MADRID | By Francisco López | The Spanish government plans to pass the tax reform on Friday. According to media leaks, Minister for Finance Cristobal Montoro devised a reform tackling PIT, corporate and special taxes, without modifying indirect taxes, just as the IMF, EU, Bank of Spain and finance experts asked.
MADRID | By Bankinter analysts | Bundesbank’s monthly bulletin points that the German economy might slow down in the 2Q14, but that it would be reactivated in the 3Q14 thanks to the construction industry and the improvement of the confidence amongst households. Thus, the central bank raised its forecast for 2014 from 1.7% to 1.9%. In this context, Germany sold €1,511 million in 6-month bills with a negative interest rate: -0.0015%. Last May, the same bills were sold at +0.1089%, so we may conclude that the ECB’s negative deposit rate also helps the German debt.
ATHENS | Via Macropolis | The evolution of turnover indices for the services sector showed 8 out of the 14 services activities posted a contraction in Q1 2014, according to the Hellenic Statistical Authority (ELSTAT). The highest drop was recorded in architectural and engineering activities (down 27.2 percent), cleaning activities (down 17.2 percent) and advertising and market research (down 13.3 percent).
SANTANDER | By Ana Fuentes | European Commission President José Manuel Durao Barroso chose his last days in the job to dot the i’s and cross the t’s. Surprising many by his candor, he directly accused the Bank of Spain of making “important mistakes” supervising the financial sector. “It was not the EU nor Ms Merkel who originated the crisis,” he said.
MADRID | By The Corner | Barclays analysts highlight the scarce impact of the European Central Bank’s measures on the inflation expectations. This is the chart that Barclays uses to show the inflation expectations one year before and one year after ECB’s decision.
MADRID | By Bankinter analysts | According to Rightmove, housing prices in the UK rose by +0.1% m/m in June versus previous +3.6%. Thus, the year-on-year rate slows down to 7.7% from 8.9%. In such context, Bank of England’s minutes will be particularly relevant this week, especially after Mr Carney said that the rise in interest rates will come sooner than markets expect.
MADRID | The Corner | No matter whether they lend the funds on to the private sector, TLTRO is likely to be an attractively priced source of funding for banks, especially in the eurozone’s periphery. For those lenders “the costs of TLTRO could be as much as 109-114bp below equivalent wholesale funding for four years, or 68-73bp for two years if they do not increase net lending to the private sector,” an UBS report says. That being said, analysts aren’t sure this is particularly going to boost credit lending. In the graph you can see the dismal evolution of M3 in the 18 single currency area “Shame on the ECB, which has acted behind the curve as always,” The Corner senior economist Miguel Navascués states.
MADRID | By Francisco López | The Spanish economy is finally growing and creating more jobs than expected, according to leading analysts. Savings Bank Foundation Funcas upgraded its GDP forecast for 2014, from 1.2% to 1.4%. Afi and Asempleo released the report “Labor market advance” with encouraging insights: employment is likely to rise at 1.3% y-o-y pace in August. Total active population will be 17.46 million by then, 220.000 more than the prior year.
COPENHAGUEN | By Peter Ludgreen via Caixin | Despite recent moves by the European Central Bank – one of them historic – it will continue to fight against very low inflation and growth. [Cartoon published by The Japan Times]
MADRID | By Julia Pastor | The evolution of the UK’s real estate market is one of the major risks assessed by the BoE in recent months. In fact, the demand has gained great traction since 2013, backed by better credit lending conditions, the increase of confidence and the oficial program Help to Buy.