European Views | Across Europe, real estate markets which were already daunting for lower-income buyers – like Germany or Portugal – are set to become even more gruelling because of new economic stresses caused by the pandemic. 40% of young people in Europe who are at risk of poverty consider prohibitive housing costs, one of the chief contributors to their plight, while a similar percentage of low-income earners already struggle with overcrowded living situations.
Peter Isackson | The Guardian offered its readers what is certainly the most comic and hyperreal sentence of the week when it reported that “Boris Johnson accused the EU of preparing to go to ‘extreme and unreasonable lengths’ in Brexit talks as he defended breaching international law amid a mounting rebellion from Tory backbenchers.”
Poland ́s economic contraction due to the coronavirus pandemic is expected to be 3.5%, much lower than the Eurozone recession of 8%. The economic performance is less dependent on exports compared to Poland ́s Central European peers like the Czech Republic, Hungary or Slovakia. At the same time private consumption accounts for 58% of GDP, reducing the vulnerability to external shocks (as evidenced by avoiding a recession in the 2009 credit crisis). In 2021 the economy is forecast to rebound by 5.6%.
The Bank of England (BoE) left policy on hold at its latest meeting. Bank Rate remained at 0.1% and the Asset Purchase Facility (APF) was left at £745bn. Both decisions were made unanimously. The BoE explained that the APF had risen to £684bn to date, buoyed by £230bn in gilt purchases and £9.3bn (of £10bn) corporate debt purchases. The current QE programme is expected to expire around the turn of the year and purchases have been lower than in Q2 given the improvement in liquidity conditions.
This morning (Wednesday 16 September), the President of the European Commission, Ursula von der Leyen, delivered her ‘State of the Union’ address before the European Parliament in Brussels.
The presidents of UBS Group and Credit Suisse Group would be exploring a potential merger to create one of Europe’s largest banks. Both banks are undergoing changes at the top management level and are under pressure to reduce costs. Meanwhile, the coronavirus pandemic is sparking renewed interest in consolidation in Europe. The news comes in the wake of just over a week of the announcement about the potential consolidation of two Spanish entities operating in the same market – CaixaBank and Bankia.
Johannes Petry via The Conversation | Relations between London and Brussels have been better. While Brexit dominates the headlines, another cross-channel development has recently captured the attention of financial institutions. It concerns the the London Stock Exchange’s proposed US$27 billion (£21 billion) acquisition of US financial company Refinitiv, into which the European Commission is carrying out an in-depth anti-trust investigation.
BoE will announce its next policy decision on Thursday (noon). We expect no change in policy parameters. Current policy: Bank rate at +0.1%. OngoingQE, total YTD envelope of +£300bn (+£232bn of which bought so far), with latest +100bn announced in June.At the last meeting in June, BoE also added a weak form of forward guidance (“The Committee does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”) Expectation:…
EU agreement on a pandemic fund boosted market and regulators’ wishes to move towards cross-border consolidation among European banks- the ECB’s vice-president, Luis de Guindos, has already warned of the need for the sector to continue with the merger process. Scenarios have started to be built again about who should be merging with whom. But unity around the EU pandemic fund is not about banks, say analysts at Scope Ratings.