Prospects for euro-area to end-2020

2020 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Economic Downturn ◽  
Content Type ◽  
The Third ◽  
Bounce Back ◽  
The Eu

Subject Prospects for euro-area to end-2020. Significance The euro-area is facing its most challenging economic downturn to date. The ECB has responded with strongly supportive monetary policy and both Germany and the EU have adopted unprecedented fiscal measures, increasing the prospects of a stronger recovery in the third and fourth quarters, and building momentum for a strong bounce back in 2021.

Four disintegration risks may threaten the EU’s future

2017 ◽  
Keyword(s):  
Euro Area ◽  
Presidential Election ◽  
The Political ◽  
Economic Downturn ◽  
Political Uncertainty ◽  
National Front ◽  
Content Type ◽  
Marine Le Pen ◽  
Decisive Victory ◽  
The Eu

Subject Four European disintegration risks. Significance After the French presidential election, which saw the decisive victory of Emmanuel Macron over National Front leader Marine Le Pen, a sigh of relief could be heard in European capitals: the worse had been avoided; the EU would thrive again. This relief could be premature. At least four disintegration risks are still threatening the EU. Impacts Even though its economic prospects are positive, the euro-area remains fragile and could plunge back into chaos if left unreformed. An economic downturn would benefit Eurosceptic populist parties. The political uncertainty of a caretaker government in Germany will increase its officials' reluctance to agree to any euro-area reforms.

German fiscal expansion is unlikely despite concerns

2019 ◽  
Keyword(s):  
Euro Area ◽  
Negative Effects ◽  
Content Type ◽  
Political Consequences ◽  
The Third ◽  
Defence Spending ◽  
Economic Outlook ◽  
The Eu

Significance The economy shrank by 0.1% quarter-on-quarter in April-June; further shrinking in the third quarter would mean a technical recession. Since growth is not likely to pick up much in the next two to three quarters, the economic outlook for Germany is gloomy, with potentially significant political consequences. Impacts Germany’s hard-line stance against ambitious euro-area reform is likely to become more entrenched. The implications of a German slowdown for the EU-26 will increase the chances of the ECB using unconventional policy to add stimulus. A recession is likely to have negative effects on Germany’s defence spending, despite US pressure on Berlin to contribute more towards NATO.

Low euro-area growth supports case for ECB action

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Private Consumption ◽  
Oil Prices ◽  
National Data ◽  
Deposit Rate ◽  
Content Type ◽  
The Third ◽  
Area Growth ◽  
Near Term

Significance This is the same pace as in the third quarter, marking the eleventh consecutive quarter of expansion. For January-December, growth accelerated to 1.5% from 0.9% in 2014, in line with the December ECB staff projection. National data were generally below market expectations, but confirmed that the recovery remains on track. Impacts Private consumption will remain the primary growth driver in the near term, supported by recovering labour markets and low inflation. Inflation will stay subdued owing to falling oil prices; the recovery is too lacklustre to kick off a rise in prices. The ECB will expand its QE programme in March, cutting the deposit rate deeper into negative territory. After its recent rebound, the euro should weaken again as the ECB eases monetary policy further.

The international strength of the euro will grow

2021 ◽  
Keyword(s):  
Euro Area ◽  
Financial Services ◽  
Raw Materials ◽  
Domestic Demand ◽  
Content Type ◽  
The Us ◽  
Us Dollar ◽  
Strategic Autonomy ◽  
Geopolitical Risks ◽  
The Eu

Significance The proposals identified areas where the euro could potentially become more dominant, such as the issuance of green bonds, digital currencies, and international trade in raw materials and energy. Ambitions to enhance the international leverage of the euro are being driven by the aim to strengthen EU strategic autonomy amid rising geopolitical risks. Impacts Developing its digital finance sector would be an opportunity for the EU to enhance its strategic autonomy in financial services. Challenging the US dollar would require the euro-area to rebalance its economy away from foreign to domestic demand. Member state division will prevent the economic reconfiguration the euro-area needed to make the euro a truly global currency.

EU bonds will rival German Bunds as a safe asset

2021 ◽  
Keyword(s):  
Euro Area ◽  
Safe Haven ◽  
Content Type ◽  
The World ◽  
The Creation ◽  
Over Time ◽  
The Eu

Significance This could create an alternative benchmark safe-haven asset to rival German Bunds within the region. As part of its issuance plans, the EU intends to issue at least EUR50bn in green bonds annually, which is likely to make it the world’s largest issuer of these bonds. Impacts The increased importance of EU bonds over time will help to support the euro's value and could eventually put pressure on the dollar. The EU is leading the world in green bond issuance, but the risk of spurious environmental claims (‘greenwashing’) must be managed. The creation of new EU bonds will help reduce the funding costs of riskier euro-area members such as Italy.

Prospects for Europe in the third quarter

2015 ◽  
Keyword(s):  
United Kingdom ◽  
Single Currency ◽  
Member States ◽  
Content Type ◽  
The Third ◽  
The United Kingdom ◽  
The Future ◽  
The Eu ◽  
The Way

Subject Prospects for Europe in the third quarter. Significance For the rest of June and the third quarter, the EU will grapple with the future positions within the bloc of two member states, the United Kingdom and Greece. The period will see the resolution, one way or another, of the immediate crisis in Greece's relations with its international creditors. The way in which this takes place will have profound implications for the future of the single currency.

Greece to seek end of austerity, not euro membership

2015 ◽  
Keyword(s):  
Public Sector ◽  
Euro Area ◽  
Economic Hardship ◽  
Debt Relief ◽  
Credible Commitments ◽  
Content Type ◽  
Political Constraints ◽  
Greek Government ◽  
Domestic Political Constraints ◽  
The Eu

Significance Greece's government and voters have delivered a punishing blow to euro-area policies. However, the underlying dilemmas remain unchanged: whether creditors will countenance debt relief, whether the Greek government can produce credible commitments on reform, and whether euro-area leaders can manage their domestic political constraints and divisions. Impacts Without European assistance, Greece faces a period of economic hardship as funds dry up to pay public-sector salaries and pensions. Without ECB liquidity injections to keep the banks operational, they will require recapitalisation. A bail-in of depositors is possible. Otherwise, a raft of bankruptcies is expected among businesses unable to acquire operational financing. The referendum result will encourage anti-austerity eurosceptics elsewhere in the EU.

Croatia's political weaknesses will slow growth

2017 ◽  
Keyword(s):  
Economic Model ◽  
Slow Growth ◽  
Economic Convergence ◽  
Short Term ◽  
Content Type ◽  
The Third ◽  
Business Confidence ◽  
The Right ◽  
The Eu

Significance Inflation seems to have returned to the economy following three years of near-continual deflation. After years in the doldrums, the Croatian economy is finally experiencing respectable growth and various indicators are now pointing in the right direction. However, the recovery is based on short-term factors that cannot easily be sustained, and the foundations of the economy remain weak. Impacts The current spate of growth is helping to prop up a weak government and a socio-economic model to which many Croats are averse. Respectable growth has lifted business confidence in the third quarter to its highest level since 2009. Apparent economic convergence with the rest of the EU is reviving the question whether and when Croatia should adopt the euro.

Excess euro-area liquidity raises bank lending risks

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Commercial Banks ◽  
Bank Lending ◽  
Domestic Demand ◽  
Basel Iii ◽  
Content Type ◽  
Reserve Requirements ◽  
Regulatory Standards ◽  
Excess Liquidity

Significance The ECB stopped purchasing bonds this month after running its asset purchase programme (APP) since March 2015. The APP flooded commercial banks with liquidity in excess of their minimum reserve requirements, which they could use to grant new loans. The ECB achieved its goal of increasing credit to the private sector, raising domestic demand and warding off price deflation, but commercial banks have kept large amounts of excess liquidity. Impacts Euro-area banks' average profitability has improved during the APP scheme, but less accommodating monetary policy may reverse this trend. The high prudential ratios the Basel III regulatory standards require should make euro-area banks more resilient to monetary tightening. The ECB's mopping up may pose difficulties to banks relying on excess liquidity to meet the Basel III coverage liquidity ratio.

Macron is looking to enhance France’s industrial base

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Urban Areas ◽  
Manufacturing Sector ◽  
Foreign Investors ◽  
Social Unrest ◽  
Content Type ◽  
Industrial Base ◽  
The Past ◽  
Rural France

Subject France's manufacturing outlook. Significance France’s manufacturing sector has been the most attractive in Europe for foreign investors over the past ten years but the structural challenges within the sector, most notably the shift from manufacturing towards an economy based more on services, look set to deepen. Impacts Plans to reindustrialise parts of rural France may attract investment, but getting people to live there will be difficult. The ECB is likely to loosen monetary policy, and manufacturers borrowing at lower rates would boost euro-area industry. The threat of social unrest in urban areas may deter potential investors.

Sign in / Sign up

Export Citation Format

Share Document