EU Brexit safety net still means trauma for London 20 Dec 2018 The bloc will allow banks to use UK clearing houses for a year, the minimum to spare $60 trln of swaps being cancelled if Britain can’t agree an exit deal. The temporary waiver also gives Europe a negotiating tool, and forces banks to shift business and staff across the Channel.
Italy’s budget truce may yet herald 2019 hangover 19 Dec 2018 Rome’s anti-austerity executive has ended a damaging EU row by backing down over its deficit, cheering domestic asset prices. But its restraint looks largely cosmetic. Investors may soon fret about the risk of a recession and how to refinance public debt without much ECB support.
German carmakers could show Trump art of the deal 14 Dec 2018 VW, Daimler and BMW are vulnerable to 25 pct auto tariffs threatened by the U.S. president, who’s also railing against GM for idling plants. The Germans could win some goodwill by taking up some of their American rivals’ spare capacity. That’s easier done for some than others.
Viewsroom: French misery gives Italy some company 13 Dec 2018 President Macron hopes a 10 bln euro splurge from state coffers will mollify rioters calling him the “president of the rich.” But it’ll worsen the country’s deficit, risking an EU rebuke. It may, though, offer cover for Italy, whose debt load is causing friction with Brussels.
Italy saves EU budget battle for another day 13 Dec 2018 Spooked by hostile markets, Rome’s anti-austerity government is offering to cut its 2019 budget deficit goal. The U-turn could help avoid EU fines. But if the new targets are achieved by simply delaying promised freebies, tensions with the EU and investors may return next year.
European banks stuck in bond market prison 13 Dec 2018 Lenders may need to raise over 500 bln euros of loss-absorbing capital when investors are fretting over weak growth, rising rates, and geopolitical tensions. Borrowing costs are rising, and even strong banks are scrapping deals. To avert a crunch, the ECB may have to step in.
Challenge to Theresa May clarifies Brexit endgames 12 Dec 2018 If the Prime Minister is ousted by her party, the resulting turmoil could take Britain closer to a chaotic departure from the European Union. Even if she survives, her Brexit deal will still struggle to get through parliament. Either outcome makes a second referendum more likely.
“Pere Noel” Macron won’t cheer marchers or markets 11 Dec 2018 France’s president pivoted from Teutonic austerity to Matteo Salvini-ish populism in response to violent protests over inequality. He pledged state cash to help the underpaid and pensioners. That may push up French borrowing costs without pleasing those in yellow vests.
The Exchange: Joe Kaeser 10 Dec 2018 It’s hard to imagine a company embodying as many of the challenges and opportunities of 21st century capitalism as Siemens. The German conglomerate’s CEO swings by Times Square to discuss trade, breakups, power, automation, labor, Saudi Arabia and lots in between with Rob Cox.
Breakdown: Brexit maze has four flawed ways out 10 Dec 2018 The Prime Minister’s deal to leave the European Union is on life support after she delayed a crucial vote. Britain faces a baffling array of political options. Despite the confusion, the country essentially has four choices. Breakingviews offers a guide through the labyrinth.
Swiss spat offers Britain glimpse of Brexit future 7 Dec 2018 While UK politicians argue among themselves, the European Union is threatening to restrict share-trading with the Alpine nation over stalled treaty talks. It’s a stark reminder of the limits of sovereignty - and of the EU’s readiness to use regulation as a political weapon.
Alexis Tsipras mistimes Greek pre-election gamble 7 Dec 2018 After nearly a decade of bailout-related austerity, the prime minister is promising giveaways ahead of a 2019 vote. There’s a case for spending more. But Italian jitters and the end of the European Central Bank’s bond-buying make this a bad moment to test investors’ patience.
EU gives Mediobanca Christmas gift on Generali 5 Dec 2018 Finance ministers extended until 2024 a generous capital treatment for banks’ stakes in insurers. It allows Mediobanca, which has 13 pct of Generali, to add 100 bps to its capital ratio and delay a sale. CEO Alberto Nagel has a larger buffer to resist market jitters, or do deals.
Euro zone reform leaves crisis fault lines intact 4 Dec 2018 The single currency’s finance ministers agreed to make sovereign bailouts and debt restructuring smoother, and share the cost of winding down banks. Yet support for troubled countries and lenders remains limited. The region is still unprepared to cope with future economic shocks.
Swiss have no easy way out of EU deadlock 3 Dec 2018 The government delayed by a week a decision on an EU treaty that would simplify a maze of bilateral deals. Accepting Brussels’ demands to further open up labour markets would risk defeat in a referendum. But failure to agree means putting barriers around the Swiss stock market.
EU sends mixed signals to scale-hungry corporates 27 Nov 2018 Commissioner Margrethe Vestager may wave through a Dutch mobile merger but not the Siemens-Alstom rail deal. One decision hints at flexibility in the EU’s antitrust thinking. Still, politicians hoping to build regional champions to counter the U.S. and China will be disappointed.
Italian budget climbdown would be just a start 26 Nov 2018 The anti-austerity government may trim its 2019 budget deficit target to defuse a clash with the European Commission. That would ease financial market tensions which risked undermining any benefits of extra spending. The stimulus is still being spent in the wrong places, though.
Brexit vote plan is more twerp than TARP 23 Nov 2018 Market panic helped the U.S. government push its 2008 bank bailout through Congress. Theresa May might hope for a similar outcome if the UK parliament rejects her deal to leave the EU. The flawed analogy misunderstands markets, and forgets that Britain’s crisis is self-inflicted.
Viewsroom: What’s next for Brexit? 21 Nov 2018 Cabinet resignations, an angry coalition partner and a skittish currency greeted UK Prime Minister Theresa May’s draft agreement to quit the EU. Breakingviews columnists examine whether the current mess leads to Brexit with an EU deal, without a deal, or even to a new referendum.
Euro budget is a withered carrot for fiscal rebels 19 Nov 2018 France and Germany want to set up a pot of money to fund investment in the euro zone. The fund will only be available to those who comply with EU fiscal rules. The idea is a nice one but there may be too little money and too much complexity for the incentive to be effective.