European Union

Breakdown: Europe’s coronabond conundrum

7 Apr 2020

The pandemic is stretching state finances, particularly in heavily indebted countries like Italy. ECB bond-buying helps; so would clubbing together to provide cheap loans. But it’s not enough. It’s time for the single currency to consider joint bonds. Breakingviews explains why.

Orbanomics may be Hungary’s best political shield

6 Apr 2020

Covid-19 has enabled Viktor Orban to rule by decree. Busy with the virus, the EU may fail to stop abuses. But the prime minister's power grab may be limited by Hungary's economic reliance on foreign investment, which gives the like of BMW more scope to register disapproval.

Corona Capital: Uncle Sam’s penchant for boutiques

2 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. The U.S. government has given a boost to independent investment banks by hiring Moelis. Perella Weinberg and PJT are its bailout advisers. Megabanks like JPMorgan and Goldman Sachs, meanwhile, are left on the shelf.

EU divisions risk inflating crisis bill

27 Mar 2020

European leaders failed to agree a joint fiscal response to the pandemic. Despite European Central Bank support, EU inaction makes it harder for Italy and other indebted euro zone nations to ramp up spending to support their stricken economies. That will raise the ultimate cost.

EU can retool old crisis weapons for new fight

24 Mar 2020

The European Stability Mechanism was set up to support troubled euro zone countries. Its 410 bln euros of firepower could help Italy and others with the coronavirus pandemic and unlock more ECB support. By stopping short of common borrowing, it may also be acceptable to Germany.

ECB has a nascent euro zone crisis to head off

18 Mar 2020

The yield spread between German bonds and French or Dutch ones has suddenly widened. That, more than a blowout in the gap with Italy, was the sign in 2012 that markets were questioning the single currency’s future. ECB boss Christine Lagarde has little time to nip it in the bud.

EU virus move beggars neighbours a few doors down

16 Mar 2020

Brussels is urging member states to keep borders open with each other for healthcare supplies, following fears of national hoarding. It’s less worried about what happens beyond its bloc. That’s fine, but the stance could have consequences when the crisis subsides.

ECB’s stealth easing enlists banks in virus fight

12 Mar 2020

President Christine Lagarde left interest rates unchanged but used other tricks to support the euro zone economy through Covid-19. Lenders can borrow at sub-zero rates and dip into capital and cash buffers. They have every incentive to help her limit the damage from the slowdown.

Three things the EU can do to cushion virus blow

12 Mar 2020

The 27-nation bloc lacks central spending power to fight the economic shock caused by the health crisis. But it’s not powerless. Relaxing fiscal rules and restrictions on state aid would give states freedom for more emergency measures. Looser bank regulation is another quick win.

EU green deal is a 1 trln euro diversion

4 Mar 2020

The European Union’s big investment plan to cut emissions, due on Wednesday to be backed by legally binding targets, has been getting a kicking. Fair enough: it’s a typical Brussels fudge. Its main role is to keep the EU busy until political cover exists to properly price carbon.

EU offers Johnson a few crumbs in Brexit talks

3 Feb 2020

The bloc wants the United Kingdom to abide by its standards and state aid rules, and give up fishing rights, in return for a tariff-free trade deal. It’s hard to square with the prime minister’s goals. Yet Brussels has left some wiggle room. And Johnson has compromised before.

Shrinking GDP in Italy is bigger worry than France

31 Jan 2020

Two of the euro zone’s three biggest economies contracted in the fourth quarter. Gallic activity was hurt by strikes over President Emmanuel Macron’s pension reforms and inventory changes. Their impact will fade. The weakness of Italy’s domestic demand is a longer-term problem.

ECB gives banks a reason to sort themselves out

28 Jan 2020

Europe’s lenders have stronger balance sheets but aren’t very profitable, the regulator’s annual review shows. Executives blame low interest rates and strict capital rules, but these won’t change soon. If banks are too slow to cut costs or merge, they face even closer scrutiny.

Italy’s honeymoon with EU is under threat

22 Jan 2020

Luigi Di Maio looks set to step down as head of the 5-Star Movement, the largest party in the ruling coalition. That will strain the alliance. If a crucial regional election on Sunday produces a victory for eurosceptic Matteo Salvini, it may imperil the fragile pro-EU government.

Review: Greek crisis drama shows EU’s good and bad

10 Jan 2020

“The Last Bluff” tells how politicians and bureaucrats negotiated and bullied Alexis Tsipras, Greece’s prime minister, into submission in 2015. The book captures the strange excitement of complex negotiations, and the enduring appeal of the powerful but flawed European vision.

Euro zone bank rally is built on sand

9 Jan 2020

The bloc’s 20 largest lenders, such as BNP and ING, are worth $84 bln more than in October. Investors believe the ECB is now done with rate cuts, which squeeze profit. But renewed trade frictions could change such thinking. And rising capital requirements will weigh on returns.

Margrethe Vestager will open tech’s walled garden

20 Dec 2019

The European antitrust chief’s multibillion-dollar fines had little impact on the 12-digit market values of Google, Facebook and others. She will weaken their grip on the internet more effectively in 2020 by imposing common standards that allow seamless use of rival platforms.

Italy and Germany will unite on EU tech taxes

19 Dec 2019

New European Commission chief Ursula von der Leyen will struggle to persuade Rome and Berlin to compromise over much-needed euro zone banking reforms. Her best bet is to pick another battle. A levy on technology giants’ revenue may help the EU rivals find some common ground.

Johnson’s big win unlocks Brexit black box

12 Dec 2019

The UK’s Conservative Party has won a large parliamentary majority. That means Britain leaves the European Union, and gives the prime minister room to compromise on a quick trade deal. Stocks and the pound have bounced. Johnson’s broader policy ambitions remain a mystery.

ECB feuding will have a new front in coming year

11 Dec 2019

Christine Lagarde took the helm of the European Central Bank with a promise to review strategy. A debate on how to define its price stability mandate will embolden those rate setters who are fed up of ultra-loose policies. The battle will be bitter and played out in public.