BERLIN | Alberto Lozano | While German Finance Minister Wolfgang Schäuble preaches public budget consolidation all around the Eurozone, some Länder don’t seem to be taking his prescriptions seriously. Their deficits continue to grow in 2014 and moving away from the zero deficit goal in 2020 as required by the country’s constitution.
MADRID | The Corner | While the European inflation remained at 0.5%, credit steeply contracted in May thus neutralising the tepid improvement of the lending activity during March and April, according to Afi. The decline in private credit accelerated in small peripheral countries, but it continued the same in Spain and Italy.
LONDON | By Barclays analysts | Euro area “flash” June HICP remained unchanged at 0.5% y/y, in line with our and consensus expectations. Printing 0.51% y/y at two decimal places (very close to our 0.50% y/y estimate), today’s outturn is technically only very slightly higher than last month (0.49% y/y) and March (0.47% y/y). It remains nonetheless very weak indeed.
MADRID | Bankinter Analysis | 3Q Perspectives. Economic cycle speeds up and, mostly, gains soundness and reliability. Global growth will consolidate in 2014/2015 by +3%/+4% with positive news for developed countries and less favorable surprises in emerging markets. Japan and India are the exception to this rule. Spain will also amaze and main economic risk will lie in regional regional integrity issues whose aftermath may be undervalued, regardless the final scenario.
ZURICH | By UBS analysts | On 5 June, the ECB delivered a comprehensive monetary policy package, comprising cuts in the refi rate (from 0.25% to 0.15%), the deposit rate (from zero to -0.1%) and the marginal lending facility (from 0.75% to 0.4%). The ECB also rolled out the ‘full allotment mode’ – the commitment to supply unlimited liquidity (against adequate collateral) at the refi rate – from July 2015 to December 2016, and it will inject liquidity by ending the sterilisation of the Securities Markets Programme (SMP) portfolio.
ZURICH | By UBS analysts | The economic recovery in the Eurozone remains on track, but Q1 GDP data have once again shown the slow pace of growth and wide discrepancies that exist between individual economies. We cut our 2014 Eurozone growth forecast to 1.0% (from 1.1%) and continue to project 1.5% growth for 2015. Nominal GDP growth is expected to pick up to 1.7% this year and 2.7% in 2015, but nonetheless, it remains much slower than would be desirable to accelerate debt deleveraging
MADRID | The Corner | The liquidity net increase of the new measures by the ECB may be substantially less than expected, because of two main reasons: as a consequence of the 3-year LTRO maturity next December and February, and due to the improvement in the workings of the money markets.
MADRID | The Corner | The much-awaited German Ifo Business Climate Index for industry and trade fell to a seasonally adjusted 109.7 points this month, below forecasts for 110.2 and down from 110.4 in May. Although the country’s firms still make positive assessments of the current business situation, the Munich-based institution explained in a press release on Tuesday, they feel less optimistic about the future. And fear the potential impact of the crises in the Ukraine and Iraq.
BERLIN | By Alberto Lozano | Although when speaking of reforms nobody is pointing to Germany, international organizations are pushing for it in the country, especially in the services sector. The goals are boosting consumption and rebalancing the euro monetary union, and higher productivity in services sector becomes a challenge with large potential gains for both Germany and the whole Eurozone. But some voices insist this won’t easily happen.
MADRID | By J. J. Fernández-Figares | According to Eurostat, the US became by far the largest foreign investor in the European Union (EU-28) during 2013, with a figure that triples 2010 data. For its part, the second largest foreign investor in 2013 was Brazil, with €21bn.