ECB’s money drain has silver lining for markets 14 Mar 2024 The European Central Bank is ready to exit its huge stimulus programme. With 4.7 trln euros of bonds on its books, that will take time but policymakers want few surprises. A new regime of setting rates and relying on banks to ask for loans will wean them off cheap money.
EU’s spending snags spoil joint borrowing success 12 Mar 2024 Europe’s 800 bln euro stimulus plan is stuck. The bonds that finance it sell like hotcakes, but so far it has paid out only 225 bln euros as countries struggle with projects. Unless the bloc can show it can use the money it raises from investors, it will lose much-needed funds.
Apple’s Epic fail powers up EU tech oversight cred 11 Mar 2024 The $2.6 trln firm quickly reversed its decision to close ‘Fortnite’ maker Epic Games’ developer account. Frowns from the EU, which is going after Big Tech via fresh laws, look to have played a role. The episode is as much a victory for the bloc’s credibility as it is for Epic.
Europe will struggle to unite if Ukraine loses 11 Mar 2024 Jean Monnet, one of the European Union’s founders, predicted it ‘will be forged in crises’. Russian success in Ukraine could be the wake-up call the bloc needs to forge closer security ties. But it could also fragment under the strain. All the more reason to ramp up support now.
Slow growth puts ECB before Fed in rate-cut line 7 Mar 2024 The European Central Bank held borrowing costs but President Christine Lagarde suggested it might lower them in June. That could make her the first major central banker to ease policy, ahead of US Federal Reserve boss Jay Powell. Sadly, that’s only due to dire euro zone growth.
Microsoft is case study in weathering EU techlash 7 Mar 2024 The $3 trln group has taken a stake in French startup Mistral AI and kept its browser, search engine and ad sales platform clear of the European Union’s new Digital Markets Act. Things could change. But so far Microsoft shows how US firms can work around the Brussels backlash.
Kyiv’s defence requires European supply-side shock 5 Mar 2024 Europe is not producing the 2 mln artillery shells Ukraine needs, and missile plants are idle. Meanwhile, its stockpiles are shrinking, threatening the region’s ability to defend itself. To crank up production lines, manufacturers will need a steady flow of government orders.
How to solve Europe’s defence riddle 5 Mar 2024 At 360 bln euros, the bloc’s military expenses are three times Russia’s. Yet fragmented defence systems are a problem, Bruegel senior fellow Guntram Wolff tells The Exchange podcast. To improve scale and boost aid for Ukraine, Europe should consider more joint debt.
EU’s $2 bln Apple bite is still more of a bark 4 Mar 2024 Brussels is fining the US giant more than expected for hurting streaming competition. That leaves $2.7 trln Apple open to similar cases. But as with other EU bids to rein in Big Tech, it hikes the cost of doing business more than it shakes up the sector.
EIB backing would add spark to EU mini-nuclear bid 1 Mar 2024 Europe’s bid to develop smaller, cheaper nuclear reactors as part of its plan to cut carbon emissions needs cash and political support. European Investment Bank financing for next-generation projects would make a difference. Even so, green benefits may take years to materialise.
European telcos’ new deal hopes face reality check 1 Mar 2024 Executives gathered in Barcelona this week to plead for lighter regulation, cheaper spectrum and some financial help. Policymakers are unlikely to agree. Deutsche Telekom, Telefónica and others will have to convince investors that future growth requires more investment today.
European bank property buffers rest on two big ifs 28 Feb 2024 Lenders like BNP and ING sit on $1.5 trln of commercial property loans, which look vulnerable to high interest rates. Longer leases give EU players more breathing space than US counterparts. Yet averting a crisis requires a mixture of falling inflation and a revival of offices.
Europe defence push requires clearing M&A barriers 27 Feb 2024 The region is hiking military spending to aid Ukraine and become less dependent on the US. Yet governments are squandering investment on incompatible weapons and systems. Creating more regional champions, like aerospace giant Airbus and missile maker MBDA, is a top priority.
Why central banks risk making more mistakes 27 Feb 2024 Western rate-setters were late in fighting inflation. In this Exchange podcast, TS Lombard economists Dario Perkins and Davide Oneglia argue that, as price growth abates, the US Federal Reserve and European Central Bank may be too slow in easing monetary policy.
Europe shares’ granola rush will become thin gruel 26 Feb 2024 The STOXX 600 Index has hit a record, but local funds are seeing outflows. As in the US a small bunch of companies – the so-called GRANOLAS group – are behind the good news. But in the Old Continent they’re more dependent on weak economic growth rather than the AI revolution.
How a syndicated loan can funnel cash to Ukraine 26 Feb 2024 Western allies could extend credit backed by Kyiv’s claim for war damages against Russia, and then use $300 bln of frozen assets to pay off the loan if Moscow refuses to pay reparations. The widely recognised principle of ‘set-off’ can help overcome legal and practical hurdles.
Russia risk looms over Euroclear profit windfall 22 Feb 2024 The Brussels-based clearing house is a reluctant depository for sanctioned Russian assets. It made 5.7 bln euros before tax last year thanks to cash sitting on its balance sheet. But the bonanza also makes it a target. A blow to financial stability would far exceed one-off gains.
Europe risks falling into Levant’s powder keg 20 Feb 2024 War in Gaza is worsening already dire economic conditions in Egypt, Lebanon and Jordan. Western aid is unlikely to solve their deep problems. Despite efforts to outsource its migration issues, the European Union may find some displaced by a protracted conflict reach its borders.
The green agenda’s best shot at a revival 13 Feb 2024 Economic distress prompted by globalisation undermines support for the energy transition, climate change economist Valentina Bosetti tells The Exchange podcast. That matters as key US and EU elections approach. Using proceeds from carbon taxes to address inequality is paramount.
Europe’s wilting bourses get fresh cause to unite 12 Feb 2024 The likely de-listings of Italy’s Saras and Tod’s add to a wider exodus from euro zone stock exchanges. Part of the problem is a lack of new European companies to replace them. But Europe could also help itself if its equity market rules and trading were less fragmented.