The German government is reportedly preparing to sell energy giant Uniper in a deal that could fetch up to €18 billion, according to a Reuters report citing unnamed sources.

Uniper, which holds significant UK assets, has drawn interest from potential buyers, including Canadian investment management firm Brookfield. The company is chaired by Mark Carney, former governor of the Bank of England (2013–2020).

Move Toward Privatization

The reported sale marks a move to privatize Uniper, which was nationalized in 2022 to safeguard Germany’s energy security during the European energy crisis. The crisis was triggered by Russia’s invasion of Ukraine and the subsequent reduction and eventual halt of natural gas supplies to Uniper by Russia’s Gazprom.

Uniper, a key player in Germany’s energy sector, became a focal point of government intervention as it faced mounting losses due to soaring energy prices and supply disruptions. Its assets, including infrastructure and operations in the UK, are seen as highly valuable to prospective buyers.

Brookfield Emerges as Potential Bidder

Brookfield, a global investment group with expertise in infrastructure and energy assets, has been identified as a potential bidder. The firm’s interest underscores the appeal of Uniper’s portfolio, which includes power plants, gas storage facilities, and renewable energy projects.

Mark Carney’s leadership at Brookfield adds further weight to the speculation. The former central banker has been a vocal advocate for sustainable energy investments, aligning with the broader transition in the energy industry.

Strategic Implications

If the sale proceeds, it could mark a significant milestone in Germany’s efforts to stabilize its energy sector while transitioning ownership of critical infrastructure back to private hands. The German government’s intervention in Uniper was seen as a necessary step during a time of unprecedented energy market volatility.

Analysts suggest that privatizing Uniper now could attract investment needed to support long-term energy transition goals, particularly as Europe pushes for renewable energy expansion and reduced reliance on fossil fuels.

Broader Context

The potential sale comes as European governments and energy companies navigate the fallout of geopolitical tensions and shifting energy dynamics. Uniper’s nationalization reflected the broader challenges faced by energy firms heavily reliant on Russian gas supplies.

Germany’s Ministry for Economic Affairs and Energy has not yet commented on the reported sale. Similarly, Brookfield has not confirmed its interest in acquiring Uniper.

The outcome of the potential deal could have wide-reaching implications for the energy market, particularly in terms of investment flows and the role of private capital in bolstering energy resilience. For now, the energy industry awaits further developments as the process unfolds.

Goldman Sachs has downgraded German automotive giants Mercedes-Benz AG and Porsche AG, citing mounting challenges including rising costs, tariff risks, and weakening electric vehicle (EV) profitability. The move underscores growing concerns over the European car industry as it grapples with intensifying market pressures.

In a note released Tuesday, Goldman Sachs analyst George Galliers highlighted a bleak outlook for 2025, driven by higher labor costs, stricter environmental regulations, and dwindling earnings from Chinese joint ventures. The sector, already reeling from a 12% decline in 2024, faces an anticipated 9% earnings drop in 2025 and a further 6% in 2026.

Challenges Facing European Automakers

Battery Electric Vehicles (BEVs), a cornerstone of Europe’s strategy to reduce carbon emissions, remain a significant challenge for profitability. Goldman Sachs projects BEV penetration in Europe and the European Free Trade Association to grow from 14.3% in 2024 to 19% in 2025, driven by regulatory pressures. However, Galliers questioned whether the anticipated sales growth could offset high production costs, which continue to weigh on profit margins.

Another pressing issue is the sharp decline in earnings from Chinese joint ventures. According to Goldman, these earnings fell 36% year-on-year in 2024, reflecting broader difficulties faced by Western automakers in the world’s largest car market. Notably, Ford and General Motors have already seen their Chinese operations become unprofitable, raising concerns that European manufacturers could face a similar fate.

Downgrade Details

Goldman Sachs downgraded Porsche SE from a “Buy” to a “Sell” rating, citing limited growth prospects and ongoing financial risks. Galliers noted that softening demand for BEVs in Western markets and challenges in China could dampen Porsche’s outlook for 2025. Additionally, high leverage and Volkswagen’s restructuring efforts are expected to hinder near-term financial improvements.

Mercedes-Benz AG was downgraded from “Buy” to “Neutral.” The report pointed to declining demand for luxury vehicles, mixed reception for AMG models, and challenges posed by an ageing S-Class lineup. By the end of Q3 2024, Mercedes’ car division had seen a 44% decline in adjusted earnings before interest and taxes (EBIT), with a further 14% drop forecasted for 2025 before a modest recovery in 2026.

Despite these setbacks, the report highlighted opportunities for Mercedes in autonomous driving technology and its partnership with Nvidia. Advancements in these areas, coupled with shareholder return strategies, could provide a brighter long-term outlook.

Tariff Risks and Industry Uncertainty

Trade tensions and tariff risks further complicate the industry’s recovery. The European Union recently imposed tariffs on Chinese-made BEVs, while potential trade disputes with the U.S. could disrupt global supply chains.

A Potential Bright Spot

Amid the challenges, Renault emerged as a potential outperformer in the European auto sector. Goldman cited the French automaker’s focus on cost discipline and strong product pipeline as key strengths.

As European automakers navigate this turbulent landscape, Galliers remarked: “Secular concerns have weighed on auto multiples for almost a decade.” The question remains whether industry leaders can adapt to an evolving market and reclaim their competitive edge.

UK government bond yields soared to levels not seen in decades on Thursday, with the 10-year gilt yield reaching 4.90%—its highest since July 2008—and the 30-year yield climbing to 5.40%, a peak last recorded in August 1998. Simultaneously, the British pound slumped to a 14-month low against the US dollar, dipping below $1.23 amid mounting economic concerns.

The sharp rise in yields and currency depreciation has prompted comparisons to the market turmoil during Liz Truss’s brief premiership in 2022. However, analysts remain divided over whether this represents a similar crisis or temporary turbulence driven by inflationary and fiscal challenges.

“Capital flows are moving out of the UK, pushing bond yields higher and the pound lower,” said Alejandro Cuadrado, an analyst at BBVA. He warned that if fiscal concerns persist, the situation could become a “mini Truss moment.”

Drivers Behind the Sell-Off

The gilt market is under pressure from both domestic and global factors. Persistent inflation, increased government spending, and a broader global bond sell-off have contributed to rising yields. Long-term gilts, such as the 30-year, have been particularly affected, reflecting investor worries about inflationary risks and the sustainability of public finances.

The British pound has also faced significant pressure. “The gilt market has proven to be the Achilles’ heel for sterling,” said Chris Turner, an analyst at ING. He added that widening gilt spreads have led investors to reduce their positions in the currency.

Globally, US Treasury yields have surged, with the 30-year yield reaching 4.95%, near its highest levels since 2007. Markets are reacting to inflationary fears stoked by the incoming administration of Donald Trump, whose policy agenda includes sweeping tariffs and tax cuts that could drive deficits higher.

Is This a Repeat of the ‘Truss Moment’?

While the rise in gilt yields has sparked memories of the market panic during Truss’s tenure, analysts note key differences. Unlike the sudden spiral triggered by unfunded tax cuts in 2022, the current rise in yields has been more gradual.

“Demand from foreign buyers remains strong, reducing the risk of a repeat of 2022’s liquidity crunch among pension funds,” said Turner.

Nonetheless, sticky inflation and government spending continue to weigh on investor sentiment. Fitch Ratings recently flagged uncertainty in the UK housing market, adding to the cautious outlook.

Looking Ahead

Analysts see limited room for further increases in gilt yields, although inflation and higher US rates could maintain some upward pressure. The Bank of England faces a difficult balancing act, with markets pricing in rate cuts while inflation remains elevated.

For the pound, further declines are possible, though a fall below $1.20 appears less likely, Turner noted. As economic uncertainty persists, the trajectory of UK markets remains under close scrutiny.