Morningstar - Q1 2023 - 22

Dispatches
EXHIBIT 1
September Salary Increases Trailed Inflation in Many Sectors
15%
11.84
10
5
3.43
-3.63
-5
-10
Education
Transportation
and Storage
Health
and Social Work
Source: Haver Analytics, International Labor Organization, and DBRS Morningstar. Data for September 2022.
Manufacturing
-6.71
-6.11
10.14
6.51
1.69
4.03
10.14
10.14
10.14
Average
Salary
Increase
Inflation
Difference
included in the taxonomy as activities supporting
climate change mitigation. "
The EU wants to encourage investment in the
nuclear industry to accelerate the shift away
from solid or liquid fossil fuels, including coal, and
toward a net-zero-emissions future, and
also to achieve greater energy independence
from Russia.
Nuclear power offers several advantages over
other clean energy technologies: It provides a
clean and constant base load (the minimum
level of demand on an electricity grid over a period
of time), which renewables may struggle to
offer. It can reliably supply energy at any time of
day and regardless of weather, and it requires less
material than other transition technologies,
which also lowers associated carbon emissions.
in different sectors compared with inflation.
The differences imply that workers in education,
manufacturing, and the transportation
and storage sectors were worse off during the
cost-of-living crisis.
Increases in weekly salaries in the health
and social work sector, on the other hand, were
slightly higher than inflation. Yet, nurses
in England, Wales, and Northern Ireland went
on strike in December over their pay dispute
with the government. This is reported as
their biggest strike in the history of the National
Health Service.
These are just a few examples of the ongoing
industrial action and labor disputes in the
U.K. as a result of current economic conditions.
In DBRS Morningstar's view, it is unclear
how long these strikes will persist: Rising
unemployment rates could reduce incentives for
industrial action over time.
If companies do increase wages to match
inflation, it could lead to wage-price spirals: Higher
wages lead to higher prices through increased
demand for goods, which in turn increases
the demand for higher wages. Wage increases
won't necessarily be reflected in prices
and trigger inflation but could instead lead
22
Morningstar Q1 2023
to a decline in corporate profits. This latter
scenario seems less plausible for now,
however, since many firms' profit margins are
already squeezed.
Nichola James is managing director, co-head of sovereign
ratings, at DBRS Morningstar.
Sena Ozyapi is an analyst, sovereign ratings, at
DBRS Morningstar.
However, nuclear energy remains controversial,
in part because of nuclear accidents, use of
uranium in nuclear weapons, and the high costs
of plant construction.
" However, the positive factors seem to outweigh
the negative ones, " says Jess Williams,
sustainable-investments analyst at Columbia
Threadneedle Investments, " which has
encouraged a return of emphasis on nuclear power
in Europe, as governments look for ways to
improve energy security and meet ambitious
emission reduction targets. "
Europe Sees Nuclear
Revival
GREATER EUROPE
European Union
Nuclear energy is enjoying a revival in popularity
after the European Union decided to include
it in the EU's sustainable-finance taxonomy.
In July, the Joint Research Centre-the European
Commission's science and knowledge service-
said its analysis " did not reveal any science-based
evidence that nuclear energy does more harm
to human health or to the environment than
other electricity production technologies already
Says Niall Gallagher, European equity
investment director at GAM Investments, " Europe
would have faced an energy crisis during the
energy transition process even if the conflict
between Russia and Ukraine had not occurred.
We also believe that the transition to net
zero is unlikely to happen without significant
investment in nuclear power. " Gallagher
expects to see investments in solutions like
modular nuclear reactors that can be adapted
and industrialized for power generation.
The largest global nuclear company, Electricité de
France EDF:FR, is building four new nuclear
reactors in France and in the United Kingdom.
" Due to its large footprint in those two
countries, it is well positioned to benefit from

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Morningstar - Q1 2023

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