The EU as Great Britain’s tailor
Great Britain’s exit from the European Union could be the straw that breaks Europe’s back. So heads of state and government have worked hard on devising a new tailor-made suit for the UK.
In Europe
Whatever it Takes Cannot be in Frankfurt
Francesco Saraceno | Mario Draghi had no choice. The increasingly precarious macroeconomic situation, deflation that stubbornly persists, and financial markets that happily cruise from one nervous breakdown to another, had cornered the ECB. It could not, it simply could not, risk to fall short of expectations as it had happened last December.
SNB relieved From Pressure On Negative Rates Thanks to ECB
UBS | The Swiss National Bank (SNB) reassessed its monetary stance at its quarterly March meeting today. After the European Central Bank (ECB) a week ago lowered its negative deposit rate for bank reserves by only 10 basis points to -0.40% and the main refinancing rate by 5 basis points to 0.00%, it became clear that the negative interest rate differential disfavouring the franc would not erode significantly.
Others Are Doing Worse (But Everyone’s In The Same Boat)
Aristóbulo de Juan | This is the huge cost of complacency. You frequently hear Spanish bankers and supervisors repeating a new mantra: “The European banks are worse than ours and their supervision is more lax.” Europe’s oldest bank reveals an NPL ratio of 39%, while Deutsche Bank announces losses of 6.9 billion euros…but can this sort of management be allowed?
Super Mario’s limited powers
Mario Draghi surprised the markets with a bold move no one expected. That said, he openly conceded his margin for manoeuvre was running out. In a sincere confession few central bankers would indulge in, Draghi acknowledged there was little room for ECB’s extra rate cuts.
France and Italy unable to do the labour reform that Spain did
F.Barciela. F.G. Ljubetic | Labour reforms in Spain are being so successful that few governments in Europe are now left doubting the need to change their labour market laws if they want to reduce unemployement figures, still over 10 per cent. In fact, the Wall Street Journal recently recalled that ‘the Reforms That Saved Spain Could Also Save Europe’.
Spanish Banks Likely to Avoid the “Swiss rate” scenario
UBS | President Draghi surprised the market positively, both in terms of the magnitude of some of the expected moves (QE extension in the upper end of the range) and also implementing new measures (acquisition of non-financial IG bonds in its asset purchases, and new targeted TLTRO). For (retail) banks like the Spanish, the balance of ECB’s actions has to be considered as positive, especially if trends seen in the swap market are confirmed in Euribor fixings.
The UK’s Twin Deficits, The Budget And Brexit
UBS | The focus in the Brexit debate is often on the UK’s relatively large current account deficit. This is understandable, as a period in which Foreign Direct Investment was harder for the UK to attract in a post-Brexit world would likely imply the current account would need to correct.
When The Refugee Crisis Met The Bailout Review
Nick Malkoutzis via Macropolis | After weeks of dancing around the issue, it seems that Greece and its lenders have started, even tangentially, to link the refugee crisis and the pending bailout review.
Corporate Investment In The Eurozone: A Diverse Picture
UBS | We conducted a survey to determine whether Eurozone corporates are starting to invest again, and how this would be funded – a crucial question not just for the business cycle, but also for individual sectors and stocks.