EU adopts CO2 targets reprieve for car industry
EU countries gave final approval on Tuesday to a reprieve for European carmakers over new emission targets, as they seek to balance climate goals with support for a struggling key industry.
EU countries gave final approval on Tuesday to a reprieve for European carmakers over new emission targets, as they seek to balance climate goals with support for a struggling key industry.
Starting this year, the European Union is cutting the average carbon emissions that new vehicles sold in the 27-country bloc are permitted to produce, with steep fines if auto manufacturers fail to comply.
Carmakers had expressed concern that they would not be able to meet the target because of lacklustre sales of electric vehicles.
Member states on Tuesday adopted a proposal put forward by the European Commission in March that allows companies to comply with the targets by averaging their emissions over three years from 2025 to 2027, rather than each individual year.
This means they will not be fined if they fail to meet the 2025 target by December 31 this year.
The changes aim "to grant car manufacturers the flexibility required to meet their emissions targets", said the European Council, the body representing member states.
The amendment is to enter into force after publication in the EU's official journal.
Brussels has made it a priority to support businesses and revamp the economy in the face of fierce US and Chinese competition.
The automotive sector is the jewel in Europe's industrial crown, employing around 13 million people and contributing some seven percent to the EU's economy.
But with factory closures in Europe and US President Donald Trump's tariffs threatening to upend the global trading system, the industry faces increasing risks.
AFP
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Daily Maverick
2 hours ago
- Daily Maverick
Loaded for Bear: Stars are aligned for a rate cut on Thursday, and why not make it 50 basis points?
The Monetary Policy Committee will almost certainly not cut the repo rate by 50 basis points. But its success in containing inflation gives it room to roam on this front. The case for the South African Reserve Bank (SARB) to cut interest rates on Thursday, 29 May 2025, is strong, and the economic stars have aligned in all of the right places for such an outcome. The market consensus is that the SARB's Monetary Policy Committee (MPC) will cut its key repo rate by 25 basis points to 7.25% — which would bring the prime lending rate to 10.75% — when it wraps up its bi-monthly meeting on Thursday. A Reuters poll found that 15 of the 25 economists surveyed expect such a move, while nine forecast a hold. One of the economists went against the grain, predicting a 50-basis-point cut. And while this maverick take is an outlier and the cautious SARB will almost certainly not lower rates on that scale, it actually has space to be bold on this front. Let's start with consumer inflation. The SARB's mandated target range is a wide range of 3% to 6% for the consumer price index (CPI). In March and April, CPI came in below this target, at 2.7% and 2.8% respectively. The Reuters poll cited above sees South Africa's CPI averaging 3.5% this year and then accelerating to 4.2% in 2026 and 4.4% in 2027. These expected averages are below the midpoint of the target range, which in reality is what the SARB — which has strongly signalled it would like to change the bullseye to 3.0% — is aiming for. One of the tasks of the MPC is to 'anchor' inflation expectations, and it seems to have done that given the consensus outlook among economists. In its latest statement in March, the MPC's projections were for CPI to average 3.6% this year and 4.5% in 2026. One factor that informed that forecast was the proposed VAT hike, and that is now dead and buried. But the inflation-linked increase in the fuel levy will accordingly adjust the outlook for fuel prices this year. Forward-looking The MPC, it must be stressed, is forward-looking and it crafts monetary policy with a telescope that scans the economic horizon. Whatever decision it reaches on Thursday will be based on the effects it expects six or 12 or 18 months down the road. And that outlook in terms of inflation is currently benign. Another key factor that is closely linked to inflation is the value of the rand, especially its exchange rate with the US dollar, which affects the costs of key imports such as oil. The SARB's main mandate 'is to protect the value of the currency in the interest of balanced and sustainable economic growth'. When the last MPC decision was made on 20 March, the rand was fetching 18.14/dlr. It then tanked and flirted with record lows close to 20/dlr but has since rebounded to below 18/dlr. One reason behind this state of affairs has been dollar weakness on the global currency stage in the face of US President Donald Trump's ham-fisted and ill-conceived tariff policies and trade wars. The chaos rippling out of the White House has upended markets and triggered downgrades for global economic growth. The shroud of uncertainty thrown up as a result gave the MPC pause in March when it held rates steady. But one silver lining has been unexpected support for the rand, and despite the expected inflationary surge in the US from Trump's tariff tiffs, the Federal Reserve is still expected to cut rates modestly later this year. Having said that, no cut is seen when its Federal Open Market Committee next meets in June, and that prospect alone could contain Thursday's MPC move to 25 basis points or even another hold. Maintaining a high rate differential with the US props the rand up against the dollar because of the higher returns on offer. A case can still be made for the MPC to throw its usual caution to the wind and make a 50-basis point cut. The main exhibits on display here are South Africa's simply woeful rates of economic growth and shocking levels of unemployment — as well as the SARB's own success in bringing inflation to heel. In Budget 3.0, the Treasury slashed its forecast for South African economic growth in 2025 to 1.4% from 1.9% in March, and typically that looks optimistic. Returning to the Reuters poll cited above, the economists surveyed see growth of only 1.2% this year. And the dreadful duo of sluggish economic growth and a sky-high unemployment rate of 31.9% in Q1 of this year — a 1 percentage point increase from the previous quarter — is stifling demand pressures in the economy, which in turn is a big brake on inflation. Slowdown South African retail trade sales on a year-on-year basis rose only 1.5% in March, a significant slowdown from 4.1% in February and 7.0% in January when there seems to have been a spending splurge sparked by the initial early pension draw-downs under the Two-Pot reforms. And in the three months to the end of March compared to the previous quarter, retail sales growth was just 0.1%. Meanwhile, mining and manufacturing output both declined in Q1 compared to the last quarter of 2024, raising the prospect of a possible Q1 economic contraction to start the year. One thing about a bigger-than-expected rate cut now is that it could help lift growth down the road without inflation quickening beyond the SARB's target range. I don't really expect the bank to make such a big cut, and the current rate and trajectory of inflation vindicate its approach to monetary policy — this MPC with the level-headed Lesetja Kganyago at its helm is first class. But that vindication also means that the MPC now has more room to roam. Given the outlook for inflation and South Africa's dire pace of economic growth, I would say that there is scope for a 50-basis point cut to provide further relief to consumers and lower the cost of borrowing for businesses big and small. And this can be done without reigniting the flames of inflation, which the SARB to its credit has been dousing. DM
Daily Maverick
3 hours ago
- Daily Maverick
Digital dispatch from Estonia, the eGovernance capital of the world
Daily Maverick was invited to Estonia as a guest of the minister of foreign affairs to attend the African Business Forum and 11th annual eGovernance Conference. Minister Leon Schreiber was also in attendance, but I missed his panel discussion at the forum. 'When Estonia was part of the Soviet Union the decisions were made in Moscow; now we're part of the European Union and decisions are made in Brussels. There's no change,' says my driver — it's a private trip, but he also does Bolt work — while racing to the African Business Forum that I'm already late for. It takes about 10 minutes to get from Tallinn airport to the Radisson hotel where the event is happening. 'It's 2pm' chimes the digital assistant on my Sony WF-1000XM5 earbuds. There is almost no traffic on a Tuesday. I've been in transit for 24 hours since boarding Ethiopian Air flight ET 846 in Cape Town. I should have arrived on Sunday, but my passport was still at the VFS operational centre in Pretoria on Friday, on its journey which started when Godongwana ended his Budget 3.0 speech en route to Cape Town from the Swedish embassy in Nairobi. Technology should have solved this problem by now. I'm also in desperate need of a shower. A problem of scale I dialled into the media roundtable with Estonian Minister of Foreign Affairs Margus Tsahkna from the downstairs lobby of the VFS offices in Cape Town. He said that we 'cannot compare your big country with us' in response to questions about scaling his country's digital advancements to the South African context. It's a fair point. Estonia has 1.3 million people — roughly the population of Johannesburg's northern suburbs. The entire country runs on what they call the 'XRO solution', a system they developed nearly 20 years ago that allows different government databases to talk to each other seamlessly. So remember, when Tsahkna says '100% of public services are online' and 'everyone knows exactly what their rights are', he's talking about a population smaller than eThekwini municipality and a land area the size of Gauteng. But here's what struck me about his response: he wasn't dismissive. 'There are technological solutions available, of course… and you have (natural) resources to invest,' he said. The key, he insisted, was political leadership. 'We can (share with) you our experiences about digitalisation.' Digital dreams and African realities The Africa Business Forum is in full swing by the time I arrive. I excuse myself briefly to brush my teeth in the fancy bathroom – the only thing I couldn't do while changing in the restroom at Frankfurt Airport before boarding flight LH 880 to Tallinn. I'm led straight into a conference room buzzing with conversations about digital transformation, but the context is distinctly different to what I'd expected. This isn't Estonians lecturing Africans about efficiency — it's a more nuanced conversation about partnership and practical realities. Estonian and EU officials are refreshingly candid about their limitations. When they talk about their digital achievements — tax returns in three minutes, businesses started in 18 minutes online — they acknowledge these come with caveats. For real though, eFiling is dope, but the Estonian Tax and Customs Board (exclusively for Estonian tax residents) online platform is something else. Their entire digital infrastructure was built 'together with the private sector mainly' over 'more than 30 years', they explain, and it works for a population of 1.3 million. The geopolitical subtext is never far from the surface. Estonia is 'under heavy heavy cyberattacks', as officials put it, and they're 'very careful' about technological cooperation with certain countries — a not-so-subtle reference to Russia, their 'difficult neighbour' The digital-first approach wasn't just about efficiency; it was about survival. The Global Gateway pitch The forum's centrepiece is the European Union's Global Gateway strategy — a €150-billion investment promise for Africa by 2027. EU officials position this as a 'value-based alternative' to other global powers' approaches, though they're diplomatically vague about which alternatives they have in mind. 'We are not coming in to put the conditions there,' comes the refrain from multiple speakers. 'We have long-term partners based on values.' The pitch includes 'literally thousands of procurement actions every year', with opportunities ranging from direct private sector contracts to partnerships through organisations like the UN Office for Project Services (UNOPS), which spent $130-million across various African countries. Digital infrastructure is positioned as one of five key pillars of Global Gateway, with the EU (and Estonia) offering expertise in 'payments identity interoperability' and promising a 'more explicit message to our partner countries' about digital public infrastructure. Estonian companies in Africa The Estonian presence in Africa is already more substantial than I'd realised. Companies like Positum use mobile data to provide insights for governments, working with UN agencies and the World Bank. And the 'digitisation services' industry is in advanced talks to set up a pop-up to deliver e-residency cards in Mzansi — they're aware of our country's challenges with keeping card printing equipment working. Estonian businesses have implemented projects in 'Botswana, in Nigeria, in Kenya, many of them in Tanzania', according to forum speakers. The approach seems less about grand pronouncements and more about practical problem-solving — using Estonia's digital experience as a starting point rather than a template. 'Estonian expertise is really sought after,' one official notes, encouraging participation in international expert groups, 'even if it is pro bono work.' The message is clear: build relationships first, business follows. The e-residency proposition Oh, yes… Perhaps Estonia's most audacious offering is e-residency — a programme started in 2014 that makes you a digital resident without requiring physical presence. 'You don't need to become an Estonia resident,' they explained to me. You apply online, and once approved, 'all our digital infrastructure is open for you about how to start business, run the business, taxation and the services that we have online'. They claim to be the 'only country in the world that can actually be part of this environment'. For African entrepreneurs navigating complex regulatory environments, it's an intriguing proposition — remote access to Estonia's digital infrastructure, running businesses through their systems while remaining physically based elsewhere. It's become a community of more than 120,000 digital citizens, generating €15-billion (R304-billion) in combined revenue from more than 33,000 companies. When Estonia says it is selling a lifestyle to African entrepreneurs, they really mean it — but being an e-resident doesn't come with the same benefits as being a tax resident, so it will still be SARS systems for you. Looking ahead The organisers of the eGovernance Conference told me that they were aware of how previous iterations had been hijacked by the now decidedly out of vogue idea of 'put it on the blockchain' — this year was shaping to be all about 'AI' but they insisted that it would be less of a ride on the hype train. The forum has been about relationships and possibilities; whereas the conference will be about implementation and practicalities. But already, one thing is clear: the Estonian model isn't about copying and pasting solutions. It's about understanding principles and adapting them to local contexts. As Tsahkna puts it, each country needs to find its own model while drawing on available technological solutions and investing in political leadership. I bump into Minister Leon Schreiber at the eGovernance Conference reception — he says I must pull him aside for an open discussion about the eVisa he is trying to get going back at home. I said ' yes ' but was forced to pull away from his typically South African, manly affirming embrace (he is, after all, a Paul Roos old boy) because I was heading out the door to finally take that shower at my hotel room. DM
Eyewitness News
4 hours ago
- Eyewitness News
ECB's Lagarde pitches euro alternative to dollar in 'fracturing' world
BERLIN - European Central Bank President Christine Lagarde on Monday said the global economic order backed by the US dollar was "fracturing" and made a pitch for the euro as a global reserve currency. "The global economy thrived on a foundation of openness and multilateralism underpinned by US leadership," Lagarde said in a speech at the Hertie School in Berlin. Washington's support for a rules-based international system and the dollar as a reserve currency had "set the stage for trade to flourish and finance to expand". The persistence of that US-led economic order over the past 80 years had "proved immensely beneficial to the European Union". "But today it is fracturing," she said in an apparent reference to global trade tensions fuelled by US President Donald Trump's threat to impose sweeping tariffs on key partners. "Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays. Openness is giving way to protectionism." The recent upheaval was also threatening "the dominant role of the US dollar", she said. The disintegration of the global economic order would "pose risks for Europe", Lagarde said. "Any change in the international order that leads to lower world trade or fragmentation into economic blocs will be detrimental to our economy," she said. But the retreat of the US dollar could also "open the door for the euro to play a greater international role". Increasing the international role of the euro would lower borrowing costs for EU member states, insulate the bloc from exchange rate fluctuations and would "allow Europe to better control its own destiny", Lagarde said. For that to happen, the European Union would need a "steadfast commitment to open trade" and to underpin its position with sufficient security capabilities. It would also need to strengthen its economy and defend the rule of law, she said. "This is not a privilege that will simply be given to us. We have to earn it."
