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European economy 16th July 2020

How To Make The Most Of The European Recovery Fund

Morgan Stanley | For the time being, the Fund is still only a proposal and there remains a wide divergence of views about the amount, duration, allocation, grants/loans etc. We assume that the final outcome will be in line with the Commission’s proposal: €750 Bn in joint issuance (500 Bn in grants and 250 Bn in loans). As regards to the use of the funds, the optimal scenario would be one where spending is applied via investment since it has a higher fiscal multiplier (vs for example a corporate tax cut or transfers).

Eurozone with masks

European economy 15th July 2020

Europe Is Gaining Ground: Eurozone’s Activity Reaches 92% Of Pre-Crisis Level; The US Stagnates At 67%

David Kohl (Chief Economist Germany, Julius Baer) | Lower new infection rates in Europe and a swifter recovery of activity are valid reasons to scale back some pessimism regarding the eurozone growth outlook. The eurozone has ramped up its fiscal response to the corona pandemic. We feel comfortable in expecting for the region a more moderate contraction of -7.2% in 2020.

ECB buying corporate

European economy 14th July 2020

ECB Preview: The Economy Continues To Recover And The Inflation Outlook Is Muted.

Peter Allen Goves (MFS Investment Management) | The overall macro picture has not changed significantly since the June meeting. The economy continues to recover and the inflation outlook is muted. We still see enough flexibility in the Pandemic Emergency Purchase Programme (PEPP) to combat any unwarranted tightening in financial conditions. The June targeted longer-term refinancing operation (TLTRO) was a successful exercise and the extra liquidity added (around €550bn) is seen as enough to support the private sector into the recovery phase (or at least reduce liquidity crisis). Overall, we do not believe there is a strong need for further action from the European Central Bank (ECB) at the current juncture. If anything, the ECB communication will be closely watched.

sector auto spain

European economy 14th July 2020

Eurozone Industrial Production Rebounded 12.4% In May With The End Of Restrictions

Industrial production in the euro area chalked up a record rise of 12.4% in May, after falls of 18.2% in April and 11.8% in March. However, the figure was still 20.9% below the level recorded in May 2019, according to data published by the EU’s statistics office Eurostat. In the case of Spain, industrial production rebounded 15.1% in May after declines of 22.8% in April and 13.5% in March. The figure was still 24.9% lower than in May 2019.

Sunak

European economy 8th July 2020

“Rishi Sunak Has Delivered A Trifecta Of Crowd-Pleasing Measures In The Summer Statement.”

Ranko Berich (Monex Europe) | Rishi Sunak has delivered a trifecta of crowd-pleasing measures in the summer statement but has nonetheless dialled the pace of stimulus down from its previous “warp speed” setting. The OBR’s judgement is due next week, but by the Government’s reckoning today’s measures add up to another £30bn of spending – significant by any stretch, but not on the scale of the £84bn job retention scheme. Although at this point the additional fiscal stimulus is welcome, the effectiveness of both the VAT cut and the discount voucher will depend on the vagaries of human behaviour.

european union

European economy 8th July 2020

The European Economy Will Recover At Two Speeds, Widening The Gap Between The Eurozone’s Members

The three countries most affected by the coronavirus crisis will be Italy, Spain and France, with falls in GDP of 11.2%, 10.9% and 10.6% respectively this year. For the region as a whole, GDP will contract by 8.7% in 2020 compared to the 7.7% previously expected. By 2021 it expects GDP to grow by 6.1%. In the second half of next year, the Commission sees a two speed recovery happening in the EU, with the existing divergences in the area becoming even more pronounced.

ECB Bundesbank

European economy 7th July 2020

The ECB Accelerated Spanish Debt Purchases By 6.8% In June

The European Central Bank acquired €5.4 Bn in Spanish bonds during the month of June as part of its PSPP purchase programme, which has been questioned by the German Constitutional Court. The June figure accounts for 21.5% of the total of €25.23 Bn allocated for the month by the ECB for the acquisition of sovereign debt of the euro area countries participating in the programme. So it has exceeded the capital key of 11.9% corresponding to Spain.

 

Spains productivity

European economy 2nd July 2020

Productivity Is Stagnating In Europe; In Spain It Is Counter-Cyclical

Matilde Mas (Funcas) | Since the beginning of the 21st century, productivity growth has experienced an almost generalized slowdown, albeit of unequal intensity, in most developed countries. And this is despite the accelerated process of innovation accompanying the Fourth Industrial Revolution. It is the phenomenon known as the productivity puzzle. Among the large EU-15 countries – Germany, France, Italy, Spain and the UK – the general pattern has been a slowdown in labour productivity since around 2005.

CO2

European economy 25th June 2020

European Refining Industry Targets 30 M Tonnes Of Eco-Fuels Annually By 2035

The association FuelsEurope, representing the European refining industry, expects to produce 30 million tonnes of low-carbon liquid fuels (eco-fuels) annually by 2035. This would mean a reduction in CO2 emissions with an estimated minimum of 100 million tonnes per year by that date, and emission neutrality by 2050 in Europe. The European counterpart the Spanish Association of Oil Product Operators (AOP) has launched a plan to introduce these eco-friendly fuels into the transport sector.