European economy

Angela Merkel

Germany At The End Of The Merkel Era: The Next Coalition To Inherit An Economy Not Fully Recovered

Bruno Cavalier (ODDO BHF) | In a few weeks’ time, Angela Merkel will cease to be Chancellor, a position she has held since 2005. Polls show that the three main contenders to succeed her are tied. Despite Germany’s good performance in the first Covid-19 wave, successive waves of contagions brought new restrictions in early 2021, delaying the recovery. Also, Germany clearly suffers from its overexposure to the automotive industry, which is 25 points below normal.


BBVA Holvi

BBVA Returns To The Euro Stoxx 50 One Year Later

BBVA and Stellantis have been added to the Euro Stoxx 50, replacing Amadeus and Engie. These changes will be effective at the opening of trading on 20 September. According to Bankinter analysts, “BBVA and Stellantis should rebound today, despite the fact that the session will probably be somewhat bearish, while Amadeus and Engie should fall back. And this same evolution could extend over several sessions. We estimate that some 27…


European banks

Ban On Bank Dividends: A Strange Remedy With Severe Side Effects

Scander Bentchikou (Lazard Frères Gestion) | The restrictions on bank dividends, which have been in force since March 2020, ended on Friday. For banks and their shareholders, this is a relief. The measure, supposed to protect banks from the crisis, has done more harm than good. Technically, the banking sector’s dividends made a big comeback in spring 2021. However, the amounts paid remained well below their 2019 levels, given the still numerous restrictions. The return to normal will have to wait for the results of the banking stress tests, published on 31 July by the European Banking Authority.


ECB night

ECB Meeting: Policy Normalisation Is Likely To Be Slow And Gradual To Enable Ongoing Policy Support

Peter Allen Goves (MFS Investment) | The need to avoid premature tightening by the ECB and the strengthened guidance is supportive for core rates in our view. The strong association of guidance with the inflation outlook will also probably raises the prominence of the projections. Overall, the new guidance reinforces the ECB’s commitment to maintain accommodation to reach its price stability aim. Given that projections remain below target, this means…



Carbon emissions

“The Reform Of The Climate Change Act Was Too Hasty”

The German government should make further improvements to the German Climate Change Act in the coming legislative period. This is what Karen Pittel, Director of the ifo Center for Energy, Climate, and Resources, writes in an article for ifo Schnelldienst. “Tomorrow, the EU publishes its Fit for 55 package. As a consequence, it might become necessary to revise the Climate Change Act,” Pittel says. It was only recently, in June…


England Euro2020

55 Years Of Hurt: The Connection Between Investing And Football

Duncan Lamont | (Schroders) | The England men’s football team are in their first major final since 1966. 30 years of hurt has become 55 years of hurt. Just one of many unwelcome statistics that have dogged the national team over the years, and which they hope to soon put an end to. The earlier England-Germany match provided a field day for statistical punditry. Every newspaper article and TV presenter trotted out the line that England hadn’t beaten Germany in a knock-out match since 1966. England went on to beat Germany, thereby demonstrating what we are frequently told is true in the investment world – that past performance is not a guide to the future and may not be repeated.


EU regions

EU Funding For Cross-Border Regions Needs Better Focus

The European Territorial Cooperation programme (Interreg) is a long-standing instrument of EU cohesion policy aimed at encouraging economic growth in border areas. According to a report from the European Court of Auditors (ECA), the cooperation programmes financed through Interreg had clear strategies for tackling existing cross-border challenges. However, several weaknesses in the implementation of the Interreg programmes and in their monitoring limited the potential to unlock the capacity of the adjacent regions they covered.Interreg’s total budget for the 2014-2020 programme period was €10.1 billion. Over €6 billion was used to finance projects associated with internal borders.


ECB bonds

ECB Raises The Bar For Normalisation In The Short-Run, Flexibility Is The Key For Policy

Monex Europe | Today’s announcement by the European Central Bank can be perceived as net dovish in the short-term by markets, as the shift from an asymmetric target to a new symmetric 2% inflation target gives the central bank ample room to run accommodative monetary policy for longer without having to fight markets. Previously, the ECB’s inflation target was set at “below, but close to 2%”, which contributed to the eurozone’s structural issues with low inflation for years. By changing this target to a symmetric target, which means any undershoots and overshoots would be equally undesirable, the central bank moves the bar slightly upwards for inflation before policy is required to tighten.


Emmanuel Macron

Macron Should Go Ahead with Pension Reforms

Nick Ottens (Atlantic Sentinel) | Emmanuel Macron is reportedly mulling pension reforms that were put on hold during the COVID-19 pandemic. There are risks: reforms will almost certainly spark protests, including from trade unions, which oppose raising the retirement age. Macron can ill-afford social unrest a year away from the election. But it could also burnish the French president’s reformist credentials after the COVID-19 crisis forced him into a more…