In Europe

RBS sale of its SME's business

UK banks graded for their resilience

The UK’s seven biggest banks which participated in the Bank of England (B0E)’s stress tests not only passed them, but were graded for their resilience to a range of adverse shocks, including a strong slowdown in growth in China and sharp falls in oil and raw material prices. Santander’s performance in the tests stood out, demonstrating that it is one of the lenders which is in best shape.


Rajoy20D TC

Spain’s Elections: Like Portugal’s, But Worse

Many people feared that the outcome of the December 20 elections in Spain would be difficult to manage. But the final situation is much worse than expected. As soon as the recount began after the voting, the conservatives of Prime Minister Mariano Rajoy’s Popular Party (PP) lost their hopes of forming a majority government with Citizens (Ciudadanos). Spain is now, undeniably, facing a period of difficult coalition-building after yesterday’s elections. And this is a very worrisome situation for the country as uncertainty is likely to increase, affecting the mood of investors and companies.


europe map

Germany vs the Euro 18

James Alexander via Historinhas | Almost alone among economic commentators we do actually look at Nominal GDP data as it is released. Full Euro Area NGDP data for third quarter 2015 was released this week alongside the 2nd estimate of Real GDP. We have already posted here and here on the good news as three of the “big 4” Euro Area countries, making up 75% of the Euro Area economy, had seen accelerating NGDP. The not so good news is that the little countries saw less acceleration.


ireland

Bailed-out countries: Ireland’s strange miracle and Portugal’s debt-depopulation spiral

The blog RWER recently published a very interesting article about Ireland. It tells the tale of an economic miracle, which no-one has been able to figure out yet. And it raises doubts that can well apply in Spain’s case. And Krugman has written an inspiring post about the possible perverse relationship between debt and the decline in Portugal’s population, which could call into question the theory of Optimal Monetary Areas.


cameron

Cameron decides to play with fire and risks being burnt

Although there is still no date set for the referendum on whether the UK withdraws or not from the European Union, it’s looking very much like this could take place in October 2016. Prime Minister David Cameron has said his intention is not to abandon the EU, but rather reshape its ties with Britain. But key analysts think his strategy could be risky and, in the end, go against him and jeopardise his political future.


euro greece

Regling and Wieser: The key points

The Agora via Macropolis |  Two of the key participants in Greece’s financing programme, the European Stability Mechanism’s Klaus Regling and the head of the Eurogroup Working Group Thomas Wieser, gave interviews to two Greek Sunday newspapers in which they covered a wide range of issues relating to the latest developments in Greece.


central banks

Europe’s Chance to Get Deposit Insurance Right

Guntram B. Wolff via Caixin | The European Commission recently presented its proposals for European bank deposit insurance. Officials hope to stabilize the banking system and decouple bank financing costs from any solvency issues affecting their host states. This would achieve the original aim of a proposed banking union by breaking the link between states and their banking systems.


France.target

A French Assessment Of NGDP Targeting Misses The Point

James Alexander via Historinhas| The Committee on Economic and Monetary Affairs of the European Parliament recently held a session on NGDP Targeting. The French paper starts with a review of the literature on Inflation Targeting and says things went well until the crisis. A caveat they mention is that since both IT regimes and non-IT regimes did well in bringing down inflation it is really too hard to tell if IT was all that superior.


refugees

Greece A Gateway And Scapegoat In EU’s Refugee Crisis

Nick Malkoutzis via Macropolis | Greece activated last Thursday the European Union Civil Protection Mechanism, agreed to allow Frontex to operate on its border with the Former Yugoslav Republic of Macedonia (FYROM) and triggered the Rapid Border Intervention Teams (RABIT) mechanism for help with Aegean patrols. But what should have been a moment of exemplary cooperation for the EU felt very tawdry.


Eurozone

Who Has To Do What In Europe

Together with growth forecasts for the EU, ranging from 1.9% to 2% in 2016 and rising to 2.1% in 2017, the European Comission recently mentioned in its annual growth survey the possibility of making the Stability Pact more flexible. They also highlighted the main macro imbalances of each member state.