Energy costs are moving from fuel pumps into shop prices
Germany’s ifo institute reports its price-expectations index, which tracks the share of firms planning to raise prices, rose to 22.7 in September from 21.4 in August (ifo). Crude oil climbed again after the blockade of the Bab al-Mandab strait, and gas and power prices hit their highest since late 2022 in mid-September (ifo).
Utilities are expected to raise household power and gas tariffs this winter. Ifo’s Timo Wollmershäuser expects euro-area-wide inflation pressure to push the rate above 3% in coming months (ifo). Energy-intensive manufacturers and households on variable tariffs take the first hit. Retailers with the pricing power to pass costs on lose the least.
Europe writes a buy-European rule into public contracts
The Industrial Accelerator Act and the proposed Public Procurement Act would let public buyers favour European suppliers in strategic sectors. Beijing has already threatened retaliation (CEPR). Governments stand to gain, because they can steer contract money toward domestic firms. Chinese suppliers lose access.
CEPR’s review of the research finds procurement does spur innovation, mostly incremental and mostly at young, small firms. That holds only when tenders leave room for new solutions and buyers have the skills to manage them. Closing markets to foreign bidders is a separate policy, and its payoff depends on narrow targeting.
Non-obvious angle: European research money builds US companies
Ifo president Clemens Fuest and more than 50 other researchers argue in Science that publicly funded European research often ends up in the patents of US startups, which then capture the market success (ifo). Their proposal is to direct grants toward projects that can become marketable products inside Europe. The financial return from European public funding currently accrues largely to American equity holders.
Lawyers adopt AI faster than clients see lower bills
In Victoria, Australia, 55% of lawyers now use AI, up from 37% last year. Only just over a quarter have cut fees as a result (The Guardian). Lawyers also report extra work correcting errors in advice clients obtained from chatbots. For now, the efficiency gains are staying with the firms.
Russia hits Ukrainian energy and ports as G20 ministers meet
Russia’s defence ministry says it struck energy infrastructure around Kyiv and in Dnipropetrovsk, plus port facilities and cargo ships in the Odesa region (ZDF, citing Reuters). G20 foreign ministers meet in Atlanta from today under a US presidency. Their agenda includes energy security and open markets (ZDF). Attacks on ports and power assets put pressure on Ukraine’s export earnings and on European energy supply.
Catch the next Gist for the continent’s moving pieces.
