The European Commission estimates Spain’s budget deficit will be 4.5% of gross domestic product in 2015 instead of the required 4.2%. The discrepancy will widen in 2016, with an estimated deficit then of 3.5% of GDP compared with the 2.8% target.
Tao Jingzhou via Caixin | The government must act to clean up a scourge that hurts the public interest yet sees few people ever punished.
Nicolas Veron | In mid-July 2014, in his maiden policy speech at the European Parliament as president-elect of the European Commission, Jean-Claude Juncker promised to create a European “Capital Markets Union.” As he explained it: “To improve the financing of our economy, we should further develop and integrate capital markets.
Fernando Barciela | Madrid leftwing Mayor Manuela Carmena (Ahora Madrid) upset the markets and the media last week with her decision to fire credit rating agencies Standard & Poor’s (S&P) and Fitch, effective from 2016.
BARCLAYS | Potential reduction in car production as a result of the Volkswagen emissions scandal may negatively affect growth in Central Europe – we believe VW factories generate 0.5- 2.9% of GDP in Czech Republic, Slovakia, Hungary and Poland.
Nick Malkoutzis via Macropolis | The nexus of Greece’s most challenging problems, and perhaps the ones that will make or break the current government, were indirectly highlighted by Prime Minister Alexis Tsipras last week.
UBS | We remain constructive on the European real estate sector. As a bond proxy with growth , real estate benefits from current central bank stimulus, while it can also gain through rental growth in an inflationary environment, should the stimulus prove successful. For Spain, we upgrade Hispania to Buy and downgrade Merlin to Neutral.
BARCLAYS | We have been arguing for some time that we see no grounds for attaching a high probability to a reflation scenario for the euro area, at least in the near term
HowMuch.net | The countries with the highest debt-to-GDP ratios are Japan (230%), Greece (177%), Lebanon (134%), Jamaica (133%), Italy (132%), and Portugal (130%). This isn’t necessarily a huge problem. As long as countries are using borrowed funds to successfully stimulate their economies, they will be able to pay back their debts on time.
After recently raising Spain’s sovereign ratings to ‘BBB+’ from ‘BBB’, S&P has also improved its stance on some of the country’s top banks. S&P’s upgrades comes in the same week as the Madrid local authorities said they could not renew the contracts with that agency.