Thu. Jan 20th, 2022


This is an audio transcript of the FT News Information Session podcast episode: The small German town hosting BioNTech

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 5th, and this is your FT News Briefing.

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Banks in China are worried about the country’s economy. Travel shares are soaring, though the Omicron variant is still rising, and the EU is pushing to take part in talks on the Ukraine crisis next week. In addition, a small town in Germany is home to BioNTech, and this city wants to stick to the vaccine maker for life.

Joe Miller
Policymakers are slightly worried that the golden egg could go elsewhere.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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Chinese banks are trying to play it safe by picking up low-risk financial instruments instead of handing out loans. This is a sign that banks are worried about China’s slower economy and that there are not as many qualified lenders out there. But Chinese banks have these government mandate quotas that they have to comply with. So they spent last month buying these low-risk financial instruments. Loan officials say these instruments are the safest way to achieve government policy goals. This is because China’s President Xi Jinping wants the country’s banks to lend more, especially to medium and small customers. And lending officials told the FT that Xi’s regulatory repression is hurting many of their best lenders and real estate and private education, and that there is no sign that conditions will improve any time soon.

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The European Union demands a role in negotiations over Ukraine. The US said Russia had gathered more than 100,000 troops along Ukraine’s border. They fear that Russia is preparing for a possible invasion. Moscow and Washington plan to talk about the situation next week. The FT’s European diplomatic correspondent Henry Foy says Brussels wants to be there largely because of Russia’s demands.

Henry Foy
What Russia really wants to talk about are security guarantees, with the West’s writing large on the European strategic arena, if you want – where and when NATO can conduct military exercises, where and when US troops can be deployed – that effectively draw a line to the continent and says this side is Western Europe, this side is Russia’s sphere of influence, and returns to a more cold war setup. And the EU says, well, if you’re going to discuss our backyard effectively, we deserve a seat at that table.

Marc Filippino
So Henry, you used to be the FT’s Moscow bureau chief. What can Russia say about the EU’s involvement here?

Henry Foy
Well, Russia has no respect for the EU. There are a number of reasons for this, but the primary one is that it believes in nation states. It does not believe in these federal or multinational agencies like the EU. It says, look, we want to deal with people who can actually make decisions. This is mainly Washington. But it’s Paris too. It’s Berlin. Dis Rome. However, this makes an exception for NATO. It recognizes that NATO is a powerful and important player in the European strategic arena, and therefore says that we will hold talks with NATO; we will have talks with the US, but the EU, I’m sorry; we do not respect you. We also do not think that you are speaking with a united voice, and there, I think, Russia has a point. The EU is very divided over its defensive position and in some respects its relations with Russia.

Marc Filippino
So Henry, considering that these talks are about Ukraine, it does not really have a seat at the table. What does the US have to say about this?

Henry Foy
Well, the US has said sternly and repeatedly that there will be no talks about the future of Ukraine that do not involve Ukraine. This is going to be difficult to deliver now, as the Russians are insisting that Ukraine will not be a party to these talks. This also begs the question, well, are you going to talk about Europe without Europe at the table? And I think the Americans will say, well, look, NATO at the table, and effectively when we think of European security, European defense and European power politics, which are finally at stake here, it’s tanks and troops on the borders with Ukraine, NATO is the voice that speaks for it. And it also encounters some problems with the EU because some members of the EU, especially Paris, but other member states, believe that the EU should have more of its own defense and security policy independent of NATO and the so-called “strategic autonomy”. ”Pressure, which will be a massive focus of the next six months within Brussels.

Marc Filippino
Henry Foy is the FT’s European diplomatic correspondent.

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The U.S. recorded more than a million Covid cases in a single day on Monday. This is the highest daily score since the start of the pandemic. But despite the Omicron variant rising, travel share prices rose sharply on Tuesday. The London-listed budget service Wizz, British Airways owner IAG and easyJet all closed above or almost 10 per cent higher yesterday. Investors stand by the data that says Omicron causes less intense diseases than previous strains. In addition, new evidence shows that current vaccines hold even serious Covid-19 outcomes. Omicron has caused thousands of flights to be canceled over the past two weeks, but even major airlines are not worried about a hit for their summer high season.

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What happens when your small town suddenly hits the jackpot? Located just southwest of Frankfurt, Germany, Mainz is home to BioNTech, and has partnered with Pfizer to create a highly successful Covid vaccine. The sting earned tens of billions of dollars, and some of that money came to Mainz. The city’s tax levy has jumped from € 173 million in 2020 to more than a billion in 2021 due to the vaccine. But FT’s Frankfurt correspondent Joe Miller says you would not know Mainz was sitting on a stack of cash just by looking at it.

Joe Miller
The center of Mainz is by no means rich. In fact, the city is in, the city center urgently needs revival. It suffered quite a lot during the pandemic. It’s quite empty, lots of windows with shutters. And so while, you know, there was this great windfall, it’s not as if the city itself had prospered for many years.

Marc Filippino
So, what are city leaders going to do with all this money?

Joe Miller
The mayor’s first priority is to pay off the € 634 million cash debt that the city has before he thinks about where else to spend the money. But he did outline some of the plans the city has, and that is to essentially make sure that it is not so dependent on a single company in the future by trying to attract many, many more BioNTechs.

Marc Filippino
This is not the only sensible thing city leaders plan to do with their newfound wealth.

Joe Miller
There’s another way locals will benefit from this, and that is that Mainz intends to lower corporate taxes quite drastically next year. At least part of the corporation tax owed to the city is certain portions of corporation tax in Germany are left to the discretion of cities. And so Mainz will sink it and businesses there will save hundreds of millions of euros, possibly in the coming years. The hope is that more companies will come to the area, but I also think the hope, the unspoken point of this policy is to make sure that BioNTech, which is now, you know, one of the most valuable pharmaceutical companies in the world, Do not Mainz does not leave. There is no indication that they will, but I think policymakers are a little worried that the golden egg could go elsewhere.

Marc Filippino
Now, if you think all German cities are just as responsible with their finances, think again. Mainz is actually learning a lesson at another city that was less practical.

Joe Miller
There is a city called Sindelfingen, which got a large Mercedes plant a few decades ago and with it a big tax windfall. And it is known that it spent part of its money on the installation of a marble slab pedestrian crossings, which require maintenance every year, as well as a large swimming pool and other buildings that require a lot of maintenance. Mainz is therefore making a kind of joint effort not to do the same thing.

Marc Filippino
Joe Miller is the FT’s Frankfurt correspondent.

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And before we go, just a quick fix. Yesterday we told you that a jury found Theranos’ former CEO Elizabeth Holmes guilty of conspiracy to defraud investors. We said Holmes could appeal against the ruling in a state appellate court. It’s actually a federal appeals court.

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You can read more about all these stories at FT.com. This was your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript was generated automatically. If there is an error, please send the details for a correction to: tikfout@ft.com. We will do our best to make the amendment as soon as possible.



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