Global Edition

Nigeria kicks off new tax regime vowing relief for low earners

  • President Bola Tinubu, who has energetically backed the tax reforms, dismissed the claims, calling them "premature" and "reactive", and said the new tax regime was in Nigeria's best interest.
  • Nigeria on Thursday launched a new tax regime that officials said will expand the tax base, ease the tax burden on low-income earners and small businesses, and streamline collection and administration. 
  • President Bola Tinubu, who has energetically backed the tax reforms, dismissed the claims, calling them "premature" and "reactive", and said the new tax regime was in Nigeria's best interest.
Nigeria on Thursday launched a new tax regime that officials said will expand the tax base, ease the tax burden on low-income earners and small businesses, and streamline collection and administration. 
The new system, based on four bills signed into law in June, came into effect despite calls for a delay by the opposition which alleged that the goverment had made unauthorised changes to the tax code.
The four laws -- the Nigeria Tax Law, Nigeria Tax Administration Law, Nigeria Revenue Service (Establishment) Law, and Joint Revenue Board (Establishment) Law -- are a "one-stop shop," simultaneously increasing revenue generation and reducing the tax burden on low-income earners, tax expert Chukwuema Eze told AFP.
Opposition leader Atiku Abubakar accused the government of inserting "illegal and unauthorized alterations" to the laws.
President Bola Tinubu, who has energetically backed the tax reforms, dismissed the claims, calling them "premature" and "reactive", and said the new tax regime was in Nigeria's best interest.
"No substantial issue has been established that warrants a disruption of the reform process," Tinubu said in a statement on Tuesday. 
In his New Year message, the president insisted that his tax reforms were "designed to build a fair, competitive, and robust fiscal foundation for Nigeria."
"By harmonising our tax system, we aim to raise revenue sustainably, address fiscal distortions and strengthen our capacity to finance infrastructure and social investments that will deliver shared prosperity," he said.
The west African economic powerhouse has a tax-to-GDP ratio of 13.5 percent, according to government figures, which is below the continental average.
The tax-to-GDP ratio is a measure of a government's capacity to raise money for public services and infrastructure. 
By comparison, The EU and US have a tax-to-GDP ratio of over 25 percent.
Nigeria, divided into 36 states, has long struggled to reform its tax system -- with the government saying its new package will "harmonise" levies across the nation.
"This is a significant step toward building a simpler, fairer, and more growth-oriented tax system," Taiwo Oyedele, who heads Tinubu's tax reforms committee, said on X on Thursday. 
tba/jh

BYD

China's BYD logs record EV sales in 2025

  • Tesla has also faced rising EV competition from BYD and other Chinese companies, as well as from European giants. pfc/ami
  • Chinese auto giant BYD sold 2.26 million electric vehicles last year, a company statement showed Thursday, setting a new record for any firm globally.
  • Tesla has also faced rising EV competition from BYD and other Chinese companies, as well as from European giants. pfc/ami
Chinese auto giant BYD sold 2.26 million electric vehicles last year, a company statement showed Thursday, setting a new record for any firm globally.
The figure puts BYD in pole position to outstrip Elon Musk's Tesla in the annual category for the first time, with the lagging Texas-based firm having previously announced 1.22 million in 2025 EV sales by the end of September.
Tesla is expected to announce its total EV sales for last year on Friday.
Shenzhen-based BYD, which also produces hybrid cars, announced the data in a statement published to the Hong Kong Stock Exchange, where it is listed.
Known as "Biyadi" in Chinese -- or by the English slogan "Build Your Dreams" -- BYD was founded in 1995, originally specialising in battery manufacturing.
The automotive juggernaut has come to dominate China's highly competitive new energy vehicle market -- the world's largest.
Now it is seeking to expand its presence overseas, as increasingly price-wary consumption patterns in China weigh on profitability.
BYD and its Chinese competitors face hefty tariffs in the United States.
But its success is growing in Southeast Asia, the Middle East, and even Europe -- to the consternation of traditional industry heavyweights from the continent.
Tesla narrowly beat BYD in annual EV sales in 2024, with US company's 1.79 million just outpacing the latter's 1.76 million.
This year, Musk's firm has seen sales struggle in key markets over the CEO's political support of US President Donald Trump and far-right politicians.
Tesla has also faced rising EV competition from BYD and other Chinese companies, as well as from European giants.
pfc/ami

eurozone

Bulgaria adopts the euro, nearly 20 years after joining the EU

BY ROSSEN BOSSEV

  • Successive governments in the country of 6.4 million people have advocated joining the euro, hoping that it will boost the economy of the European Union's poorest member, reinforce ties to the West and protect against Russia's influence. 
  • Bulgaria on Thursday became the 21st country to switch to the euro, a milestone met with both cheers and fears, nearly 20 years after the Balkan nation joined the European Union.
  • Successive governments in the country of 6.4 million people have advocated joining the euro, hoping that it will boost the economy of the European Union's poorest member, reinforce ties to the West and protect against Russia's influence. 
Bulgaria on Thursday became the 21st country to switch to the euro, a milestone met with both cheers and fears, nearly 20 years after the Balkan nation joined the European Union.
At midnight (2200 GMT Wednesday), Bulgaria gave up the lev, in use since the late 19th century, and Bulgarian euro coins were projected onto the central bank's building.
"I warmly welcome Bulgaria to the euro family," said Christine Lagarde, president of the European Central Bank, calling the euro a "powerful symbol" of "shared values and collective strength".
"Great! It works!" exclaimed Dimitar, a 43-year-old man after withdrawing 100 euros from an automated teller machine shortly after midnight.  
Successive governments in the country of 6.4 million people have advocated joining the euro, hoping that it will boost the economy of the European Union's poorest member, reinforce ties to the West and protect against Russia's influence. 
But Bulgarians have long been divided over the switch, with many worrying the introduction could usher in higher prices and add to the political instability rattling the country.
In a speech broadcast shortly before midnight, President Rumen Radev hailed it as the "final step" in Bulgaria's EU integration, as thousands of people braved sub-zero temperatures in the capital Sofia to celebrate the New Year.
Radev however voiced regret that Bulgarians had not been consulted by referendum on the adoption.
"This refusal was one of the dramatic symptoms of the deep divide between the political class and the people, confirmed by mass demonstrations across the country."
Anti-corruption protests swept a conservative-led government from office in mid-December, leaving a country anxious about inflation on the verge of its eighth election in five years.
"People are afraid that prices will rise, while salaries will remain the same," a woman in her 40s who declined to give her name told AFP in Sofia.
At one of the city's largest markets, stalls displayed prices of everything from groceries to New Year's Eve essentials like sparklers in both levs and euros. 
"The whole of Europe has managed with the euro, we'll manage too," retiree Vlad told AFP.

Easier trade, travel

European Commission president Ursula von der Leyen said Wednesday that Bulgaria's move into the eurozone marked "an important milestone" for Bulgarians. 
"It will make travelling and living abroad easier, boost the transparency and competitiveness of markets, and facilitate trade," she said.
Central bank governor Dimitar Radev said the euro symbolised much more than "just a currency -- it is a sign of belonging".
But according to the latest Eurobarometer survey, 49 percent of Bulgarians are against the switch.
Outgoing prime minister Rossen Jeliazkov sought to reassure the public ahead of the move, saying he was "counting on the tolerance and understanding of citizens and businesses".
He added that inflation in the Black Sea nation, which joined the EU in 2007, was not linked to the euro's adoption.
But the concerns of Bulgarians about inflation are not idle. 
Food prices rose by five percent year-on-year in November, more than double the eurozone average, according to the National Statistical Institute.
"Unfortunately, prices no longer correspond to those in levs," pastry shop owner Turgut Ismail, 33, told AFP, saying that prices have already begun surging.
A euro protest campaign earlier this year tapping into a generally negative view of the single currency among much of the population also fanned fears of price hikes.

Queues and possible disruptions

Given Bulgaria's ongoing political instability, any problems with euro adoption would be seized on by anti-EU politicians, warned Boryana Dimitrova of the Alpha Research polling institute.
Some people, including business owners, have complained that it has been difficult to get their hands on euros, with shopkeepers saying they haven't received the euro starter packages they ordered.
"It's not the right time!" complained Stephane, a 64-year-old economist. "Yesterday I saw the figures for Italy, Spain and Germany: their debt is enormous. And eventually we will be carrying it on our backs".
The euro was first rolled out in 12 countries on January 1, 2002. Croatia was the latest to join, in 2023.
Bulgaria's accession will bring the number of Europeans using the euro to more than 350 million.
rb/ach/st

chips

AI, chips boom sent South Korea exports soaring in 2025

BY HIEUN SHIN

  • The worldwide surge in interest in artificial intelligence saw semiconductor industry exports reach $173.4 billion in 2025 -- a record high and an increase of more than 20 percent from the previous year, the ministry said.
  • Soaring global demand for semiconductors fuelled by a boom in artificial intelligence sent South Korea's exports to their highest-ever level in 2025, official data showed Thursday.
  • The worldwide surge in interest in artificial intelligence saw semiconductor industry exports reach $173.4 billion in 2025 -- a record high and an increase of more than 20 percent from the previous year, the ministry said.
Soaring global demand for semiconductors fuelled by a boom in artificial intelligence sent South Korea's exports to their highest-ever level in 2025, official data showed Thursday.
Total exports last year were valued at over $700 billion, according to data from Seoul's industry ministry, up 3.8 percent from the previous year.
The worldwide surge in interest in artificial intelligence saw semiconductor industry exports reach $173.4 billion in 2025 -- a record high and an increase of more than 20 percent from the previous year, the ministry said.
High-priced memory chips used in AI data centres were in strong demand, they added.
Semiconductor exports in December alone rose more than 40 percent year-on-year, posting gains for a tenth consecutive month and marking the highest monthly figure on record.
South Korean tech juggernaut Samsung Electronics is one of the world's top memory-chip makers, providing crucial components for the AI industry and the infrastructure it relies on.
The country is also home to SK hynix, another key player in the global semiconductor market.
And South Korean President Lee Jae Myung has vowed to triple spending on AI this year -- a move aimed at propelling the country into the ranks of the world's top three AI powers behind the United States and China.
Cars, South Korea's other key export, also performed strongly, with auto shipments rising to $72 billion, the highest on record despite US tariff pressures.
Other sectors like agriculture and cosmetics also recorded their highest-ever figures, buoyed by strong global interest in the country's pop culture powerhouse, its food and beauty products.

'Challenging conditions'

Exports rose everywhere except to the United States and China, weighed down by tariffs on steel, automobiles and machinery.
Asia's fourth-largest economy was initially hit with a 25 percent across-the-board tariff by the United States but managed to secure a last-minute agreement for a reduced 15 percent rate.
South Korea is one of Washington's biggest trade partners.
The new record was "achieved amid challenging domestic and external conditions", industry minister Kim Jung-kwan said in a statement.
It also "serves as an indicator of the South Korean economy's solid resilience and growth potential," he said.
But, he warned, "export conditions this year are expected to remain difficult, as uncertainties persist in the trade environment, including the sustainability of semiconductor demand".
hs/oho/abs

inflation

In Venezuela, price of US dollar up 479 percent in a year

  • The gap between the official and black market rate is mounting as well, nearing 100 percent in an economy that has become increasingly dollarized as a way to tackle hyperinflation.
  • Venezuela, currently in the throes of an escalating crisis with the United States, closed the books Wednesday on a complicated year for its economy, with the official cost of buying a US dollar up 479 percent in the last 12 months.
  • The gap between the official and black market rate is mounting as well, nearing 100 percent in an economy that has become increasingly dollarized as a way to tackle hyperinflation.
Venezuela, currently in the throes of an escalating crisis with the United States, closed the books Wednesday on a complicated year for its economy, with the official cost of buying a US dollar up 479 percent in the last 12 months.
The gap between the official and black market rate is mounting as well, nearing 100 percent in an economy that has become increasingly dollarized as a way to tackle hyperinflation.
Even though President Nicolas Maduro projected economic growth of nearly nine percent in 2025, the oil-rich South American country has seen a sharp decline, with inflation soaring and hard currency in short supply.
US President Donald Trump has piled the pressure on Maduro, stiffening sanctions and ordering the seizure of "sanctioned oil vessels" sailing to and from Venezuela.
Venezuela's central bank on Wednesday set the official rate at 301.37 bolivars to the US dollar, a rate in effect until January 2. That marks a 479.25 percent increase from the rate of 52.02 bolivars to the dollar posted in early 2025.
On the black market, where prices are determined by crypto exchange platforms, one US dollar is going for nearly 560 bolivars -- at least an 85 percent difference with the official rate.
Economists say that 80 percent of Venezuela's currency exchanges are carried out on such platforms.
Inflation could ultimately pass the astronomical rate of 500 percent in 2025, according to estimates from private firms. Official data has not been published since October 2024.
Venezuela has been under a US oil embargo since 2019 and exports the vast majority of its output on the black market at a sharp discount. 
bc/pgf/sst/sla

trade

China says to impose extra 55% tariffs on some beef imports

  • Countries have been assigned annual quotas and beef sent to China will be subject to the extra 55 percent levy if imports go beyond that amount.
  • China said on Wednesday it will impose additional 55 percent tariffs on some beef imports from countries including Brazil, Australia and the United States that exceed a certain quantity from January 1.
  • Countries have been assigned annual quotas and beef sent to China will be subject to the extra 55 percent levy if imports go beyond that amount.
China said on Wednesday it will impose additional 55 percent tariffs on some beef imports from countries including Brazil, Australia and the United States that exceed a certain quantity from January 1.
The price of beef in China has trended downwards in recent years, with analysts blaming oversupply and a lack of demand as the world's second-largest economy has slowed.
At the same time imports have surged, with China representing a hugely important market for countries such as Brazil, Argentina and Australia.
Investigators found that beef imports had damaged China's domestic industry, Beijing's commerce ministry said in a statement. The probe covered fresh, frozen, bone-in and boneless beef.
The extra tariffs apply for three years -- until December 31, 2028.
The ministry described the levies as "safeguards" and said they would be gradually relaxed.
Countries have been assigned annual quotas and beef sent to China will be subject to the extra 55 percent levy if imports go beyond that amount.
Quotas expand slightly each year.
In 2026, Brazil has an import quota of 1.1 million tons while Argentina has a cap of roughly half that.
Australia faces a quota of around 200,000 tons and the United States one of 164,000 tons.
The ministry also said it was suspending part of a free trade agreement with Australia covering beef.
"The implementation of safeguards on imported beef is intended to temporarily help the domestic industry get through difficulties, not to restrict normal beef trade," a spokesperson said in a separate statement.
Brazil, the world's largest meat exporter, said Wednesday it intended to "work with the Chinese government, both bilaterally and within the WTO (World Trade Organization) framework, to mitigate the impact" of the new measure.
The foreign ministry in Brasilia said in a statement that Brazil was the main supplier of beef to China, which accounted for 52 percent of the South American country's foreign sales of the commodity in 2024.
mya/je/tmo/mlr/iv

Global Edition

Stocks pull lower at end of record year for markets

  • Across the globe, stock markets struck record highs and enjoyed double-digit gains in 2025, thanks in large part to interest rate cuts from the US Federal Reserve following drops in inflation.
  • Stock markets mostly retreated Wednesday in thin trading, following a year of record gains for key assets as central banks cut interest rates and the tech sector boomed thanks to the growth of artificial intelligence.
  • Across the globe, stock markets struck record highs and enjoyed double-digit gains in 2025, thanks in large part to interest rate cuts from the US Federal Reserve following drops in inflation.
Stock markets mostly retreated Wednesday in thin trading, following a year of record gains for key assets as central banks cut interest rates and the tech sector boomed thanks to the growth of artificial intelligence.
Wall Street's main indices dipped to close the final trading day of 2025, with little fresh economic data apart from a drop in both first-time and continuing claims for jobless benefits in recent weeks.
Still, all three indices logged solid gains for the full year.
The Dow added 13 percent in 2025, the broad-based S&P 500 advanced 16.4 percent and the tech-focused Nasdaq Composite surged 20.4 percent over the year.
"Generally speaking, 2025 was a spectacular year for equities," said Briefing.com analyst Patrick O'Hare.
Across the globe, stock markets struck record highs and enjoyed double-digit gains in 2025, thanks in large part to interest rate cuts from the US Federal Reserve following drops in inflation.
London's benchmark FTSE 100 index jumped more than 21 percent in 2025 -- the biggest gain for 16 years. 
Frankfurt rallied 23 percent in 2025, while Paris saw an annual gain of more than 10 percent.
In Asia, Seoul stocks rocketed 75 percent higher, while Hong Kong's Hang Seng index jumped 28 percent, and Tokyo's Nikkei 225 won more than 26 percent.
"To push meaningfully higher in 2026, equities will need confirmation that the Fed can deliver at least the two rate cuts still priced by the market, with growth unimpeded," noted Stephen Innes of SPI Asset Management.
Minutes of the Fed's policy meeting in December, which were released on Tuesday, indicated that most of its officials see future rate cuts as appropriate, should inflation cool over time as expected.
A surge in the tech sector on the back of the vast amounts of cash pumped into AI also helped push stocks to record highs, but concerns that valuations of AI stocks are too high gnawed at investors late in 2025. 
AI chip juggernaut Nvidia became the world's first $5 trillion company at the end of October, while its current worth stands at around $4.5 trillion.
The price of gold, seen as a safe haven investment, scored multiple record highs this year. 
The precious metal has benefitted from weakness to the dollar caused by the Fed's rate cuts and economic growth concerns triggered by President Donald Trump's tariffs war.
On Wednesday, the price of silver slid further having struck record highs in December.
Oil prices have retreated nearly 20 percent over the year, pressured by an oversupplied market.
Bitcoin, emphasizing the volatile nature of the cryptocurrency sector, soared to a record high above $126,000 in October before ending the year around $88,000.
- Key figures at around 2105 GMT - 
New York - Dow: DOWN 0.6 percent at 48,063.29 points (close)
New York - S&P 500: DOWN 0.7 percent at 6,845.50 (close)
New York - Nasdaq Composite: DOWN 0.8 percent at 23,241.99 (close)
London - FTSE 100: DOWN 0.1 percent at 9,931.38 (close)
Paris - CAC 40: DOWN 0.2 percent at 8,149.50 (close)
Frankfurt - market closed for holiday
Hong Kong - Hang Seng Index: DOWN 0.9 percent at 25,630.54 (close)
Shanghai - Composite: UP 0.1 percent at 3,968.84 (close)
Tokyo - market closed for holiday
Euro/dollar: DOWN at $1.1750 from $1.1774 on Tuesday
Pound/dollar: DOWN at $1.3478 from $1.3503
Dollar/yen: UP at 156.66 yen from 156.00 yen 
Euro/pound: UP at 87.18 pence from 87.15 pence
Brent North Sea Crude: DOWN 0.8 percent at $60.85 per barrel
West Texas Intermediate: DOWN 0.9 percent at $57.42 per barrel
burs-rl-bys/sst

EU

Eurostar trains back with delays after power glitch sparks travel chaos

BY JULIE CHABANAS AND ISABEL MALSANG WITH JUSTINE GERARDY IN LONDON

  • But Eurostar said on Wednesday that services had "resumed today following a power issue in the Channel Tunnel yesterday and some further issues with rail infrastructure overnight".
  • Rail traffic through the Channel tunnel slowly resumed with more cancellations and delays Wednesday after an electricity failure stranded thousands of passengers and trapped some for a night in a powerless train.
  • But Eurostar said on Wednesday that services had "resumed today following a power issue in the Channel Tunnel yesterday and some further issues with rail infrastructure overnight".
Rail traffic through the Channel tunnel slowly resumed with more cancellations and delays Wednesday after an electricity failure stranded thousands of passengers and trapped some for a night in a powerless train.
Two London-Paris trains were cancelled and most trips were delayed in both directions as Eurostar warned of "knock-on impacts" on New Year's Eve.
Christelle Renouf, her husband and two children arrived in Paris from London after a journey that took 12 hours longer than expected.
"After boarding, the train first stopped for an hour because there wasn't enough staff, then it stopped again just before the tunnel, because an overhead line fell" on a  carriage, she said in the French capital's Gare du Nord railway station.
They spent the night in a train "without electricity, water or wifi", she added.
A spokeswoman said "an overhead line fell onto a Eurostar train linking London and Paris, near the entrance to the Channel Tunnel".
New Year travellers had to scramble to find alternatives on Tuesday, after the operator postponed all services between London, Paris, Amsterdam and Brussels.
But Eurostar said on Wednesday that services had "resumed today following a power issue in the Channel Tunnel yesterday and some further issues with rail infrastructure overnight".
It added there could be "some delays and possible last-minute cancellations".
One man told the BBC he boarded the 19:01 train to Paris Tuesday, but at 03:00 am on Wednesday he was still sitting in the train at the entrance to the tunnel.
France's BFMTV reported passengers left waiting into the night on a train from London to Lille without electricity, heating or functioning toilets.
"Nothing electrical is working. It's always the same information -- there's a serious problem," a passenger named Herve told the broadcaster from the train, which arrived in Lille early Wednesday with an 11-hour delay.

'Nightmare'

New York tourist Allison O'Shea arrived in Paris a day later than expected.
"It was kind of a nightmare," she told AFP, saying she and her travel companion had to rebook a hotel in London on Tuesday, after missing out on their first night dining out in the French capital.
"We spent an additional $2,500 to come to Paris today," she added.
In London, British DJ Nathan Denyer said he had hardly slept he was so worried about making it to the French city of Dijon in time to play a set at a New Year's Eve party.
"It is quite stressful today -- even if the service is apparently running," he said inside London's St Pancras International station.
Eurostar had on Tuesday warned passengers to postpone their journeys to a different date and warned them of severe delays as well as last-minute cancellations.  
As well as the power problem, there was also a failed LeShuttle train in the Channel tunnel, the 31-mile (50-kilometre) undersea rail link between Folkestone in England and the Calais area in France. 
LeShuttle operates vehicle-carrying trains between Folkestone in southeast England and Calais in northern France.

High demand

A record-high 19.5 million passengers travelled on Eurostar last year, up nearly five percent on 2023, driven by demand from visitors to the Olympics and Paralympics in Paris.
Eurostar has held a monopoly on passenger services through the tunnel linking Britain and France since it opened in 1994.
But British entrepreneur Richard Branson -- the man behind the Virgin airline -- has vowed to launch a rival service.
Italy's Trenitalia also eyes competing with Eurostar on the Paris-London route by 2029.
Tuesday's disruption came as Eurostar faces criticism over its high prices, especially on the Paris-London route.
An electrical fault forced the cancellation of Eurostar services and severe delays on others in August, while cable theft on train tracks in northern France caused problems in June.
bur-ah/cw

Xi

Xi says China to hit 2025 growth target of 'around 5 percent'

  • The world's second-largest economy has come under increasing pressure in recent years, with consumer sentiment having so far failed to recover from a Covid-19 pandemic-induced plunge.
  • China's economy is expected to have grown "around five percent" in 2025, President Xi Jinping said on Wednesday, despite "pressure" during a year he described as "very unusual", state media reported.
  • The world's second-largest economy has come under increasing pressure in recent years, with consumer sentiment having so far failed to recover from a Covid-19 pandemic-induced plunge.
China's economy is expected to have grown "around five percent" in 2025, President Xi Jinping said on Wednesday, despite "pressure" during a year he described as "very unusual", state media reported.
The announcement came in Xi's New Year's Eve speech to a top political consultative body that was reported by state news agency Xinhua.
Such an annual expansion would be in line with the official government target and on par with the five percent growth recorded in 2024.
The world's second-largest economy has come under increasing pressure in recent years, with consumer sentiment having so far failed to recover from a Covid-19 pandemic-induced plunge.
A persistent debt crisis in the property sector, industrial overcapacity and heightened trade conflict with Washington have also darkened the outlook.
"We faced challenges head-on and strived diligently, successfully achieving the main goals of economic and social development," Xi said in his remarks to the Chinese People's Political Consultative Conference, according to Xinhua.
"The growth rate is expected to reach around five percent," he said.
Experts widely expect Beijing to announce a similar economic growth target for 2026 at a major annual political gathering in early March.
Xi said in a later speech broadcast to the nation that China had "overcome many difficulties and challenges" in recent years but that its economic, technological and defence capabilities had improved.
"Many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips," Xi said, according to Xinhua.
China should "focus on our goals and tasks, boost confidence, and build momentum to press ahead" in the coming year, he said.
Data released on Wednesday offered a positive sign for policymakers, with factory activity in December inching into expansionary territory to snap an eight-month streak of contraction.
pfc/pbt

defense

Berlin says decision postponed on European fighter jet

  • However, the government spokesman said Merz and French President Emmanuel Macron had been unable to discuss the project in recent weeks due to "the comprehensive Franco-German agenda on foreign and security policy issues". 
  • Efforts to break a deadlock in 2025 over plans for a new European fighter jet have been unsuccessful, a German government spokesman told AFP on Wednesday.
  • However, the government spokesman said Merz and French President Emmanuel Macron had been unable to discuss the project in recent weeks due to "the comprehensive Franco-German agenda on foreign and security policy issues". 
Efforts to break a deadlock in 2025 over plans for a new European fighter jet have been unsuccessful, a German government spokesman told AFP on Wednesday.
The Future Combat Aircraft System (FCAS) programme was launched in 2017 to replace France's Rafale jet and the Eurofighter planes used by Germany and Spain.
But the scheme, jointly developed by the three countries, has stalled in recent months over disagreements between France's Dassault Aviation and Airbus, which represents German and Spanish interests in the project.
German Chancellor Friedrich Merz had previously pledged a decision on FCAS by the end of the year.
However, the government spokesman said Merz and French President Emmanuel Macron had been unable to discuss the project in recent weeks due to "the comprehensive Franco-German agenda on foreign and security policy issues". 
No new date for a decision was given.
The future of the FCAS project has looked increasingly uncertain over the tensions between Dassault Aviation and Airbus.
In September, both Dassault and a French government official said the country was in a position to develop the project alone should negotiations with Germany and Spain fail.
In mid-December, a prominent German lawmaker also called for a split with France in the project.
"France and Germany don't necessarily need the same aircraft," said Volker Mayer-Lay, an MP from Merz's conservatives.
Mayer-Lay argued that France should build its own fighter jet, while Germany and Spain seek new partners for a separate aircraft.
bur-fec/fz/rl

Digital World

TSMC says started mass production of 'most advanced' 2nm chips

  • "TSMC's 2nm (N2) technology has started volume production in 4Q25 as planned," TSMC said in an undated statement on its website.
  • Taiwanese tech titan TSMC has started mass producing its cutting-edge 2-nanometre semiconductor chips, the company said in a statement seen by AFP on Wednesday.
  • "TSMC's 2nm (N2) technology has started volume production in 4Q25 as planned," TSMC said in an undated statement on its website.
Taiwanese tech titan TSMC has started mass producing its cutting-edge 2-nanometre semiconductor chips, the company said in a statement seen by AFP on Wednesday.
TSMC is the world's largest contract maker of chips, used in everything from smartphones to missiles, and counts Nvidia and Apple among its clients.
"TSMC's 2nm (N2) technology has started volume production in 4Q25 as planned," TSMC said in an undated statement on its website.
The chips will be the "most advanced technology in the semiconductor industry in terms of both density and energy efficiency", the company said. 
"N2 technology, with leading nanosheet transistor structure, will deliver full-node performance and power benefits to address the increasing need for energy-efficient computing."
The chips will be produced at TSMC's "Fab 20" facility in Hsinchu, in northern Taiwan, and "Fab 22" in the southern port city of Kaohsiung. 
More than half of the world's semiconductors, and nearly all of the most advanced ones used to power artificial intelligence technology, are made in Taiwan.
TSMC has been a massive beneficiary of the frenzy in AI investment. Nvidia and Apple are among firms pouring many billions of dollars into chips, servers and data centres.
AI-related spending is soaring worldwide, and is expected to reach approximately $1.5 trillion by 2025, according to US research firm Gartner, and over $2 trillion in 2026 -- nearly two percent of global GDP.
Taiwan's dominance of the chip industry has long been seen as a "silicon shield" protecting it from an invasion or blockade by China -- which claims the island is part of its sovereign territory -- and an incentive for the United States to defend it.
But the threat of a Chinese attack has fuelled concerns about potential disruptions to global supply chains and has increased pressure for more chip production beyond Taiwan's shores.
Chinese fighter jets and warships encircled Taiwan during live-fire drills this week aimed at simulating a blockade of the democratic island's key ports and assaults on maritime targets.
Taipei, which slammed the two-day war games as "highly provocative and reckless", said the manoeuvre failed to impose a blockade on the island.
TSMC has invested in chip fabrication facilities in the United States, Japan and Germany to meet soaring demand for semiconductors, which have become the lifeblood of the global economy.
But in an interview with AFP this month, Taiwanese Deputy Foreign Minister Francois Chih-chung Wu said the island planned to keep making the "most advanced" chips on home soil and remain "indispensable" to the global semiconductor industry.
joy-amj/abs

health

Trump v 'Obamacare': US health costs set to soar for millions in 2026

BY CHARLOTTE CAUSIT

  • We're anticipating to go to about $1,300 a month," Lehman, who is president of the Iowa Farmers Union, told AFP. "It's more than double."
  • Iowa farmer Aaron Lehman was already paying a hefty price for health insurance, but his premium is set to skyrocket in January when major government subsidies expire, after US President Donald Trump's Republican party declined to extend them.
  • We're anticipating to go to about $1,300 a month," Lehman, who is president of the Iowa Farmers Union, told AFP. "It's more than double."
Iowa farmer Aaron Lehman was already paying a hefty price for health insurance, but his premium is set to skyrocket in January when major government subsidies expire, after US President Donald Trump's Republican party declined to extend them.
That imminent change to the "Obamacare" health insurance program means that Lehman, 58, a fifth-generation grain farmer in the US Midwest, may have to postpone improvements in his farm.
"My wife and I have been paying about $500. We're anticipating to go to about $1,300 a month," Lehman, who is president of the Iowa Farmers Union, told AFP. "It's more than double."
More than 20 million Americans from lower and middle-income brackets are facing a significant increase in the cost of their health insurance in 2026. 
The hike comes as persistent inflation weighs on households and adds to political pressure on Trump, who had promised to bring down the cost of living when he took office nearly a year ago.
"It's pretty stressful for a lot of people," said Audrey Horn, a 60-year-old retiree from another Midwestern state, Nebraska, that Trump comfortably won in the 2024 presidential elections. She told AFP that her monthly increase will be $300. 
"Most Americans can't afford a bill of (an) extra 300 or whatever a month on top of, you know, their mortgage... car insurance and groceries," she said.

Dipping into savings

For their first payment in January, Horn and her husband will be tapping into some of her retirement savings. Her husband works for a small construction company where he is paid by the hour and doesn't get health insurance. 
"Next year, we probably won't be going out to eat as much. We don't go out to eat as much anyway," Horn said, adding, "And I'm going to keep driving my old 2008 Honda for a few more years." 
Created in 2010 under then President Barack Obama, so-called Obamacare allowed millions more people to access health coverage. The program included financial aid, which was expanded and strengthened during the Covid-19 pandemic. It is this temporary boost that is now coming to an end.
This issue was at the heart of the budget standoff between Republicans and opposition Democrats in October and November that led to a 43-day shutdown of the federal government.
The Democrats demanded the extension of the enhanced subsidies, which the Republicans opposed, arguing it was too expensive for taxpayers, subject to abuse, and failed to control the rising cost of health insurance. 
"It is frustrating to me that that these subsidies were cut in order to make tax breaks for billionaires," said Andrea Deutsch, 58, owner of a pet supply store in Pennsylvania, referring to the Trump-backed legislation that Congress eventually passed.

'Largest rollback in health coverage'

Deutsch, who has suffered from type one diabetes since childhood, said that Obamacare was life-changing as it mandated that insurance companies provide coverage to people with pre-existing medical conditions. So, she's resigned herself to paying $160 more per month for her insurance in 2026.
But others are expected to forgo insurance rather than pay much bigger premiums.
According to a government estimate, the expiration of the subsidies is expected to cause four million Americans to lose their health insurance over the next 10 years. 
But Matt McGough, at the health policy think tank KFF, said there are estimates that an additional 10 million could become uninsured because of changes under the budget bill to health insurance marketplaces and the state-funded Medicaid program that serves low-income Americans.
"This is the largest rollback in health coverage in US history, certainly in modern times," he told AFP.
He warned that could lead to increased mortality and higher health care costs for all Americans, with insured individuals paying for the unpaid bills of the uninsured.
But things could still change. 
While Republicans are still refusing to extend the subsidies, they want to limit the surge in costs which will come less than a year before midterm Congressional elections.
Democrats have made the issue key to their election platform to claw back control of both houses of Congress from Republicans.
Faced with this risk, Trump has floated the idea of summoning health insurance executives to his Mar-a-Lago residence in Florida, where he is spending the holidays, "to see if they can lower prices."
cha/aem/msp/dw 

Japan

SoftBank lifts OpenAI stake to 11% with $41bln investment

  • SoftBank had announced in April its planned investment of up to $40 billion in Open AI, and on Wednesday it said that the second tranche of $22.5 billion was completed.
  • Japanese tech investor SoftBank said Wednesday that its stake in OpenAI is now around 11 percent after completing the second stage of a $41-billion investment in the maker of ChatGPT. Having made colossal profits as well as losses on previous investments, flamboyant founder Masayoshi Son has pivoted SoftBank towards artificial intelligence (AI).
  • SoftBank had announced in April its planned investment of up to $40 billion in Open AI, and on Wednesday it said that the second tranche of $22.5 billion was completed.
Japanese tech investor SoftBank said Wednesday that its stake in OpenAI is now around 11 percent after completing the second stage of a $41-billion investment in the maker of ChatGPT.
Having made colossal profits as well as losses on previous investments, flamboyant founder Masayoshi Son has pivoted SoftBank towards artificial intelligence (AI).
SoftBank had announced in April its planned investment of up to $40 billion in Open AI, and on Wednesday it said that the second tranche of $22.5 billion was completed.
The final investment reached $41 billion and includes $30 billion from SoftBank's Vision Fund plus $11 billion from other third-party co-investors, it said.
"We are deeply aligned with OpenAI's vision of ensuring AGI benefits all of humanity," Son, 68, said in a statement.
AGI refers to artificial general intelligence, the mooted next stage of AI when computers could outperform humans in different tasks.
"SoftBank saw the potential of AI early and committed with a deep belief in its impact on humanity," said OpenAI chief Sam Altman.
"Their global leadership and scale help us move faster and bring advanced intelligence to the world," Altman said in the joint statement.
SoftBank and OpenAI, with Oracle, are also leading the $500-billion Stargate project to build AI infrastructure in the United States announced by President Donald Trump in January 2025.
SoftBank also announced this week that it is buying US data centre investor DigitalBridge in a deal worth around $4 billion.
stu/lga/fox

Global Edition

Stocks mixed, silver rebounds as 2025 trading winds down

  • The price of silver jumped 5.5 percent to $76.09 an ounce Tuesday, having reached a record-high $84 on Monday before tumbling as investors booked profits.
  • Stock markets were mixed on Tuesday while silver prices rebounded amid volatile trading in precious metals.
  • The price of silver jumped 5.5 percent to $76.09 an ounce Tuesday, having reached a record-high $84 on Monday before tumbling as investors booked profits.
Stock markets were mixed on Tuesday while silver prices rebounded amid volatile trading in precious metals.
Wall Street's main indices closed slightly lower as worries over valuations of artificial intelligence stocks lingered in the final days of the year.
"There hasn't been much that has moved markets" in the past few days, said Art Hogan of B. Riley Wealth Management. "Today is no different."
Adam Sarhan of 50 Park Investments told AFP that it is "perfectly normal for the market to pause, consolidate, go down a little bit."
"Right now, the market is consolidating a very strong rally from April's low until October," he added.
The major US indices remain on track for solid gains over the full year.
The Federal Reserve's monetary easing in the second half of this year has been a key driver of the rally, compounding a surge in the tech sector on the back of the vast amounts of cash pumped into all things AI.
It also helped offset recent worries about a possible tech bubble and warnings that traders might not see a return on their investments in AI for some time.
Minutes of the Fed's recent policy meeting in December indicated that most Fed officials see further rate cuts as appropriate, if inflation cools over time as expected.
But when it came to the extent and timing of reductions, some officials suggested that it was likely appropriate to keep levels unchanged for some time after December's cut.
"Perhaps one of the biggest threats to stock indices for 2026 is an end to interest rate cuts, or even rate hikes in the major economies," Kathleen Brooks, research director at trading group XTB, noted Tuesday.
Investors, including central banks, have been piling into dollar-denominated silver and gold on expectations of more cuts to US interest rates next year.
Gold, in particular, has rocketed to record highs this year thanks to its status as a safe-haven investment amid geopolitical unrest.
The price of silver jumped 5.5 percent to $76.09 an ounce Tuesday, having reached a record-high $84 on Monday before tumbling as investors booked profits.
Silver, a key industrial metal as well as being used for jewellery, has won additional support from tight supply concerns.
Europe's main stock markets ended the day with gains.
Frankfurt, which is closed on Wednesday, ended the year with a gain of 23 percent.
The CAC 40 index in Paris was heading for an annual gain of more than 10 percent and London's FTSE 100 of over 21 percent.
Asian markets have enjoyed a healthy year, with Seoul's Kospi piling on more than 75 percent and Tokyo's Nikkei 225 more than 26 percent -- both having hit records earlier in the year.
But the two edged down Tuesday, with Sydney, Mumbai and Taipei also lower. Hong Kong, Singapore, Wellington, Bangkok and Jakarta rose. Shanghai was flat.
In company news, shares in Facebook owner Meta rose 1.1 percent after it announced it had agreed to buy Manus, an artificial intelligence agent created by a company founded in China but now based in Singapore.
- Key figures at around 2115 GMT - 
New York - Dow: DOWN 0.2 percent at 48,367.06 points (close)
New York - S&P 500: DOWN 0.1 percent at 6,896.24 (close)
New York - Nasdaq Composite: DOWN 0.2 percent at 23,419.08 (close)
London - FTSE 100: UP 0.8 percent at 9,940.71 (close)
Paris - CAC 40: UP 0.7 percent at 8,168.15 (close)
Frankfurt - DAX: UP 0.6 percent at 24,490.41 (close)
Tokyo - Nikkei 225: DOWN 0.4 percent at 50,339.48 (close) 
Hong Kong - Hang Seng Index: UP 0.9 percent at 25,854.60 (close) 
Shanghai - Composite: FLAT at 3,965.12 (close)
Euro/dollar: DOWN at $1.1748 from $1.1766 on Monday
Pound/dollar: DOWN at $1.3468 from $1.3504
Dollar/yen: UP at 156.43 yen from 156.06 yen 
Euro/pound: UP at 87.23 pence from 87.00 pence 
Brent North Sea Crude: FLAT at $61.92 per barrel
West Texas Intermediate: DOWN 0.2 percent at $57.95 per barrel
burs-rl/tmc-bys/jgc

aerospace

Chinese leasing firm CALC orders 30 Airbus A320neo planes

  • The firm order, the fifth that CALC has placed with Airbus, brings the total number of aircraft it has ordered from the European aircraft manufacturer to 282, including 203 A320neo family aircraft.
  • China Aircraft Leasing Group Holdings (CALC) and Airbus said Tuesday that the Hong Kong-listed firm had placed an order for 30 A320neo family aircraft.
  • The firm order, the fifth that CALC has placed with Airbus, brings the total number of aircraft it has ordered from the European aircraft manufacturer to 282, including 203 A320neo family aircraft.
China Aircraft Leasing Group Holdings (CALC) and Airbus said Tuesday that the Hong Kong-listed firm had placed an order for 30 A320neo family aircraft.
The firm order, the fifth that CALC has placed with Airbus, brings the total number of aircraft it has ordered from the European aircraft manufacturer to 282, including 203 A320neo family aircraft.
CALC chief executive Mike Poon said in the statement that the order will allow it to "continue providing our airline customers worldwide with high-value, modern aircraft solutions".
The value of the contract was not disclosed. Airbus has not published list prices for aircraft since 2018. CALC said the aircraft would be delivered through 2033.
As of June the company owned and managed 181 aircraft and counted 41 airlines in 22 countries as clients.
The A320neo family is the latest generation of the single-aisle, medium-haul aircraft, offering greater fuel economy and the ability to burn up to 50 percent sustainable aviation fuel.
Together with Boeing's 737 family of aircraft, the A320s are the workhorses of the commercial airline industry.
chd/rl/cc

robbery

Germany bank heist nets about 30mn euros in cash, valuables: police

  • According to police, the robbers drilled their way into the underground vault room of the Sparkasse savings bank from a parking garage. 
  • Robbers used a large drill to break into a German savings bank's vault room and steal cash, gold and jewelry worth some 30 million euros ($35 million), police said Tuesday.
  • According to police, the robbers drilled their way into the underground vault room of the Sparkasse savings bank from a parking garage. 
Robbers used a large drill to break into a German savings bank's vault room and steal cash, gold and jewelry worth some 30 million euros ($35 million), police said Tuesday.
The heist in the western city of Gelsenkirchen saw the thieves break into more than 3,000 safe deposit boxes, they said.
While the criminals remained at large, hundreds of distressed bank customers massed outside the branch on Tuesday demanding information, but were kept at bay by police.
According to police, the robbers drilled their way into the underground vault room of the Sparkasse savings bank from a parking garage. 
Investigators suspect the gang spent much of the weekend inside, breaking open the deposit boxes.
The break-in came to light after a fire alarm was triggered in the early hours of Monday and emergency services discovered the hole. 
Witnesses reported seeing several men carrying large bags in the stairwell of the parking garage during the night from Saturday to Sunday. 
Footage from security cameras has also shown a black Audi RS 6 leaving the parking garage early Monday morning, with masked persons inside. 
The car's license plate had been stolen earlier in the city of Hanover, police said. 
A police spokesman told AFP that the break-in was "indeed very professionally executed", likening it to the heist movie "Ocean's Eleven". 
"A great deal of prior knowledge and/or a great deal of criminal energy must have been involved to plan and carry this out," he said. 
Police said the more than 3,000 boxes had an average insurance value of 10,000 euros, and therefore estimated the damage at some 30 million euros.
Several victims had told police officers that their losses far exceeded the insured value of their safe deposit boxes.
The police spokesman said that "disgruntled customers" were outside the bank branch which didn't open for security reasons, after threats had been made against the employees.
"We're still on site, keeping an eye on things," he said, adding that "the situation has calmed down considerably".
bur/fz/fec/gv

health

French ban on 'forever chemicals' in cosmetics, clothing to enter force

  • The French law, approved by lawmakers in February, bans the production, import or sale from January 2026 of any product for which an alternative to PFAS already exists.
  • A French ban on the production and sale of cosmetics and most clothing containing polluting and health-threatening "forever chemicals" goes into force on Thursday.
  • The French law, approved by lawmakers in February, bans the production, import or sale from January 2026 of any product for which an alternative to PFAS already exists.
A French ban on the production and sale of cosmetics and most clothing containing polluting and health-threatening "forever chemicals" goes into force on Thursday.
Per- and polyfluoroalkyl substances (PFAS) are human-made chemicals used since the late 1940s to mass produce the non-stick, waterproof and stain-resistant treatments that coat everything from frying pans to umbrellas, carpets and dental floss.
Because PFAS take an extremely long time to break down -- earning them their "forever" nickname -- they have seeped into the soil and groundwater, and from there into the food chain and drinking water.
These chemicals have been detected virtually everywhere on Earth, from the top of Mount Everest to inside human blood and brains.
Chronic exposure to even low levels of the chemicals has been linked to liver damage, high cholesterol, reduced immune responses, low birthweights and several kinds of cancer.
The French law, approved by lawmakers in February, bans the production, import or sale from January 2026 of any product for which an alternative to PFAS already exists.
These include cosmetics and ski wax, as well as clothing containing the chemicals, except certain "essential" industrial textiles.
A ban on non-stick saucepans was removed from the draft law after intense lobbying from the owners of French manufacturer Tefal.
It will also make French authorities regularly test drinking water for all kinds of PFAS.
There are thousands of different PFAS and certain ones have been banned since 2019 under the Stockholm Convention on Persistent Organic Pollutants, but China and the United States are not among the more than 150 signatories.
This includes perfluorooctanoic acid (PFOA), used since the 1950s by US company DuPont to manufacture its non-stick Teflon coating for textiles and other everyday consumer products.
The Stockholm Convention also bans perfluorooctane sulfonic acid (PFOS), known for its use as a waterproofing agent by the US group 3M, which has been heavily restricted since 2009.
A handful of US states, including California, implemented a ban on the intentional use of PFAS in cosmetics beginning in 2025, and several other states are slated to follow in 2026.
Denmark will ban the use of PFAS in clothing, footwear and certain consumer products with waterproofing agents beginning on July 1, 2026.
Denmark has banned the use of PFAS in food packaging since 2020. 
The European Union has been studying a possible ban on the use of PFAS in consumer products, but has not yet presented or implemented such a regulation.
ac/rl/gv

EU

Eurostar urges passengers to postpone journeys due to 'major disruption'

  • "We strongly advise all our passengers to postpone their journey to a different date," Eurostar said in a message on its website.
  • Eurostar advised passengers to postpone their journeys on Tuesday to a later date, citing "major disruption" including severe delays and cancellations.
  • "We strongly advise all our passengers to postpone their journey to a different date," Eurostar said in a message on its website.
Eurostar advised passengers to postpone their journeys on Tuesday to a later date, citing "major disruption" including severe delays and cancellations.
The operator blamed the travel chaos on "a problem with the overhead power supply in the Channel Tunnel and a subsequent failed Le Shuttle train".
"We strongly advise all our passengers to postpone their journey to a different date," Eurostar said in a message on its website.
"Please don't come to the station unless you already have a ticket to travel.
"We regret that trains that can run are subject to severe delays and last-minute cancellations," it added.
Eurostar, which operates services between Britain and mainland Europe, urged customers to "check for live updates on the status of your train".
The disruption came in the very busy travel period between Christmas and New Year.
Eurostar runs trains from London's St Pancras station to locations including as Paris, Brussels and Amsterdam.
LeShuttle also operates vehicle-carrying trains between Folkestone in southeast England and Calais in northern France.
A record-high 19.5 million passengers travelled on Eurostar last year, up nearly five percent on 2023, driven by demand from visitors to the Olympics and Paralympics in Paris.
Eurostar has held a monopoly on passenger services through the tunnel linking Britain and France since it opened in 1994.
But British entrepreneur Richard Branson -- the man behind the Virgin airline -- has vowed to launch a rival service. Italy's Trenitalia has also said it intends to compete with Eurostar on the Paris-London route by 2029.
pdh/rmb

plastic

France pushes back plastic cup ban by four years

  • It added that the ban would now start January 1, 2030, when companies would have 12 months to get rid of their stock.
  • The French government on Tuesday postponed a ban on plastic throwaway cups by four years to 2030 because of difficulties finding alternatives.
  • It added that the ban would now start January 1, 2030, when companies would have 12 months to get rid of their stock.
The French government on Tuesday postponed a ban on plastic throwaway cups by four years to 2030 because of difficulties finding alternatives.
The ban was meant to start on January 1. But the ministry for ecological transition said that results from a recent review into the "technical feasibility of eliminating plastic from cups" justified pushing back the deadline.
It said in an official decree that a new review would be carried out in 2028 of "progress made in replacing single-use plastic cups". It added that the ban would now start January 1, 2030, when companies would have 12 months to get rid of their stock.
France has gradually rolled out bans on single-use plastic products over the past decade as environmental campaigners step up warnings about their impact on rivers and oceans.
A 2020 law set a deadline of 2040 to eliminate all single-use plastics. A ban on plastic bags for loads of less than 1.5 kilogrammes (3.3 pounds) of 30 fruit and vegetables was introduced in 2022 and has dramatically changed supermarket habits.
The postponement marks "yet another step backwards in the fight against plastic pollution, under pressure from lobby groups," said Manon Richert, a spokeswoman for the environmental group Zero Waste France
She said "the argument put forward about technical feasibility is shaky" because solutions exist but haven't been widely adopted due a lack of investment and an inadequate regulatory framework.
Environmental campaigners say the phase out of single-use plastics has been too slow.
At the start of 2024 the groups Zero Waste France, Surfrider Foundation Europe, Les Amis de la Terre, France Nature Environnement and No Plastic in my Sea issued a failing grade in their report card for implementation of the 2020 law.
They pointed to measures which had not been implemented and government decrees which limited the impact of the law.
Meanwhile, the government's DGCCRF consumer protection agency said in a report released last year that almost a fifth of about 100 companies it checked in 2023 were breaching regulations on the production or use of single-use plastic items.
Its investigators said some marketed plastic-free products that in reality contained plastic, and some changed the name of the item in a bid to get around the ban.
hrc/rl/gv

rating

Moody's lowers city of Budapest's rating to junk

  • Moody's said it placed Budapest's rating on review for a further downgrade "to reflect the increased risk of default".
  • Ratings agency Moody's downgraded the city of Budapest's credit rating to junk level late Monday, pointing to weak liquidity and an increased default risk amid a row between Prime Minister Viktor Orban's nationalist government and the capital's opposition mayor. 
  • Moody's said it placed Budapest's rating on review for a further downgrade "to reflect the increased risk of default".
Ratings agency Moody's downgraded the city of Budapest's credit rating to junk level late Monday, pointing to weak liquidity and an increased default risk amid a row between Prime Minister Viktor Orban's nationalist government and the capital's opposition mayor. 
Moody's cut the city's credit rating from Baa3 to Ba1, a category with high risk often described as speculative or junk grade.
The move comes as Hungary is expected to hold parliamentary elections in spring, where Orban's 16-year-rule will be put to a test as the opposition TISZA party has been leading in independent polls.
The downgrade follows repeated warnings by Budapest's environmentalist mayor Gergely Karacsony -- an outspoken critic or Orban -- who said the city of 1.6 million faces the threat of insolvency.
"The action follows the disclosure of Budapest's liquidity position highlighting concerns about the city's capacity to repay all of its obligations as required by 31 December 2025," Moody's said in a statement on Monday night.
"Uncertainty around the timing and receipt of ordinary transfers, together with very weak liquidity to absorb unexpected cash flow gaps, materially increases the city's near-term credit risk," it said.
Moody's said it placed Budapest's rating on review for a further downgrade "to reflect the increased risk of default".
The rating agency added it would consider further downgrading the rating "if strained relations with the central government were to continue, forcing us to reassess our assessment of Budapest's operating environment, governance or likelihood of extraordinary support." 
Karacsony blames the government for the city's financial problems, saying it has significantly increased levies and withheld promised funds. 
He has repeatedly accused Orban of bleeding the capital and other large municipalities dry to prevent them from providing an alternative model of governance.
Orban's ruling party however alleges the mayor's "irresponsible spending" caused the city's financial troubles.
In a post on Facebook on Monday, Karacsony said the government's "senseless and petty tribute policy" has been pushing the "nation's capital into bankruptcy". 
He also blamed the downgrade on the government not reaching a "reasonable financial agreement" with the capital.
Earlier this month Hungary's parliament passed a bill, which could force Budapest to borrow money under unclear conditions and would make the mayor criminally liable for potential breaches.
There was no immediate reaction from the government to Moody's decision.
The Hungarian capital is required to pay so-called solidarity contributions to the central government.
These have increased almost nine-fold since Karacsony was elected mayor in 2019, and amounted to about one fifth of the capital's revenues this year.
The municipality has filed multiple lawsuits in recent years that argue the tax is unconstitutional.
The government has justified the contributions by saying it needs to redistribute funds from wealthier cities to financially weaker municipalities.
ros/kym/rl