European Union

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.

The Exchange: Europe’s tech-slayer in chief

27 Sep 2018

Margrethe Vestager has taken on Apple, Facebook and Google as Europe’s antitrust commissioner, leaving behind huge fines and bruised feelings. She talks with John Foley about Silicon Valley’s missteps, Europe’s challenges and what she’s buying on Amazon – her latest target.

EU arms media with a pea-shooter for Google fight

12 Sep 2018

Brussels’ proposals would make it easier for publishers to charge tech groups for using their articles. But given Google and Facebook hold all the market power, the plan would make little difference. Digital dominance calls for antitrust remedies rather than ineffective fiddling.

U.S. creeps into EU’s money-laundering blind spot

30 Aug 2018

A new anti-money laundering directive seeks to plug holes in Europe’s leaky banks. But the rules don’t address the core problem of relying on local supervision. Until the EU can establish an independent AML authority, the U.S. will continue to act as the bloc’s de facto top cop.

Italy’s bond fix idea resembles covert bailout

21 Aug 2018

The economic spokesman of the ruling League Party says the euro will collapse unless the European Central Bank limits the gap between euro zone countries’ bond yields to 150 basis points. That bar is too low and would give big spenders free rein to dodge hard budget decisions.

Sterling looks ripe for a short sharp bounce

9 Aug 2018

The pound is at its lowest in nearly a year against the dollar and the euro, and options prices show extreme pessimism about its outlook. Investors have grown too gloomy too soon about the risk of a messy Brexit. Even a glimmer of hope of a better outcome will spark a snapback.

EU bank fees stuck between politics and regulation

30 Jul 2018

Faced with ultra-low interest rates, the European Central Bank has urged banks to hike non-interest income, which accounts for 30 percent of revenue. Meanwhile French authorities are warning lenders about overcharging clients. The profitability squeeze shows no sign of ending.

EU’s $5 bln fine is the least of Google’s worries

18 Jul 2018

The Alphabet unit can absorb another record European antitrust penalty. A companion order requiring it to stop forcing handset makers to pre-install its Google search app and Chrome browser may cause more damage – and curb the firm from expanding in areas like self-driving cars.

Brexit is confronted with its own contradictions

12 Jul 2018

Theresa May’s exit plan involves the UK sticking to EU goods rules in return for symbolic but uncertain benefits on immigration and trade. Even if Brussels accepts the convoluted customs arrangement, Britain’s parliament may not. A dangerous standoff looms later this year.

ECB asset check puts investment banks on the spot

12 Jul 2018

The European Central Bank is probing how lenders including Deutsche Bank, BNP Paribas and Société Générale value illiquid holdings. Like bad debts, regulators want to improve comparability. For the three banks, the result could be higher capital charges on 44 bln euros of assets.

Rotten food is least of UK grocers’ Brexit worries

11 Jul 2018

British supermarket operators worry that failure to reach a deal with the EU would see goods stuck at the border. More serious is the prospect of tariffs on imports from the bloc. That would leave them scrambling to protect thin margins and their market share from foreign rivals.

Boris Johnson exit makes UK pound more binary bet

9 Jul 2018

Sterling fell after the foreign secretary resigned. Prime Minister Theresa May may have a freer hand to negotiate a less economically damaging Brexit. Or she, the negotiations, and the economy could fall victim to political infighting. There’s little middle ground for the pound.

Brexit dividend will be cashed in euros

6 Jul 2018

Nine months before Britain is due to leave the European Union its departure terms remain unclear. Prime Minister Theresa May’s latest plan cannot provide the certainty businesses seek: hence the shifting of investment and people elsewhere. Banks look set to lose whatever happens.

Hadas: The euro is not doomed

4 Jul 2018

The single currency is a “EuroTragedy”, Ashoka Mody writes. The Princeton professor sees fatal historical, political and economic flaws. But this drama is not over yet. The euro may still be part of Europe’s historic destiny, if destructive nationalism can be restrained.

Italian bad loan sale defies political risks

20 Jun 2018

Banco BPM sold 5 billion euros of dud loans for 34 percent of face value, amongst the highest prices to date. Rosy valuations and the ECB’s more lenient stance on disposals are a boon for lenders. But buyers risk downplaying the threat posed by Italy’s radical government.

DIY approach weakens Europe’s migration defences

19 Jun 2018

Fewer people are coming from Africa, but managing immigration is the EU’s main political issue. A unified push to screen refugees in third countries could help prevent a full-blown crisis. By contrast, piecemeal solutions in Germany and Italy would be costly and ineffective.