European Union

EU rebels will lay siege to Brussels

2 Jan 2019

The global anti-elite backlash will reach the European Parliament in May. Nationalist parties will gain a bigger voice in the assembly, making decision-making messy. Sceptical voices could even infiltrate the European Commission. It’s another test for the European project.

Euro faces tough adulescence

31 Dec 2018

The currency enters its third decade with flaws that date back to conception. They were fully exposed after early market successes gave way to a teenage existential crisis. These weaknesses have the power to ruin adulthood as the drug of cheap central bank money slowly runs out.

EU investment banks face the regulatory microscope

28 Dec 2018

With the region’s bad-debt crisis on the wane, supervisors will shift their focus to probing lenders’ risk models and 132 billion euros of hard-to-value assets. For banks which had previously relied on their own guesstimates, that could mean higher capital charges.

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.

Memo to Theresa May: How to save Brexit as well

12 Dec 2018

The prime minister has survived a confidence vote from her party. But her deal to leave the European Union remains in a critical state. Downing Street aides have a bold rescue plan: call a second Brexit referendum. Breakingviews has obtained a copy of their make-believe advice.

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.

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.

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.

Europe can play a waiting game with Italian rebels

16 Nov 2018

Italy’s anti-austerity budget flouts Brussels’ fiscal rules. Declaring Rome in breach and imposing penalties would fuel euro scepticism ahead of key European elections. Better to tone down the rhetoric, and let a slowing economy and hostile markets weaken the executive’s hand.

EU bank stress test is Brexit war by other means

2 Nov 2018

The EBA’s adverse scenario hits Barclays and Lloyds worse than other euro zone lenders. A projected UK economic hit deeper than euro zone peers helps explain why. EU stress tests are always political, and this one can be read as a coded warning against a messy UK exit.

Italy tries risky EU gamble on budget

19 Oct 2018

The radical government wants to boost spending despite Brussels’ opposition. Lengthy procedures mean the spat will drag on until European Parliament elections in May. With radical parties gaining ground, the new Commission could be more lenient. But markets won’t wait that long.