European Union

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.

Italy finance chief’s calm words clash with policy

11 Jun 2018

Newly appointed Economy Minister Giovanni Tria soothed investors by promising to stick with the euro and cut debt. His comments are a marked departure from the radical government’s budget-busting promises. The economics professor’s orthodox stance may prove politically untenable.

Exclusive: “Quitaly clause” marks new risk level

8 Jun 2018

As Rome fumbles its single-currency bona fides, global investors are taking steps to protect themselves. In a possible legal first, lawyers added language to a share purchase deal to guard against Italy leaving the euro zone, “voluntarily or by means of expulsion”.

UK’s Brexit backstop only a partial step forward

7 Jun 2018

Britain has proposed a backup plan for avoiding a hard border in Ireland when it leaves the EU. Characteristically, it fudges how long the plan will last, and it still needs Europe to agree. Investors wondering whether Brexit will be mild or ruinous still have little to go on.

Telco rules expose EU’s fake digital single market

6 Jun 2018

Europe agreed to cap cross-border call charges and push member states to award longer spectrum licences. That won’t stop the bloc falling behind China and America’s 5G networks. In the ongoing absence of EU-wide spectrum auctions the telco market will stay fragmented.

Italy’s new cabinet draws inspiration from Trump

5 Jun 2018

Rome’s new radical ministers will run departments whose policies they campaigned against. From labour and pensions to infrastructure and health, iconoclasts of questionable competence are taking over. Such “Trumpismo” governance brings added risk to Italy.

Angela Merkel’s euro reform plan is inadequate

4 Jun 2018

The German chancellor wants an investment budget that would help poorer countries and a souped-up bailout fund. The ideas are a pale imitation of French leader Emmanuel Macron’s proposals. With monetary policy exhausted, the euro zone looks ill-prepared for the next crisis.

EU has political trump card in trade conflict

31 May 2018

The United States is imposing steel and aluminum tariffs on Germany and others. Europe has threatened levies against Harley motorcycles and Kentucky bourbon, among other goods. That hits Republican leaders’ bases as the party faces elections in November. It’s a smart tactic.

Mario Draghi may help more in Rome than Frankfurt

31 May 2018

Turmoil in his native Italy threatens the European Central Bank chief’s biggest triumph: saving the single currency. A eurosceptic government would weaken his promise to do “whatever it takes”. He might have more success challenging opponents of the euro as a domestic politician.