Germany
In just 6 weeks Germany will vote and while Chancellor Scholz thinks that he can win, most others are equally convinced that he cannot based on his economic record alone that has seen the German economy contract by 0.3% in 2023 and by an estimated 0.2% in 2024. That on top of his ability to hold the current coalition together means that things do not look good for Olaf Scholz whose only hope is to convince the electorate that the ECB will cut interest rates more often and more deeply to inject life into the German economy. Unfortunately the effects of such a stimulus will come too late for Chancellor Scholz.
EUR/USD 1.0294.
AI
The problem with eye catching policies such as UK PM Starmer’s commitment to creating AI datacentres resulting in a 20 fold increase in AI computing power in the next 5 years is that it is on a collision course with the previous eye catching policy commitment of the UK being 95% carbon free with its energy consumption by 2030. The law of unintended consequences fully in play as the accident prone UK PM seeks to distract attention from his equally accident prone Chancellor. The 95% commitment alone will require a doubling of the UK’s onshore wind, a tripling of its solar power and a quadrupling of its offshore wind capacities. If that were not enough those AI datacentres are going to chew up colossal amounts of electricity; to illustrate that the International Energy Agency estimates that the increase in demand from AI in the next 2 years will be the equivalent of the total electricity consumption of Japan. Time for another eye catching policy to distract the UK from the sheer impossibility of the previous two eye catching policies from Sir Keir Starmer?
EUR/GBP 0.8431.