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VictorOrbanok

European politics 30th November 2020

EU Must Hold Firm in Rule-of-Law Dispute with Hungary, Poland

EU leaders — including Orbán and his Polish counterpart, Mateusz Morawiecki — agreed in September to tie the disbursement of EU funds to compliance with the rule of law. The conditionality is not automatic. To withhold funds, a qualified majority of fifteen out of 27 member states, representing 65 percent of the EU’s population, would need to agree (…) But if the proposal were meaningless, Orbán and Morawiecki wouldn’t be fighting it. They understand it could be used to rein them in — which is exactly why the rest of the EU must hold firm.

negative rates2

European economy 26th November 2020

The Blunder Of Negative Interest Rates

Miguel Navascués | The depression and the drop in inflation -or even deflation- have led the central banks to try a disastrous experiment: negative interest rates. Even Christine Lagarde speaks of putting the reference interest rate at -2%. This has been a mistake for several reasons. It discourages the holding of liquid deposits (which logically yield zero or negative), but it does not make people anticipate consumption, if prices stagnate or fall.

Europeok

European economy 25th November 2020

Western Europe: Overdue invoices and write-offs increase dramatically

Crédito y Caución (Atradius) |For many businesses around the world, 2020 has been the most challenging year experienced for some time. Global GDP is forecast to contract by more than 4% this year, world trade by about 15% and insolvencies to increase by 26%. Without exception, every country polled in Europe reported an increase in late payments which corresponds to an average two-thirds increase on pre-pandemic figures for the whole region. This would make a bigger downturn than the 2008/2009 recession.

Hungaryok

European economy 24th November 2020

Hungary-High Debt Levels Remain A Major Weakness In The Mid-Term

Crédito y Caución (Atradius) | Hungary’s current account turned to a deficit in 2019, due to rising disposable income and import-intensive investment. The deficit will increase in 2020 to 1.8% of GDP, mainly due to export deterioration. External debt is very high and increasing to about 100% of GDP in 2021, with the share of inter-company lending amounting to 37%. A large share of external debt is foreign currency-denominated, and a sharp forint depreciation would hurt many Hungarian households and businesses whose loans are denominated in foreign currencies. The forint remains vulnerable to international investors’ sentiment due to the elevated external and public debt levels and a suboptimal institutional and policy environment. However, strong GDP growth in the coming years should continue to support the exchange rate.

gbpusdok 1

European politics 23rd November 2020

BREXIT After US Elections And Promising Covid-19 Vaccines

The -2.5% underperformance of UK real GDP growth relative to OECD countries over the last 4 years (to 31/12/2019) clearly signals the damaging impact Brexit has had on business confidence. Brexit uncertainty has led to slower investment, with firms instead building up cash buffers from ~16% up to ~19% of GDP. The opportunity cost of this saving is the slower rate of GDP growth experienced.

UK

European economy 20th November 2020

UK-Spend, spend, spend

In the UK, the fiscal party continues. The government announced £12bn of funding for green initiatives this week and £16.5bn in additional defence spending. The government also published its latest public sector finances. For the fiscal year so far, the net borrowing requirement is £215bn, a staggering £169bn more than in the same period last year. The level of net public sector debt exceeded $2trn last month and stands at 100.8% of GDP, a level not seen since the 1960s.

Greece is meeting fiscal targets and concludes program reviews on time

European economy 19th November 2020

A Rebound Is Expected For The Greek Economy, But Downside Risks Remain

Assuming the pandemic comes to a gradual end, a robust recovery of investments, private consumption and exports output should lead to an economic rebound of almost 7.5% in 2021. Unemployment is expected to decrease again next year. However, besides a resurge of the pandemic, any deterioration of the Greek-Turkish relationship could hurt economic performance, especially within the tourism sector (e.g. if Turkey again opens the border for refugees to move on to Greece, or in case of rising military tensions and clashes in the Aegean Sea).

Germany labour market

European economy 18th November 2020

ifo Institute: Low Earners in Germany Have Too Little Incentive to Work

“For single people with low wages, there is little financial incentive to work full time. If they had an additional income of EUR 10 per hour gross, they would see only EUR 2.50 to 3.90 of this in their net income. This is a finding of a study by ifo researchers Andreas Peichl and Maximilian Blömer for the Bertelsmann Stiftung. “The fatal combination of taxes, social security contributions, and the high withdrawal rate of benefits are to blame,” Peichl says. “This error in the system must be corrected. The workforce is shrinking, and soon we’ll need all hands on deck.”

Russias Putin

European politics 17th November 2020

What Is Russia’s Stake in the Nagorno-Karabakh War?

Dumitru Minzarari (Via Fair Observer) | s the world discusses the sudden cessation of fighting between Armenia and Azerbaijan in the disputed region of Nagorno-Karabakh and the deployment of Russian “peacekeepers” to the region to monitor the truce, one critically important question is overlooked: Why did Russia not discourage Azerbaijan’s military offensive? A powerful security rationale implies a strong Russian interest in deterring a war that might change the regional status quo. Preserving a favorable status quo, by strategic logic, is the central security interest of a regional hegemon like Russia.