and academia, as well as restricting the rights of migrants, the LGBTQ+ community and women.

“It’s about breaches of the rule of law compromising the use and management of EU funds,” said EU Budget Commissioner Johannes Hahn. “We cannot conclude that the EU budget is sufficiently protected.”

He highlighted systemic irregularities in Hungary’s public procurement laws, insufficient safeguards against conflicts of interest, weaknesses in effective prosecution and shortcomings in other anti-graft measures.

Hahn said the Commission was recommending the suspension of about a third of cohesion funds envisaged for Hungary from the bloc’s shared budget for 2021-27 worth a total of 1.1 trillion euros ($1.1 trillion).

The 7.5 billion euros ($7.5bn). in question amounts to 5 percent of the country’s estimated 2022 gross domestic product (GDP). EU countries now have up to three months to decide on the proposal.

Hahn said Hungary’s latest promise to address EU criticisms was a significant step in the right direction, but must still be translated into new laws and practical actions before the bloc would be reassured.

On Saturday, Hungary’s government said that MPs would vote next week on a series of laws aimed at easing the conflict. The measures are expected to include setting up independent anti-corruption watchdogs to monitor the use of EU funds as well as steps to make the legislative process more transparent.

Hahn said he was “very confident that … we will see significant reforms in Hungary, which indeed will be a game-changer.”

He said Hungary has committed to “fully inform” the commission about implementing measures to address their concerns by November 19.

Hungary’s Development Minister Tibor Navracsics, in charge of negotiations with the EU, said Hungary would meet all 17 of its commitments made to the European Commission to stave off the loss of any EU funding.

“Hungary did not make commitments to befuddle the Commission,” Navracsics told a news conference. “We have made commitments that we know can be implemented … therefore, we will not be facing a loss of funds.”

PM Orban, who calls himself a “freedom fighter” against the world view of the liberal West, denies that Hungary – an ex-communist country of some 10 million people – is any more corrupt than others in the EU.

On Thursday, the European Parliament declared that Hungary is no longer a “full democracy” and that the EU needs to act after a vote of 433 in favour and 123 against the resolution. Hungary reacted furiously to the vote and said it is an “insult against a Hungarian person”.

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American consumers spent more in August, as prices rose | Inflation News

Consumers spent a bit more in August than the previous month, a sign the economy is holding up even as inflation lifts prices for food, rent, and other essentials.

Americans boosted their spending at stores and for services, such as haircuts, by 0.4 percent in August, after it fell 0.2 percent in July, the Department of Commerce said Friday. Yet much of that increase reflected higher prices, with an inflation gauge closely monitored by the Federal Reserve rising 0.3 percent in August, the government’s report showed.

The figures suggested that the economy is showing some resilience despite sharply rising interest rates, violent swings in the stock market, and high inflation.

Still, there were signs that rising prices are weighing on shoppers. Consumer spending, adjusted for inflation, is growing at a weaker pace. It increased at an annual rate of 2 percent in the April-June quarter. Yet July and August data indicate that spending growth is on track to slow to an annual rate of just 0.5 percent in the July-September quarter, economists said.

The economy is expected to grow in the third quarter, after shrinking in the first six months of this year. But many economists lowered their forecasts after the spending report and now expect growth will be just 1 percent or so at an annual rate.

Americans are also saving less in order to keep up with higher prices. The US saving rate was just 3.5 percent in August, far below pre-pandemic levels of about 8 percent, Friday’s report said.

There have been other signs of consumer weakness recently, with used car seller Carmax reporting sharply lower sales in the three months ending in August. The company attributed the decline to “affordability challenges” for consumers amid high inflation and rising interest rates.

Rising prices

Compared with a year ago, prices jumped 6.2 percent, down from a 6.4 percent annual gain in July but not far from June’s four-decade high of 7 percent. The figure is lower than the more widely-known consumer price index, released earlier this month, which reported an 8.3 percent price gain in August from a year earlier.

The two indexes differ for several reasons. For example, the consumer price index puts much greater weight on rents and housing costs, which have been rising steadily, than the measure released Friday, known as the price index for personal consumption expenditures.

Excluding the volatile food and energy categories, core prices rose 0.6 percent, much faster than July’s flat reading. They increased 4.9 percent from a year earlier, up from July’s figure of 4.6 percent.

Those figures were higher than expected, and may make the Federal Reserve more likely to lift its benchmark interest rate by another hefty 0.75 percentage point at its next meeting in November. If so, that would be the fourth such rise in a row.

The inflation figures in Friday’s report echoed those released earlier this month, with core prices rising more quickly than headline inflation. Falling petrol prices have reduced overall inflation, while stubbornly high costs for housing, cars, and services such as healthcare and haircuts have pushed core prices higher.

Adjusted for inflation, consumer spending ticked up 0.1 percent last month, after falling slightly in July.

While they are spending more, Americans are saving less in order to keep up with higher prices [File: Andrew Kelly/Reuters]

Friday’s report also showed that personal income rose 0.3 percent in August for the second month in a row. Adjusted for price increases, disposable income — what is leftover after taxes — ticked up 0.1 percent, after a hefty 0.5 percent gain in July.

But over a longer timeframe, incomes are trailing inflation. In the April-June quarter, inflation-adjusted disposable income fell 1.5 percent at an annual rate.

Fed action

The Federal Reserve is seeking to wrestle inflation under control with its most rapid series of interest rate rises in four decades. It has pushed its benchmark short-term rate to a range of 3 percent to 3.25 percent, the highest since early 2008, up from nearly zero in March.

Fed Chair Jerome Powell and other officials have repeatedly underscored the Fed’s determination to bring prices down, even if their rate increases resulted in layoffs and a higher unemployment rate.

The Fed intended its interest rate increases to slow borrowing and spending, which should in turn reduce inflation pressures in the economy.

Inflation has spiked globally, contributing to economic and financial turmoil in the United Kingdom, Europe, and a slew of developing countries, from Turkey to Argentina.

Also Friday, the 19 countries that use the euro currency reported that inflation spiked 10 percent from a year earlier, as prices for natural gas and electricity soared. European countries are struggling with an energy crunch in the aftermath of Russia’s invasion of Ukraine, as Russia has reduced its supplies of natural gas to the European Union.

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Burkina Faso’s military leader Damiba deposed, army captain says | Politics News

BREAKING,

Burkina Faso’s military government dissolved and constitution suspended, army Captain Ibrahim Traore says.

Burkina Faso army Captain Ibrahim Traore has deposed military leader Paul-Henri Damiba and dissolved the government and suspended the constitution and transitional charter, he said in a statement read on national television.

Traore said on Friday evening that a group of officers had decided to remove Damiba due to his inability to deal with a worsening armed uprising in the country. He announced that borders were closed indefinitely and that all political and civil society activities were suspended.

It is the second takeover in eight months for the West African state. Damiba took power in a coup in January that overthrew former President Roch Kabore, also due in part to frustration over the worsening insecurity.

The Burkina Faso government had said earlier on Friday that an “internal crisis” within the army was behind troop deployments in key areas of the capital, adding that negotiations were underway after shots rang out before dawn.

Government spokesman Lionel Bilgo said talks were ongoing “to try to reach a settlement without trouble”.

The state television was cut for several hours, broadcasting just a blank screen with the message “no video signal”.

In Brussels, the EU voiced “concern” at the events unfolding in the Burkina capital.

“A military movement was observed from 04:30 this morning. The situation still remains particularly confused,” spokeswoman Nabila Massrali said.

Damiba had pledged to restore civilian rule within two years and to defeat armed factions stoking unrest in the country.

Attacks have increased since mid-March, despite the junta’s vow to make security its top priority.

More to follow.

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US unveils plan for long-term baby formula imports | Business and Economy News

In February, Food and Drug Administration inspectors temporarily shutdown the nation’s largest domestic formula factory due to bacterial contamination.

United States regulators have unveiled a plan to allow foreign baby formula manufacturers to stay on the market long term, an effort to diversify the nation’s tightly concentrated industry and prevent future shortages.

On Friday, the Food and Drug Administration said recent entrants to the US market will have until October 2025 to make sure their formulas comply with federal standards for nutrition, labelling and manufacturing. The agency noted that some companies should be able to meet those requirements sooner.

The US has been forced to turn to foreign manufacturers to boost formula supplies since February, when FDA inspectors temporarily shuttered the nation’s largest domestic formula factory due to bacterial contamination.

In May, the FDA eased federal import regulations and President Joe Biden authorised the airlift of millions of pounds of powdered formula from overseas. Together those actions have brought the equivalent of 300 million bottles of formula into the country, according to the FDA.

“Manufacturers from around the world have demonstrated their commitment to helping bolster US supply and, in turn, we are committed to continuing these flexibilities for their products to safely remain on the market,” FDA Commissioner Robert Califf said in a statement.

The policy allowing imports was set to expire in November, but the FDA said it would be extended to January, after which companies can ask to stay on the market longer.

For decades, the US formula industry has been dominated by a handful of companies with domestic production facilities, excluding similar products from Europe, Australia and Latin America. The US system evolved to prioritise safety and low pricing, favouring a few large players.

Foreign formula companies seeking to remain in the US must meet specific thresholds for 30 nutrients and undergo manufacturing inspections by FDA staff, among other steps.

Earlier this month the FDA formally acknowledged several shortcomings in its response to the shortage, including outdated information technology systems and inadequate training among its food facility inspectors.

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