eco TV Week


Central Europe: Growth amid shortages   2/26/2021

Central European economies surprised on the upside in 2020 and should grow again in 2021. However, the first semester should exhibit less visibility as a new wave of Covid and the likelihood of a temporary underperformance of the car sector should weigh on growth.

Spain: the debate on pension reform arises again   2/19/2021
On the political front in Spain, the start of the year has been marked by a vigorous debate on pension reform, and more particularly on the question of a possible change in the calculation of pensions.

Towards a delayed eurozone recovery?   2/5/2021
Eurozone real GDP growth in the final quarter of 2020 surprised favourably, which means that the contraction was smaller than anticipated. The current quarter should again see negative growth but attention is quickly shifting to the second quarter. Given the pace of vaccination, the level of new infections in many countries and the concern about the new variants, there is a risk that restrictions may need to stay in place for longer. This would mean a delay in the recovery, with a sizeable growth acceleration occurring as of the third quarter rather than in spring. This implies that pent-up demand in the second half could be even bigger. However, in the sectors impacted by the restrictions, the difficult times would last for longer and could lead to bigger scarring effects. Finally, an international comparison of the recovery speeds could influence capital flows and the euro, considering that the eurozone is lagging.

United Kingdom: A month after Brexit   1/29/2021
A month after the UK’s exit from the EU’s single market and customs union, the economic effects of Brexit are starting to be felt, although there are some mitigating factors. Looking ahead, the British will face an important dilemma between using their newfound autonomy and staying aligned with the EU’s regulatory framework to protect their exporters.

France’s economic situation at the start of 2021   1/22/2021
On Friday 29 January, the first estimates of France’s Q4 2020 national accounts will be published, giving us an opportunity to review the current economic situation and our short-term forecasts.

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On the Same Theme

The European Council agreement: truly historical 7/24/2020
The EU countries have reached a historical agreement on the recovery fund. Debt will be issued at the EU level and the proceeds will be distributed under the form of grants and loans. Although the amount of grants has been scaled back from the initial Commission proposal, the EUR 750 bn package still represents more than 5 % of EU 2019 GDP. This will enhance the effectiveness of ECB policy. The agreement is also important from a longer term perspective. It sets a precedent that could guide policy in case of future major economic shocks. In addition, the milestones to which countries need to commit should strengthen the growth potential and contribute to the green and digital transition.
The European Council agreement: not perfect, but truly historical 7/24/2020
The European Council agreement this week on a recovery effort is, inevitably, a compromise but it is nevertheless historical It consists of a combination of grants and loans to member states and is funded by debt issued at the EU-level It sets a precedent for the management of future crisis situations with a better balance between monetary and fiscal policy. The possibility of such a two-pronged approach, reduces economic tail risk, which should structurally support confidence of households, companies and investors. The targeted allocation of the grants to countries which are in greater need, is another historical achievement and should generate a larger multiplier effect.
Central Europe industrial future remains bright 6/29/2020
The Central European countries are exposed to the impact of the Covid-19 pandemic on trade flows, through their integration in multi-country supply chains. In the short term, it creates spillover effects from the contraction in economic activity observed in Western Europe, particularly in Slovakia and the Czech Republic, via the automotive sector. Although the Central European countries moved up the value chain in the automotive industry, the proportion of a vehicle built locally has not widely increased in recent years. There are still solid arguments for maintaining these industries in Central Europe: Competitiveness is still favourable and clustering effects (cost savings arising from the presence of several manufacturers in the same area) materialized in ways that would be hard to replicate elsewhere.
Impact investing and the European Recovery Plan 6/26/2020
Faced with the depth of the recession, there is no doubt about the need for a European recovery plan, in addition to the massive national measures that have already been taken. The European Commission has proposed an ambitious plan, but it has run up against two considerations, among others: moral hazard and strict conditionality. One solution would be to apply the principles of impact investing: targets would be set, and once reached, they would open the door to better financial terms, or even the partial conversion of loans into grants.
Southern Europe: sharp increase in the cost of risk 6/12/2020
The cost of risk of southern European banks sharply increased in the first quarter of 2020. The forward-looking approach followed by the impairment model for financial assets introduced by IFRS9 explains, to a large extent, the magnitude of the phenomena.
France and Germany: Very different cyclical slowdowns 6/28/2019
 The slowdown since the start of last year is of a different nature in France, where it has manifested itself in manufacturing and services, compared to Germany, where it is very much concentrated in the manufacturing sector. Recent data show a somewhat improving picture in France whereas in Germany signs of stabilisation remain tentative. Under the hypothesis that concerns about trade relations (US-China, US-Europe) and Brexit will not disappear anytime soon, it seems difficult to expect a significant improvement in the near term. France could however surprise positively on the back of the measures to support the purchasing power of households. 
What trends and outlook for office markets in Europe? 3/29/2019
Commercial real estate market volumes reached €265bn in 2018, an impressive result compared to 2017 which was already a historic year.
Five years after: Believe me it will be enough 7/21/2017
Turning Mario Draghi’s 2012 “Believe me it will be enough” speech into action has consisted of a two-step process with Outright Monetary Transactions being followed by QE. Given where we are in the business cycle and paraphrasing the London speech, markets would now love to hear "on normalisation, believe me it will be slow enough”… Whether that speech will be given remains to be seen.
Booming wages in Eastern Europe 7/12/2017
Wages keep booming in Eastern Europe, expanding at +15% year-on-year (yoy) in Hungary and Romania in April-May 2017 and more moderately in Poland, Czech Republic and Slovakia. Unemployment rates reached historic lows and companies’ complaints about the shortage of skilled labour are increasingly audible in several branches. With GDP growth rates among the highest in the EU and dynamic industries, the demand for labour has been growing fast. But negative demographic trends over the past 20 years - declining birth rates, ageing of the population – are now weighing on the active population. The latter is declining in Poland, Bulgaria and Romania and it is growing very modestly in other countries. In this context, the supply of posted workers - these countries are net suppliers of posted workers within the EU - exacerbates labour shortage in the short term. Wages will therefore continue to grow, which will contribute to the catch up in revenues but carries a risk of eroding competitiveness.
State of the Union 9/16/2016
Jean-Claude Juncker wants to keep institutions in flux. Donald Tusk calls for the heads of State to better coordinate their actions.

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