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Leonardo Advocates for ‘EU Defense Giants’ to Address Fragmentation in European Military Development
The CEO of Italian defense company Leonardo has emphasized the urgent need to establish "EU defense giants" to combat the existing "fragmented and inefficient" landscape of military hardware development in Europe.
Roberto Cingolani, the firm’s chief executive, stated, "Right now, the European defense industry lacks cohesion and efficiency, as each nation is following its own path in weaponry and platform development. While our companies are sizable, they haven’t reached the necessary strength to thrive in the current environment. Creating consolidated EU defense giants is crucial, and Leonardo is dedicated to building partnerships within the European defense sector."
Cingolani also highlighted Leonardo’s commitment to fostering global collaboration, citing a strategic partnership with Rheinmetall as part of their efforts to bolster the European defense framework.
Following these developments, shares of the defense contractor rose by 6%.
UK Employers Prepare for Workforce Reductions Amid Rising National Insurance
A new survey by the CIPD has revealed that nearly a third of employers in the UK are planning to decrease their workforce by making redundancies or hiring fewer staff in response to upcoming increases in National Insurance Contributions (NIC) and the National Minimum Wage.
According to the survey of over 2,000 UK employers, approximately 25% are set to make job cuts by March 2025. The net employment balance, which tracks employers’ expectations for staff changes, showed a notable decline from +21 last quarter to +13 this quarter.
The UK government recently unveiled a new budget plan, which includes a 6.7% increase in the minimum wage for individuals over 21, raising it to £12.21 ($15.4). Additionally, the NIC rate will escalate from 13.8% on earnings exceeding £9,100 annually to 15% for salaries above £5,000.
Peter Cheese, CEO of CIPD, remarked, "These are some of the most significant shifts in employer sentiment we’ve seen in the last decade, aside from during the pandemic. For the government’s plans to be effective, they must clarify how they intend to support business growth and investment."
Despite rising employment costs, a recent poll by the Chartered Management Institute indicated that 55% of managers do not plan to reduce enhanced maternity or paternity pay, with over a third stating it is very unlikely.
European Bond Yields Increase Amid Focus on Defense Spending
Bond yields in the UK and euro area have seen a rise as traders contemplate the possibility of increased national defense spending in light of discussions following the Munich Security Conference and emergency talks among European leaders regarding Ukraine.
As of 11 a.m. in London, the 10-year yield for UK government bonds, known as gilts, increased by 5 basis points to 4.553%, while the 2-year yield rose nearly 3 basis points to 4.231%.
UK Prime Minister Keir Starmer emphasized the need for Europe to prioritize its defense in a recent article for the Telegraph, asserting that European nations must enhance their defense budgets and play a more significant role in NATO.
Rise in Defense Stocks: What This Means for EU Spending
The Stoxx Europe Aerospace & Defense Index reached an all-time high on Monday, following remarks from EU President Ursula von der Leyen that member nations would be permitted to boost their defense spending without contravening the bloc’s fiscal deficit rules.
Shares surged after the Munich Security Conference, showcasing a collective readiness among European leaders to increase military expenditure in light of global tensions.
Assura Shares Rally After Rejection of Takeover Bid
Shares of Assura, a UK healthcare property firm, surged 15% following the news of its rejection of a £1.56 billion ($1.96 billion) acquisition offer from US private equity firm KKR and the Universities Superannuation Scheme.
KKR announced that it had made four indicative, non-binding proposals to Assura’s board, with the latest reflecting a significant premium over the company’s previous closing share price.
European Markets Expected to Show Mixed Openings
European markets are anticipated to open mixed as the UK’s FTSE 100 is forecasted to dip slightly, while Germany’s DAX is set to rise moderately. There will be no major earnings or economic data released today.
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