Annalisa Piazza (MFS) | ECB “recalibrates policy”: Nothing else has changed. Indeed, the rest of the policy announcement was a carbon copy of what we heard back in July. Forward guidance on both rates and QE was confirmed, along with the re-investment programmes. The slower pace of PEPP had been widely flagged by ECB officials over the past few weeks so the announcement was hardly a surprise. That said, the…
The Conversation | Boris Johnson has unveiled an additional 1.25% levy on national insurance paid by wage earners and employers, which will raise £14 billion a year to help pay for the NHS and reforms to social care. Coming on the back of rises to income tax and corporation tax that were announced in the budget in March, it is the latest example of the government using tax rises rather than austerity to rein in public finances that have been hit by the cost of the pandemic. We asked Alex de Ruyter, a Professor of Economics at Birmingham City University, to explain how it would affect different parts of society.
Fernando Rodriguez | The percentage of European companies linking executive compensation plans to ESG targets has increased more than eightfold in the last decade, from 4% in 2008 to 34% in 2020. This is according to a survey conducted by the Diligent Institute of nearly 2,000 companies in 15 European countries, including Spain, which is in the high end of the range for most indicators. According to the survey, the…
ASE Group | Gas has risen so much that coal-fired plants are now competitive. In recent months, Germany has reduced its gas-fired power generation by 36% while doubling its coal-fired generation. Similar developments have occurred in the UK and the Netherlands. This pull in coal demand has driven up the price of coal by 1000% in the last year.
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 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…
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.
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…
On the otther hand, the European Central Bank warns that it will monitor excessive bank dividends. On the otther hand, the European Central Bank warns that it will monitor excessive bank dividends.
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…