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European economy

ECB premises

European economy 3rd April 2020

Eliminating Dividends In European Banks Could Generate 140 bp Of Average CET 1

Following the recommendations of European banking supervisors to suspend dividend payments for 2019 and 2020, Morgan Stanley analysts estimate that, in a hypothetical scenario, eliminating all dividend payments for ’19 and ’20 would generate on average 140 bp in CET1 (about EUR 100 Bn). Banks such as Caixabank, DBK, and Italy’s Banco Monte dei Paschi di Siena and Banco BPM would not be impacted due to their low dividend payouts.

eurozone quarantine

European economy 2nd April 2020

A Two-Month Quarantine Can Mean A Recession Of -3.6% In The Eurozone’s Annual GDP

Unigestion | The current shock that the investment world is facing has three unique features: it is exogenous, it will likely be temporary, and its effect on the real economy is extremely uncertain. According to our core scenario, 2020 should see the first global recession since the Great Financial Crisis. This scenario assumes that the quarantine will have a limited impact on financial services, insurance, utilities and healthcare services, and leaves 20% of usual energy consumption.

lagarde

European economy 19th March 2020

The ECB Takes The Lead In The Eurozone To Contain Economic Damage Of The Epidemic With A €750 Bn Programme

Philippe Waechter (Ostrum AM) | The ECB has just launched a new asset purchase operation worth 750 billion euros over the period up to the end of 2020 at least. The purchases will relate to public and private securities which are eligible for the asset purchase program (APP) previously implemented by the ECB. The weight of each state in this buying program will be that of each state in the capital of the ECB. The press release suggests a lot of flexibility in interpretation.

Brexit uncertainties

European economy 16th March 2020

Brexit Freeport Plan: Empty Promise Or Gateway For Tax Crime?

European Views | In the first weeks of the United Kingdom’s official departure from the European Union, one of the most significant moves made by Boris Johnson’s government has been the launch of a “freeport” plan masterminded by Johnson’s handpicked Chancellor Rishi Sunak. Downing Street claims that its decision to create “up to ten new innovative Freeports” – special trade zones where goods can transit or be stored without having to pay taxes or customs – means “hubs of business and enterprise will be opened across the UK.”

ECB

European economy 12th March 2020

ECB: Falling Short Of The Market’s High Expectations

As expected, the main elements of the ECB’s easing package focused on providing liquidity to a real economy through additional term-financing operations at subsidized interest rates as well as supporting overall aggregate demand through additional net asset purchases while deemphasizing reducing policy rates.

ursula pedro

European economy 10th March 2020

The Key to Overcoming the Risk Scenario will be Mainly through Governments and not so much through Central Banks

As the latest OECD simulations rightly point out, the area where there is really room for maneuvering is that of fiscal policies and structural reforms. According to the international organization, in the short term and under a scenario of coordination in the G-20, the aforementioned measures could add up to nearly 0.5 percentage points of GDP in the first year with respect to the central scenario, as opposed to nearly 0.15 percentage points of monetary policy.

Norway wealth fund

European economy 6th March 2020

Sovereign Wealth Funds Focus on Technology and Life Sciences

In the increasingly complex choreography of the world economy, sovereign wealth funds (SWF) play an ever more important role due to their capacity to channel large volumes of savings toward in- vestment and hence boost economic growth. This role is analyzed in depth in the study on sovereign funds, a joint project between ICEX-Invest in Spain and IE University, and which has become a leading instrument of analysis for the institutional investment industry worldwide.

Eurozone

European economy 3rd March 2020

The Eurozone’s Growth Will Be Half Of The Forecast Due To Covid-19 : 0.6% In 2020

Bank Of America Global Research | We lower our Euro area growth forecast to 0.6% for 2020 (-40bp), on the back of lower foreign demand (global growth downgraded to 2.8%, from 3.1%), supply chain disruptions and at least temporarily lower domestic demand from local virus hot-spots. We keep our 2021 forecast unchanged at 1.1%, assuming a permanent loss in activity. Euro area growth is expected be close to zero in 1H20 (with negative quarters in Italy and Germany part of our base case).