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Week Ahead (10 August)


W/C Monday, 10 August - UK economic data to be released

A new tranche of UK economic data will be released this week which should provide more detail on the effect of the pandemic on UK businesses and the efficacy of the government's response. On Tuesday, monthly employment data will be released for July, taking account of the raft of lay-offs made by prominent UK companies in recent weeks as businesses reckon with the pandemic fall-out. The BRC-KPMG retail sales monitor for July will also be released on Tuesday, while Wednesday will see the release of monthly GDP estimates as well as the latest monthly data on the services sector.

The data release will be instructive as the Chancellor, Rishi Sunak, has come under pressure from the opposition recently to extend the furlough scheme. On foot of the Bank of England's warning on falling business investment - which had been occurring pre-pandemic - the Shadow Chancellor, Anneliese Dodds, said that Sunak's "one size fits all" approach on winding down the furlough scheme will damage any potential recovery and lead to a major jobs crisis.

Wednesday, 12 August - Boeing/Airbus tariff decision due

On Wednesday the United States Trade Representative will announce the level at which tariffs will be set as part of the long-running dispute with the EU over their respective flagship aircraft manufacturers. Airbus announced last week that it had reached agreement with the French and Spanish governments to "amend" what are called "launch aid loans" which assisted the company in the development of new aircraft models, and that it was no longer taking such loans. However, Robert Lighthizer, the USTR, recently suggested that this did not go far enough, and that Airbus should be made to pay back a portion of the subsidy it received.

Wednesday's announcement by the USTR will be instructive. If the USTR increases tariffs, it can be read as a rejection of the recent "amendments" made by Airbus, whereas if tariffs are kept at the same rate it may read as the US acknowledging progress.

Friday, 14 August – Tensions between government and Atlantia remain as anniversary of collapse of Morandi Bridge approaches

Friday marks the fourth anniversary of the collapse of the Morandi Bridge in Genoa in which 43 people died. While a new bridge for the city was opened last week, the fallout from the collapse continues to cause difficulties for the ruling coalition government. Atlantia last week proposed that its 88% stake in Autostrade be opened to the market in a competitive process, while spinning off Autostrade from its parent company. Although such a provision was accounted for in a 14 July agreement between the government and Atlantia, the move has caused anger in government circles who wanted the asset to end up in the hands of the state owned Cassa Depositi e Prestiti (CdP).

Separately, Prime Minister Giuseppe Conte faced strong criticism last week when the minutes of a meeting between the scientific and technical committee and the government concerning the early stages of the pandemic were finally published. They reveal that Conte's decision to impose a nationwide lockdown in March was taken just 48 hours after the committee advised that the country could be split in two for the purpose of a quarantine, with stricter rules in place for the hard-hit north. The new information is likely to be received poorly in the south of Italy, where “anti-establishment” parties continue to grow in strength.

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