Gilles Moëc (Axa Investments Manager)| Those who like to see their glass half full probably took comfort in the fact that in Germany the manufacturing Purchasing Managers Index rebounded by 0.2 pp in October relative to September, but this was again short of expectations and the absolute level remains very concerning.
Recently there’s again been talk of a two-speed Europe. During the mini-summit two weeks ago, Merkel, Hollande, Italy, Rajoy, gave the green light to this latest spin. The Spanish PM has said the country would be at the nucleus of this.
After the restructuring Santander carried out in Spain in 2016, the bank could be planning to improve efficiency in other countries, including Germany. Although the project is in an initial phase, it would obtain cost savings of about 15%.
Spain can’t imitate Germany in a context in which Europe is a closed zone where countries export to each other. And Spain is unlikely to become another Germany because the Spanish production model is still based on low productivity.
“In principal, the euro is a good idea. The aim is to create a big economic space without any monetary barriers, like the US. But a common space implies that member states are prepared to take each other into consideration as far as their economic, financial and wage policies are concerned,” says Peter Bofinger, one of the five ‘wise men’ who make up the German Council of Economic Experts.
Spanish midcap CAF has won a €51.3 million contract in Germany to supply 9 three-car light rail vehicles for the Schönbuchbahn and their maintenance over 19 years, with the option to request up to an additional 19 trains. The contract will strengthen CAF’s position and reputation in a key strategic market niche.
I can tell you that the most eminent economists in Spain have continued to be wrong-footed since before the crisis. They are still clamouring for debt reduction, for a return to austerity, when what is slowly killing Europe is precisely that, the austerity spreading from Germany.
James Alexander via Historinhas | While still waiting for the 1Q16 official Eurostat NGDP figure for the Euro Area of 19 countries it has been interesting to have a look at the implied deflators for the currency bloc and its constituents. (Ireland, Slovakia, Cyprus and Luxemburg are all hopelessly late delivering GDP figures, and the first two don’t even seem to do it to Eurostat standards for calendar-adjusted data.)
Yiannis Mouzakis via Macropolis | Following an 11-hour Eurogroup that brought back memories of other classic encounters between Greece and its lenders, an agreement was reached to disburse 10.3 billion euros from the programme’s financing in two tranches – next month and in September – as the much-contested debt issue was put on the table.
Guntram B. Wolff via Caixin | G-20 ministers in Shanghai appeared to be aware of the importance of structural work. In particular, there was agreement in our panel discussions that the Base Erosion and Profit Shifting (BEPS) project of the OECD was an essential element to deal with tax avoidance and ensure that profits are taxed where economic activity generating it takes place.