AFP

Cash is king in Italy, and the debate over limiting payments in notes and coins is heating up again under the country’s new right-wing government.

A new bill introduced this week by the League party, a member of Prime Minister Giorgia Meloni’s coalition, would raise the cash payment ceiling for Italians to 10,000 euros from 2,000 euros today.

The ceiling was already scheduled to decrease further to 1,000 euros as of January 1.

Credit card use has been steadily on the rise throughout the eurozone in recent years, but Italy has doggedly persisted in its preference for cash despite numerous incentives to encourage electronic payments.

Italians used cash for 82 percent of transactions, versus the 73 percent eurozone average, according to a 2020 study by the European Central Bank.

Defenders cite high card fees for shopkeepers and the preference among the elderly for cash.

However, critics say its use contributes to tax evasion and money laundering — two problems that have long dogged the Italian economy.

“Mafia and (tax) evaders thank you,” tweeted Andrea Orlando, labour minister under former premier Mario Draghi, about the League’s bill.

– Helps the poor –

Meloni — who has sought to reassure the EU that she will be fiscally prudent — told the Senate Wednesday she will support a higher cash ceiling, although reports suggest she will back a lower level than proposed by the League.

She denied any link between high cash limits and the shadow economy, saying the higher ceiling “helps the poor”.

Cash is preferred by low earners in the centre and south of Italy, where unemployment is higher, and among women and the self-employed, according to a Bank of Italy analysis of European Central Bank surveys published in March.

In a May report, the ECB estimated there were 13.5 million people in the eurozone with no bank account or access to financial services, arguing that cash needed to be remain accessible and accepted. 

However, an October 2021 Bank of Italy research paper found a direct correlation between the use of cash and the shadow economy, noting that restrictions on cash use “are an effective instrument to tackle tax evasion”.

– Tax evasion –

A 2016 decision to raise Italy’s ceiling from 1,000 euros to 3,000 euros to boost spending raised the share of the shadow economy by about 0.5 percentage points, the Bank of Italy report found.  

Italy’s cash ceiling has gradually been lowered over the past three decades, although it rose to a high of 12,500 euros under two governments of then-premier Silvio Berlusconi, whose Forza Italia party is also part of Meloni’s coalition.

Elsewhere in Europe, Greece has the most stringent cash limit, at 500 euros, while the ceiling rises above 10,000 euros in countries such as Malta, the Czech Republic and Croatia. 

Germany, Sweden and Ireland, among others, have no limits, but restrictions exist.

Italy’s largest business association, Confcommercio, said that as soaring inflation eats into household budgets, “it does not appear appropriate to impose new limitations on forms of payment”.

It said that lowering merchants’ credit card processing fees was a priority.

Massimo Vidiri, 51, who runs a Rome tobacco shop, said clients increasingly wanted to use credit cards, although he himself likes carrying cash.

“If something happens, like a blackout, what do I do?” he asked. “If the internet goes down throughout Italy, what do we do?”

He complained about high fees, a view shared by another shopkeeper nearby, Angelo Bruno.

Bruno, 71, denied small merchants like himself were a problem, telling AFP: “The big cases of tax evasion are the politicians, the only ones who get picked on are the little shopkeepers.”

The Bank of Italy report found that because small business owners were more susceptible to bureaucratic burdens and high taxes, they were “more prone to shifting into the shadow economy”.

Digital payments accelerated in Italy during the Covid-19 pandemic, when shops were shut and online shopping spiked.

A “cashback” scheme put in place in 2021 by then-prime minister Giuseppe Conte to encourage consumer spending and fight tax evasion through refunds on credit card purchases was considered inefficient and costly, and suspended by Draghi. 

IAG, owner of British Airways and Spanish carrier Iberia, revealed Friday revenue slightly above pre-pandemic levels as it posted third-quarter profits on rebounding passenger demand.

Revenue soared to 7.3 billion euros (dollars) in the peak July-September demand period, from 2.7 billion euros in the third quarter last year, IAG said in a statement.

The latest result was almost one percent higher compared with the third quarter in 2019, or before the coronavirus pandemic grounded planes worldwide at the start of the following year.

It comes despite the group’s airlines, which include Aer Lingus and Vueling, facing higher costs, notably from soaring jet fuel prices. 

Airlines are tackling this by charging higher fares.

“While demand remains strong, we are conscious of the uncertainties in the economic outlook,” IAG chief executive Luis Gallego said in the earnings statement. 

“Leisure demand is particularly healthy and leisure revenue has recovered to pre-pandemic levels. Business travel continues to recover steadily.”

Profit after tax stood at 853 million euros in the third quarter compared with a net loss of 574 million euros one year earlier.

The second quarter had seen IAG fly back into profit for the first time since the start of the pandemic.

IAG said its third-quarter performance was impacted also by a strong dollar, while passenger capacity was 81 percent of pre-pandemic levels.

Despite the headwinds, “this is no doubt an impressive turnaround from BA’s parent company”, noted Derren Nathan, head of equity research at Hargreaves Lansdown. 

“Planes are just as full as before the pandemic but IAG is flying less of them.”

In reaction, shares in IAG were down 1.2 percent on London’s falling FTSE 100 index. 

The group had collapsed into annual losses in 2020 and 2021 as Covid ravaged global demand for international air travel, forcing BA and its peers to slash thousands of jobs.

That has left airlines and airports struggling to recruit staff. 

Japan will spend $260 billion on a stimulus package to cushion the economy from the impact of a weak yen and inflation, Prime Minister Fumio Kishida said Friday.

But the nation’s central bank is refusing to budge from the ultra-loose policy that has hammered the currency this year, wiping out more than 20 percent of its value against the dollar.

The government hopes the 39 trillion yen in fiscal spending will rise to 72 trillion yen when private sector investments are taken into account, Kishida said after the cabinet approved an extra budget to partly fund the relief measures.

“This… is a comprehensive economic package meant to combat inflation and revitalise the economy,” he told reporters.

“We want to protect people’s livelihoods, employment and businesses, while strengthening our economy for the future.”

Prices are rising in Japan at their fastest rate in eight years, although the three-percent inflation rate remains well below the sky-high levels seen in the United States and elsewhere.

Japan — which has one of the world’s highest debt-to-GDP ratios — has already injected hundreds of billions of dollars into its economy over the past two years to support recovery from the Covid-19 pandemic.

Friday’s package will include measures to encourage wage growth and support households with energy bills, which have spiked since Russia’s invasion of Ukraine.

It is also designed to help people and businesses affected by the plummeting yen, currently at 147 against the dollar.

Japan spent nearly $20 billion in September in an effort to curb the yen’s slide, and further expensive government interventions have reportedly taken place in recent days.

The yen’s steep falls have been driven by the widening gap between the monetary policies of the US and Japanese central banks — with the Bank of Japan keeping rates ultra-low to encourage sustainable growth, while the Federal Reserve ramps them up.

– Bank of Japan stands pat –

Following a two-day policy meeting, the BoJ said it would keep its easy-money policy, defying growing pressure to tweak its strategy as the yen drops.

Bank Governor Haruhiko Kuroda told reporters officials would stick to their guns until prices rise “in a sustainable manner”, adding there would be no change “any time soon”.

Kuroda declined to comment on suspected currency interventions in the past week, which the finance ministry has not confirmed.

But “it is extremely important that (forex rates) reflect economic fundamentals, and move in a stable manner”, he added.

“The recent depreciation of the yen is rapid and unilateral,” which is “negative for the Japanese economy”, Kuroda said.

Ahead of the BoJ meeting, UBS economists Masamichi Adachi and Go Kurihara said that a mix of continued easing by the central bank and the government’s stimulus measures would be “optimal”.

That is because Japan’s inflation is not demand-driven, but largely down to soaring energy costs, they explained in a commentary.

This view was echoed by Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Japan’s economy faces weak demand due to price rises, in contrast to the United States, where demand is strong, with the Fed trying to cool down inflation,” he told AFP.

“It’s impossible that Japan would hike rates to curb inflation, for this reason.”

French consumer prices rose at their fastest pace since 1985 in October, official data showed Friday, driven by rising energy, food and manufactured goods prices.

Year-on-year price growth hit 6.2 percent this month, statistics authority Insee said based on preliminary data, a new increase in inflation after it slowed in August and September.

Food especially grew more expensive, at almost 12 percent, in a blow to the least well-off households who spend a larger share of their monthly budget at supermarkets.

Meanwhile energy prices added almost 20 percent, despite government interventions to limit bills for consumers that have kept overall inflation below levels seen in EU neighbours.

Russia’s war on Ukraine and the throttling of gas supplies to Europe has triggered an energy crisis on the continent — at the same moment when many of France’s vital nuclear power plants are offline for maintenance.

French inflation reached 7.1 percent year-on-year when measured using the Harmonised Index of Consumer Prices (HICP) yardstick preferred by the European Central Bank.

The Frankfurt-based ECB on Thursday announced a fresh bumper interest rate hike of 0.75 percent as it strives to bring price growth across the 19-nation eurozone under control.

“We will have further rate increases in the future,” central bank chief Christine Lagarde said. “There is still ground to cover.”

Insee will publish its final October inflation reading in mid-November.

Elon Musk took control of Twitter and fired its top executives late Thursday in a deal that puts one of the leading platforms for global discourse in the hands of the world’s richest man.

Following the takeover, Musk tweeted that the “the bird is freed,” referencing the company’s iconic avian logo.

He wasted no time sacking chief executive Parag Agrawal, as well as the company’s chief financial officer and its head of safety, the Washington Post and CNBC reported citing unnamed sources.

Agrawal previously went to court to hold the Tesla chief to the terms of a deal he had tried to escape.

The takeover came hours before the court-appointed deadline for Musk to seal his on-again, off-again deal to purchase the social media network.

Musk tweeted earlier in the day that he was buying Twitter “because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner.”

Twitter did not immediately reply to a request for comment on the departure of its top executives, but the platform’s co-founder Biz Stone thanked the trio — Agrawal, Ned Segal and Vijaya Gadde — for their “collective contribution to Twitter.”

“Massive talents, all, and beautiful humans each.”

– ‘Chief Twit’ –

The closure of the deal marks the culmination of a long and drawn out back-and-forth between the billionaire and the social network.

Musk tried to step back from the Twitter deal soon after his unsolicited offer was accepted in April, and said in July he was canceling the contract because he was misled by Twitter over the number of fake “bot” accounts — allegations rejected by the company.

Twitter, in turn, sought to prove Musk was contriving excuses to walk away simply because he changed his mind.

After Musk sought to terminate the sale, Twitter filed a lawsuit to hold Musk to the agreement.

With a trial looming, the unpredictable billionaire capitulated and revived his takeover plan.

Musk signaled the deal was on track this week by changing his Twitter profile to “Chief Twit” and posting a video of himself walking into the company’s California headquarters carrying a sink.

“Let that sink in!” he quipped.

He even shared a picture of himself socializing at a coffee bar at Twitter headquarters earlier in the day Thursday.

Musk said during a recent Tesla earnings call that he was “excited” about the Twitter deal even though he and investors are “overpaying.”

– Twitter free-for-all? –

Some employees who would prefer not to work for Musk have already left, said a worker who asked to remain anonymous in order to speak more freely.

“But a portion of people, including me, are willing to give him the benefit of the doubt for now,” the employee said.

The idea of Musk running Twitter has alarmed activists who fear a surge in harassment and misinformation, with Musk himself known for trolling other Twitter users.

But Musk said he realizes Twitter “cannot become a free-for-all hellscape where anything can be said with no consequences.”

Musk has vowed to dial content moderation back to a bare minimum, and is expected to clear the way for former US president Donald Trump to return to the platform.

The then-president was blocked due to concerns he would ignite more violence like the deadly attack on the Capitol in Washington to overturn his election loss.

Far-right users were quick to rejoice on the network, posting comments such as “masks don’t work” and other taunts, under the belief that moderation rules will now be relaxed.

“Free speech will always prevail,” tweeted Republican Senator Marsha Blackburn of Tennessee, prompting replies including “says the party that bans books.”