TheChek News Flow

New, more lenient rules will seek to reduce European government deficits and debt while encouraging investment in defense and tech

European Union governments have agreed on new rules to curb budget deficits and debt, drawing a line under years of freewheeling spending during the Covid-19 pandemic and the Ukraine war.

The agreement reached on Wednesday comes as rich nations face both rising borrowing costs due to higher interest rates and increased spending needs on items ranging from defense to the green transition and an aging population.

The deal, which comes after months of negotiations and still needs formal backing from governments and EU lawmakers, opens up a divergence between Europe and the larger U.S. economy, which is expected to run large budget deficits for years and has been growing faster.

The new rules are generally more lenient. They give countries more time to reduce budget deficits to the target 3% of gross domestic product, incentivize certain kinds of investments from a country’s budget gap, and encourage countries to reduce their public debt more gradually. They also give more space for governments to loosen fiscal policy temporarily during downturns.

The new rules will replace the fiscal framework that used to govern public spending and borrowing in the EU until it was suspended at the start of the pandemic. They aim to put budget deficits across the 27-nation bloc on a downward path, while leaving room for green investment. The deal walks a path between Northern European countries like Germany that are eager to keep debt in check and southern European nations such as Italy that would prefer more room for state investment.

At a news conference, Spanish economy minister Nadia Calviño said the deal sought to balance the need to rein in higher debt and deficits with ensuring investment in green and digital technologies and defense. The new rules “are more credible and will also be easier to apply,” Calviño said.

The effort to curb debt will likely reassure investors in European bond markets that public finances in the region are sustainable. But it could also weigh on economic growth at a time when Europe’s economy has been stagnant for a year. Officials expect the European Parliament to approve the rules early next year before they become binding in 2025.

“This agreement provides for fiscal rules that encourage reforms, with room for investments and tailored to the specific situation of the member state in question,” Dutch Finance Minister Sigrid Kaag said after the agreement was reached. They work counter-cyclically so that potential economic growth is not cut short.”

Across advanced economies, governments are still borrowing heavily four years after the start of the Covid-19 pandemic. However, a jump in long-term interest rates, as central banks battle high inflation, have made raising debt expensive, suggesting that countries might in future need to run smaller deficits than in the past.

Now, rich countries face massive new bills to finance the costly shift to green energy infrastructure and support aging populations. Together, those costs might add 3 percentage points of gross domestic product to annual government spending over the coming years, according to Capital Economics.

With rising spending needs but less room to borrow, many governments will find themselves considering tax increases. In Germany, the government this month announced a series of energy tax increases and spending cuts to plug a hole in next year’s budget, which had opened after the country’s top court ruled it couldn’t tap unused pandemic funds.

To safeguard investments required to address climate change and social problems and bolster Europe’s defense spending at a time of rising interest rates, the new rules allow for a transition period until 2027. For the next couple of years, governments tasked with reducing their deficits to 3% of GDP will be able to maintain higher investment spending levels by discounting the additional borrowing costs they face.

Europe conducted large scale fiscal stimulus to support workers and businesses during the pandemic and after the start of the Ukraine war. The measures included sweeping energy subsidies and supporting the wages of tens of millions of furloughed workers. EU governments were less lavish than the U.S., however, which ran double-digit budget deficits for two years—one reason for Europe’s slower economic recovery.

Government debt in the U.S. is expected to increase to 127% of GDP next year, about 40 percentage points higher than the ratio of 88% in the eurozone, according to IMF data.

The broad outlines of the European Union’s budget rules were laid down in 1993 as part of the Maastricht Treaty that paved the way for the euro. They stipulate that budget deficits should not exceed 3% of GDP and overall government debt should not exceed 60% of GDP. Those rules were suspended in 2020 to allow governments to respond to the pandemic, and again during the Ukraine war, to allow governments to support households during the surge in energy prices.

The U.S. is likely to run budget deficits of more than 7% of GDP over the next three years, while the combined deficits of eurozone governments will decline to 2.7% of GDP next year, according to the International Monetary Fund. Within the eurozone, deficits vary widely. In Greece, it is forecast to fall to 1.6% of GDP from 2.3% last year, while Ireland is forecast to have a budget surplus for the second straight year. Italy and France continue to have deficits of roughly 5% of GDP.

Governments that test the limits of their budgets, like the U.K., have been punished by investors. U.K. borrowing costs skyrocketed last year when then-Prime Minister Liz Truss announced a surprise package of large tax cuts. Truss was quickly replaced by Rishi Sunak, whose government has instead raised taxes in an effort to bring its debts down.

One of the toughest discussions over the new EU rules was how to replace a widely-disliked provision which demanded that countries with debt over 60% of their economic output had to reduce them by a set amount each year.

In the end, finance ministers agreed that the debt should be on a clear downward trend, but also that countries had to reduce their debt-to-GDP ratio by one percentage point a year if that ratio was over 90%. For countries with debt-to-GDP’s between 60% and 90%, the debt must fall by half a percentage point annually.

One significant criticism of the old fiscal rules was that rather than restrain day-to-day spending, they prompted governments to hold back on investment that boosts long-term growth. Enforcement by Brussels was also patchy, with bigger, more powerful countries like France repeatedly given more time to meet the goals.

Officials are once again debating Trump-era duties on roughly $300 billion of Chinese goods

WASHINGTON—The Biden administration is discussing raising tariffs on some Chinese goods, including electric vehicles, in an attempt to bolster the U.S. clean-energy industry against cheaper Chinese exports, people familiar with the matter said.

Biden administration officials, long divided over trade policy, have left in place Trump-era tariffs on roughly $300 billion of Chinese goods. But officials at the White House and other agencies are debating the levies again, the people said, with an eye on wrapping up a long-running review of the tariffs early next year.

Chinese EVs are already subject to a 25% tariff, which has helped prevent subsidized Chinese automakers from making inroads into the U.S. market. Raising that tariff likely would have little immediate impact on U.S. consumers. Other targets for potential tariff-rate increases are Chinese solar products and EV battery packs, the people said. While the U.S. now primarily imports solar material from Southeast Asian countries, China is still an important supplier of EV batteries.

Raising some tariffs could allow President Biden to signal he is tough on China as he approaches a 2024 re-election campaign that could again see him face Donald Trump.

The Biden administration is also considering lowering tariffs on some Chinese consumer products that officials don’t see as strategically important, in addition to the potential increases on clean-energy products, the people familiar with the conversations said.

The administration hasn’t decided on the tariffs, the people said. Previous internal discussions about adjusting tariffs on China fizzled out without any changes. Spokesmen for the Office of the U.S. Trade Representative and the National Security Council declined to comment.

The conversations have picked up recently as officials grow concerned about Chinese clean-energy exports, which are flooding global markets at low prices as China’s domestic economy slumps. U.S. officials worry that American companies, even with the protection of existing tariffs and new subsidies, won’t be able to compete with China’s production.

“China is determined to dominate the electric-vehicle market by using unfair trade practices, but I will not let them. I promise you,” Biden said in November before a crowd of United Auto Workers members.

The current push to raise some duties is a shift from earlier rounds of discussions over the tariffs, when conversations focused on whether to lower them. Some officials, such as Treasury Secretary Janet Yellen, previously pushed to decrease some of the duties, arguing that the tariffs didn’t achieve a strategic purpose. They also saw reducing tariffs as a way to combat high inflation in 2022.

U.S. Trade Representative Katherine Tai, among others, sought to keep the tariffs in place to keep pressure on Beijing.

Raising tariffs on Chinese exports could complicate U.S. efforts to stabilize relations with China, which has pushed the Biden administration to drop Trump-era levies. A presidential election in Taiwan next month is already poised to stress the bilateral ties.

“The stabilizing momentum in U.S.-China relations should not be disrupted by domestic politics. The U.S. used to call for letting the market decide. Why should it reverse course now?” Xie Feng, China’s ambassador to the U.S., said at a recent gala event hosted by the U.S.-China Business Council.

Trade with China is quickly emerging as a major issue in the 2024 presidential contest. Trump made going after China a signature issue in his presidency and, on the campaign trail, has argued that Biden’s clean-energy push will ultimately benefit China. Other Republicans have at times sought to portray Biden as going easy on China.

Robert Lighthizer, who led trade policy during the Trump administration and advises the former president, has been in touch with congressional Republicans on trade, people familiar with the matter said. Testifying before the House select committee on China earlier this year, he called for the U.S. to raise tariffs on China.

Sens. Sherrod Brown (D., Ohio) and Bob Casey (D., Pa.), each running for re-election next year in competitive states, warned Biden in a letter last month against lowering any tariffs on China.

“These tariffs are essential to level the playing field for American workers to compete and counter unfair trade practices by China,” they wrote.

Under the Biden administration, the U.S. has sought to help American companies compete with China, which dominates many clean-energy sectors. The renewable-energy and drug-cost law known as the Inflation Reduction Act offers incentives to companies that manufacture goods without input from China.

EVs have been a focus of that effort. The U.S. barred EVs containing battery materials from China from eligibility for a $7,500 consumer subsidy. But U.S. officials feared domestic automakers couldn’t compete without some collaboration from Chinese companies.

The administration wrote the subsidy rules in a way that leaves room for U.S. automakers to work with Chinese companies operating in the U.S. or third countries to manufacture batteries.

Some automakers and members of Congress are worried that those subsidies, along with the existing tariffs, might not be enough to protect the U.S. market from relatively inexpensive Chinese EVs. China is already one of the world’s largest auto exporters, and its EVs are often the cheapest available. The European Union recently opened an investigation into raising tariffs on Chinese EVs.

Rules aim to make it harder to circumvent measures to limit Kremlin revenues

The UK and US are tightening rules around the shipping of Russian oil in an attempt to make it harder for Moscow to circumvent the so-called price cap, a policy aimed at squeezing the Kremlin’s revenue from crude.

Companies involved in shipping Russian oil will need to prepare fresh documentation to show that each voyage has complied with the G7 price cap, rather than generic reassurances that the law would be obeyed, under rules published on Wednesday.

Similar detailed guidance is being issued by other members of the “price cap coalition”, which includes the Group of Seven nations, the EU and Australia. The intention is to make it more difficult for Russia to take advantage of services such as insurance without complying with the price cap.

Under the new rules, when oil is sold at a price that includes other costs, such as insurance and freight, the insurers and other service providers will be able to demand cost information about how the contract was priced.

The change is designed to make it harder for companies to circumvent the restrictions by pricing the oil under the cap and then clawing money back through inflated fees for shipping, insurance and other costs such as export licenses and packing.

“These are encouraging developments because, for the first time, it is going to mean that insurers actually have the ability to check if their clients are breaching sanctions on each voyage,” said Benjamin Hilgenstock, an economist at the Kyiv School of Economics.

“It will also potentially make it much easier for enforcement agencies to check if violations have taken place.”

Under the terms of the price cap — introduced last December — companies from price cap coalition countries may be involved in moving Russian oil as long as the oil is priced at below a set maximum. For crude oil, this is fixed at $60 per barrel.

Crude sales from Russia have, however, routinely been priced at above $60 since the summer, leading to concerns about whether the price cap is still effective in denying revenues to the Kremlin. Officials hope to demonstrate that concerted action can hold down Russian prices.

A senior US Treasury official said they considered this “phase two” of the implementation of the price cap. The US was, they said, pivoting to more aggressive enforcement.

The official noted that since mid-October, when they said they began this ramp-up of enforcement action, the discount on Russian oil against market prices had risen from $13 to $18 per barrel.

Russia has largely got around the cap by building its “shadow fleet” — a group of largely elderly vessels with no links to price cap coalition countries that are therefore not bound by the regulations. But it is still reliant on western-linked companies for a portion of its exports.

In recent months, more than a quarter of crude exports have been on vessels with a link to the G7 or EU — even as almost no oil was moved for less than the cap.

The Office of Financial Sanctions Implementation at the UK Treasury said it was introducing the changes to “strengthen the compliance regime and reduce routes for circumvention” and to align with G7 partners.

The senior US official said they were also focused on raising the price for Russia of using its shadow fleet.

As part of this effort, the US Treasury on Wednesday put sanctions on Hong Kong’s Bellatrix and Covart Energy and Dubai-registered Voliton — little-known traders that have grown in prominence since the start of the war. The three companies were listed for “operating or having operated in the marine sector of the Russian Federation economy”.

The Treasury said that since Russia’s full-scale invasion of Ukraine, “Bellatrix has traded tens of millions of tons of crude oil and other products of Russian state-owned oil companies and has received a loan worth hundreds of millions of dollars from a Russian state-owned bank”.

Ørsted to press ahead with world’s largest offshore wind farm in North Sea

Hornsea 3 project off the Yorkshire coast will be able to supply power for about 3.3mn homes. 

Ørsted is to press ahead with developing the world’s largest offshore wind farm in the North Sea after the UK increased financial support for the sector in a big boost for the Danish group after a string of setbacks.

The Copenhagen-listed company made the announcement on Wednesday about the 2.9GW Hornsea 3 project off the Yorkshire coast, which will be able to supply power for about 3.3mn homes. 

The group’s shares rose 3 per cent to DKr371 by the market close, although they remain more than 40 per cent down since the start of the year after the company walked away from two offshore wind projects in the US.

The announcement follows a DKr28.4bn ($4bn) writedown because of the problems in the US, which prompted the departure of finance chief Daniel Lerup and chief operating officer Richard Hunter in November.

The £8bn Hornsea 3 project, to be built with 14-megawatt turbines made by German manufacturer Siemens Gamesa, is Ørsted’s single biggest investment decision.

Duncan Clark, head of Ørsted’s UK operation, said the wind farm was “strategically very significant for the company; we have had it in our sights for a long time”. 

Ørsted had raised doubts about the project in March, calling on the UK government to offer more support to help it cope with a surge in costs, driven by rising interest rates and supply chain strains. 

It was among five projects that won contracts with the UK government in July 2022, guaranteeing an inflation-linked electricity price starting at £37.35 per MWh at 2012 prices. 

Rival Vattenfall in July halted work on its 1.4GW Norfolk Boreas project in the North Sea, which was also among the five winning contracts, arguing it “simply didn’t make sense to continue” given a 40 per cent surge in costs. 

Ørsted said it would bid for a higher price for a chunk of Hornsea’s capacity in the next annual auction for government contracts in 2024. Ministers have raised the maximum price available to £73 per MWh at 2012 prices in this round. 

Analysts at Bernstein expect it to try to get a higher price for roughly 700-megawatts of the project, based on what is allowed under the contracts.

Clark said the company had also taken other steps to get the project over the line, including talking with government and suppliers.

He added: “It has been a real collective effort. We have done things to de-risk the project. All of that taken together means we have a robust, investable business case.”

Hornsea’s foundations will be made by South Korean company SeAH’s factory in Teesside, north-east England, which is under construction. The wind farm should be up and running by the end of 2027.

Warburg Pincus teams up with Horta-Osório on €6bn bid for telecoms assets

Private equity firm is working with former Lloyds and Credit Suisse boss on plan to buy Altice’s Portuguese business

Warburg Pincus has teamed up with former Credit Suisse chair Sir António Horta-Osório on a €6bn-plus bid by the US private equity firm for Altice’s Portuguese telecoms assets, according to people familiar with the matter.

A deal would mark a comeback for Horta-Osório, the former Lloyds Banking Group chief executive, who left Credit Suisse last year after losing the board’s support following breaches of coronavirus quarantine rules.

Since then, the 59-year-old Portuguese has taken advisory roles at Italian lender Mediobanca and private equity firm Cerberus, but has mainly kept a low profile.

He is more than an adviser on the Warburg bid, according to people familiar with the relationship, who described it as a “partnership”, and he could play a role in the business if it is bought, although that has not yet been decided.

Horta-Osório ran Santander’s Portuguese business in the early 2000s when Portugal Telecom, which was later bought by Altice, was a large client. 

Altice is fielding offers for its Portuguese telecoms business until early January, and has received interest from multiple industry players and private equity funds, including US group Apollo, said people familiar with the matter. 

The auction of Altice Portugal is part of a broader effort led by Patrick Drahi, the billionaire owner of Altice, to sell assets to chip away at its $60bn debt load amid concerns about higher interest rates.

Drahi has signalled he is open to selling various parts of his telecoms and media empire, which includes assets in France, Israel and the US, as it faces debt repayments in the coming years. 

Altice announced it November it had agreed to sell a majority stake in its French data centre unit to Morgan Stanley, and has also been looking to dispose of online video advertising company Teads.

Altice has also come under scrutiny since the summer when Armando Pereira, the company’s co-founder, was placed under house arrest in Portugal as prosecutors investigate corruption allegations against him. Pereira has previously denied wrongdoing.

Warburg Pincus recently raised more than $17bn for its latest flagship private equity fund despite a difficult market. 

The firm has made a series of investments in recent years in the telecoms and technology sectors, including the acquisition of T-Mobile’s Netherlands business, in a deal valuing the company at €5.1bn. Warburg also acquired satellite company Inmarsat in a $6bn deal in 2019. 

Warburg’s European co-head is former Deutsche Telekom chief executive René Obermann, who has been involved in some of these investments. Alongside investing in telecoms, Warburg also backs companies in the technology, healthcare and business services sectors, among others. 

Horta-Osório, Warburg, Altice and Apollo all declined to comment.

Ministers told to take ‘precautionary’ approach to protect children and vulnerable people from branding ‘bombardment’

MPs have urged the UK government to cut the amount of gambling advertisements at football games and other sports events, to protect audiences amid growing concerns over the prevalence of betting addiction.

The committee of culture media and sport on Thursday called on ministers to take a more “precautionary approach” in its regulation of the sector, citing a study by the University of Bristol that showed nearly 7,000 gambling ads appeared in just six matches of this Premier League season. 

“More should be done to shield both children and people who have experienced problem gambling from what often seems like a bombardment of advertising branding at football and other sporting events”, said committee chair Caroline Dinenage. 

The report comes alongside demands from policymakers and campaigners for stricter regulation of “harmful” messaging, including a ban on gambling adverts in sports venues as well as on public transport. 

“Increasing so-called ‘safer gambling’ messaging will not help until we get proper evidence-based public health messages that have not been influenced by the gambling industry”, said Charles Ritchie, founder of the Gambling with Lives charity that supports families bereaved by gambling-related suicide.

In a white paper published earlier this year, the government set out plans to introduce a stake limit on bets as well as a statutory levy on some gambling companies to fund public health initiatives.

The policy document “outlines a balanced and proportionate package of measures, delivering greater protections for those at risk of experiencing harm, while having minimal impact on the freedoms of the large majority of punters”, the Department for Culture, Media and Sport said on Thursday.

The proposals, however, do not directly limit the sports industry from advertising gambling, with the department claiming that “sports governing bodies are best placed to decide” how to protect their fans.

Gambling groups pay the Premier League around £65mn a year, according to government figures.

In April, Premier League clubs said they would begin to phase out gambling logos from the front of players’ shirts by the end of the 2025-26 season.

However, this type of on-clothing promotion makes up only 7 per cent of the total gambling branding visible during matches, according to the Bristol university study cited in the CMS committee report. 

The MPs proposed that the new gambling sponsorship code of conduct, which the government plans to develop with sports bodies, include clear measures to promote safer messaging. 

FT : The US backlash against Nippon Steel is wholly misguided

American objections to a deal to buy US Steel turn on an outdated view of how close Japanese companies are to the state

The frayed end of 2023, with decoupling still an active force and geopolitics in ragged shape, is an odd time for any politician to suggest — even indirectly — that their nation does not trust its closest friends. 

Particularly so for the US, given the leaps of faith it continues to ask of its friends and the reminder by President Joe Biden, shortly after returning from Israel in October, that “American alliances are what keep us, America, safe”. 

But the now bipartisan American backlash against Nippon Steel’s $14.9bn purchase of US Steel — a deal driven by robustly commercial motives and for which the Japanese buyer is shelling out roughly twice what a US bidder was prepared to pay — appears to be shaped by the idea that even close friends merit suspicion. 

However ugly steel-state politics are on the eve of an election year, leveraging mistrust of Japan is a perversely odd strategy. Especially in an era in which the US has a chip war to fight, is actively courting direct investment from Japan and is pushing the “friendshoring” of supply chains as a unit of diplomatic trustworthiness. 

Japan reasonably thinks of itself as America’s closest ally in Asia. It is the host nation of the largest number of US military outside the US itself and a gargantuan customer of American hardware. Japan has also recently proved its friendship many times over — most prominently by joining the US in imposing restrictions on exports of high-end semiconductor production equipment, and by directly helping Washington rally sign-ups to the Indo-Pacific Economic Framework trade deal.

But, within 48 hours of the Nippon Steel announcement, the vague spectre of national security concern has been invoked. Three Republican senators have signed a letter decrying Nippon Steel as a company “whose allegiances clearly lie with a foreign state” and insisting that the Committee on Foreign Investment in the US “can and should” block the acquisition on those grounds.

A trio of Democratic politicians, meanwhile, wrote to the company to demand further clarity, with one of them, Senator John Fetterman, taking to social media to fume at the outrage that US Steel “have sold themselves to a foreign nation and company”.

There are several reasons why this backlash is flawed. The first is the casual conflation of Nippon Steel with the Japanese state, as if it were directly comparable with a Chinese or some other state-owned steelmaker. It is not, any more than US Steel is.

Explanations for the speed of Japan’s economic rise in the 1970s and 1980s leaned heavily on the idea that its corporations’ competitiveness was propelled by the government’s industrial policies and by the tight collusion of companies and state. However plausible that account might once have been, its accuracy has evaporated over the past 30 years. Government interventions may still happen from time to time, but the implication that Nippon Steel might be acting not out of its own commercial interests but in those of the Japanese state is wrong.

But a more harmful implication in the backlash rhetoric is that the mere Japaneseness of the acquirer is itself sinister — a suggestion that Heino Klinck, America’s former deputy assistant secretary of defence for east Asia, strongly rejects. “If this deal were not to be approved, it would cast a shadow on the alliance, and that is not in our interests,” he told the Financial Times. “I can’t think of any national security reason to use as justification for this not getting approved.”

A third oddity is the muddled nature of the other objections to the takeover. On the one hand, US investors have spent decades criticising Japanese companies for their failure to apply more aggressively profit-driven, shareholder-first standards. Now, with the prospect of a large Japanese company taking over an American rival, the implicit fear is that the Japanese company will somehow enforce a more pitiless standard of shareholder-first capitalism than the one under which US Steel currently operates. Many investors might see that as welcome progress. 

Each of these flaws catches the politicians leading the backlash in an ill-timed inconsistency. If Nippon Steel’s deal is approved, it will draw a mid-ranked American company under the umbrella of one of the world’s top three steelmakers, none of which is American. Specifically, it will make that company more competitive with Chinese rivals (that are genuinely state-owned) in an era where that battle is the greater threat. The tougher question, though, is that of trust. If Japan does not count as a legitimate buyer of assets in the US, who does?

Office tower sales at Europe’s biggest business district have shrivelled, though it is trying to attract new renters

Sales of office buildings at La Défense on the outskirts of Paris have collapsed this year as the property downturn hits a business district conceived by the late French president Charles de Gaulle to rival the City of London and Wall Street.

The value of transactions at Europe’s biggest purpose-built business district slumped to roughly €15mn ($16.4mn) this year, down from an annual average since 2020 of between €500mn-€1bn, according to Pierre-Yves Guice, chief executive of the state-owned business park.

Guice said the drop was triggered by higher interest rates, a fall in valuations of older office blocks and potential buyers choosing to renovate rather than make new purchases.

“There’s been a collapse [in investments], which we hope is transitory,” Guice said in an interview. “The consensus that we hear today is that it will not really pick up in 2024 but in 2025,” but he added that the rental market has proved far more resilient.

Best known for its signature “Grande Arche” building, La Défense has proved a success with developers erecting dozens of skyscrapers and some of France’s biggest companies setting up offices there.

With some 4mn square metres in office space, it is more than twice as big as London’s Canary Wharf and still home to big offices used by the likes of Société Générale and energy groups Engie and TotalEnergies.

Like Canary Wharf, however, La Défense faces a post-Covid reckoning as businesses reassess their office needs as more staff work from home, and some are drawn to more central locations in Paris, where supply is more limited.

La Défense’s vacancy rate is hovering at about 14 to 15 per cent, Guice said, above historical lows of 5 per cent. While the pandemic hit demand, vacancies were also down to newer tower blocks being built since 2020, which typically take several years to fill, he added.

New building projects are now scarce, although Total has commissioned a €1bn, 228-metre-high skyscraper. The company’s existing offices in La Défense are among buildings brokers had sought buyers for over the past 18 months but struggled to sell, according to two people familiar with the discussions said. Total declined to comment.

La Défense does not publish annual results. It draws revenues from renting and selling land and buildings, managing activities like parking and has funding from local authorities that collect property taxes.

Since the pandemic, La Défense has been trying to reinvent itself to attract new businesses or even students. Other plans include regeneration projects designed for multipurpose use and to be more environmentally-friendly.

One project awarded last week to developer BNP Paribas Real Estate will be a low-rise complex with student housing, a climbing wall and a food hall as well as offices. It is designed to be reconverted easily into more housing if needed.

“The current environment means we have to be more prudent and develop projects that can be modifiable,” said BNP Paribas Real Estate’s large project specialist Carole de Matharel.

Guice said the rental market had proved more resilient. Despite changes in working habits wrought by the pandemic, in 2021 and 2022, La Défense leased more than 200,000 square metres in new rentals, considered a benchmark for a “normal” year. Rental business was slower in 2023 but not brutally so, Guice added.

While some clients like consultancy EY are leaving La Défense for smaller premises in central Paris, the business district said it was succeeding in attracting names that had historically not considered the area, including luxury groups such as LVMH’s Christian Dior couture and its rival Kering.

Olivier Taupin of commercial real estate advisory Cushman & Wakefield said he was “very optimistic on La Défense” from a rental perspective. He added, however, that the size of leases signed had shrunk since the pandemic.

Buildings are now split between many more tenants, with some drawn to La Défense for cost reasons. Leases there were broadly stable this year at about €430 per square metre, compared with more than double that near the Arc de Triomphe in central Paris, according to Cushman & Wakefield.

In other peripheral areas around Paris, office rents are much lower still, at between €100 to €150 per square metre in some cases, but buildings are struggling to find tenants.

“The price gap has never been so high” between central Paris and the periphery, Taupin said.

Adam Driver and Penélope Cruz star in a fast-paced story of racing, money and death

Pity poor Enzo Ferrari. Inside the first minutes of the hectic new biopic Ferrari, the founder of the sports car giant has a pistol fired at what looks to be his head. In the context of this single morning in the summer of 1957, the gunshot is just one of many crises. The drama is constant. And yet the film also tips us off to a fascinating tension at its centre. This secretive, self-contained figure, played by Adam Driver, would sooner have his brains blown out than become the subject of a Hollywood movie. 

Still, his biographer is a high-end operator: Michael Mann, poet of neon and dark nights in films from Thief to Heat to Miami Vice. The director seems a neat fit for high-performance cars. We briefly see Driver’s Ferrari at the wheel, deftly moving through the gears. You imagine Mann doing the same. Yet the match of portraitist and sitter could backfire. Between a director this big on surfaces, and a focal point who spent a life ducking interviews, you wonder if we’ll really learn what drove Ferrari?

The answer sees the record souped-up with scriptwriter’s licence. That early shot is fired by Ferrari’s wife, Laura, played by a terrific Penélope Cruz. She means to miss (more or less), but sets the tone for the state of the marriage, and the shape of the movie: a whirring melodrama. 

The driver’s seat is a relative safe space. Beyond it, complications include a hidden relationship with another woman, Lina Lardi (Shailene Woodley), with whom Ferrari has a son he never publicly acknowledged as his; the collapsing finances of Ferrari the company; and preparations for the 1957 Mille Miglia race, whose significance some viewers will already know. (The film’s motorsport scenes are well staged, if mostly there to remind us how indifferent metal is to flesh.) Plates are spun at speed enough that, in lighter moments, the movie plays as knowing comedy. But tragedy comes too: before, during and after the farce.

One sad note is the memory of House of Gucci, another tale of a bad Italian marriage and flagship business, Driver again a kingly industrialist with an accent just this side of Super Mario Bros. But this film is a league above the Gucci one, with something Ridley Scott’s fiasco never had: gravity. Loss haunts Ferrari: the early deaths of Enzo’s brother Alfredo and first-born son, Dino. And death, here, feels real. It is arbitrary — and final.

Cruz brilliantly maps the scar tissue. In one brief scene with her buried son, her face moves through a world of emotions: a defiant smile, a glaze of grief. The performance grounds an outsize character, handbag stuffed with company cash.

Driver never has the same handle on the material. But his uncertainty is less damaging than it might be in a story that puts an impossible question to Ferrari himself. By the Mille Miglia, we know well the arch competitor. But Mann puts his foot down, to ask too which life force meant most to this cool logician: money or blood. We get our answer to that as well, one engineered to appear a thing of beauty, gleaming like a sports car.