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Tuesday, 13 August – UK CMA’s deadline for receiving comments on its probe into Google’s partnership with AI firm Anthropic
On 30 July, it was announced that the Competition and Markets Authority (CMA), the UK’s antitrust watchdog, has initiated a Phase 1 merger investigation partnership between Google-parent Alphabet and the US-based artificial intelligence startup Anthropic. According to the announcement, CMA's focus is on whether this partnership could result in a "substantial lessening of competition" in the UK AI services market.
Anthropic, founded in 2021 by former OpenAI executives Dario and Daniela Amodei, has received significant investment from Alphabet, securing $500 million last year with a promise of an additional $1.5 billion. The startup utilises Google Cloud services as part of its operations. Anthropic's Claude AI models compete with OpenAI's GPT series. The CMA has set a 13 August deadline for receiving comments from any interested parties before deciding whether to launch a formal investigation.
Meanwhile, earlier this week, CMA announced the launch of a similar probe into Amazon’s $4 billion investment in Anthropic with a deadline of 4 October for the first phase of the investigation. These CMA's inquiries are part of a broader global trend where antitrust regulators are concerned about the potential competitive impacts of deals between tech giants and smaller AI firms. For instance, similar scrutiny is being applied to Microsoft's partnerships with OpenAI, Inflection AI, and Mistral AI, as well as Alphabet's ties with Anthropic and Cohere.
Similarly, the European Commission and the FTC in the US have initiated their own investigations into these types of partnerships. Overall, the main concern for regulators is that these Big Tech firms could potentially use these investments to further entrench their market power by integrating advanced AI technologies and key engineering talent, thus stifling competition.
Wednesday, 14 August – Eurostat flash GDP and employment estimate for Q2 2024 to be released
On Wednesday, Eurostat will release its latest flash estimate of GDP and employment statistics for Q2 2024. Data from Q1 2024 showed that GDP growth rates increased by 0.3% in both the euro area and the EU, compared with Q4 2023. In Q4 2023, GDP had declined by 0.1% in the euro area and had remained stable in the EU. Eurozone’s GDP growth in Q1 2024 was largely attributed to increased household spending.
The number of employed persons in the euro area increased by 0.3% and by 0.2% in the EU during Q1 2024, compared to the previous quarter. On a year-over-year basis, employment rose by 1.0% in the euro area and by 0.7% in the EU in Q1 2024, following increases of 1.2% in the euro area and 1.0% in the EU during Q4 2023. Overall, the EU in 2023 experienced record-low unemployment rates, as Member States grappled with labour shortages. Most recently, the jobless rate in the Euro Area was reported at 6.5% in June, slightly up from the all-time low of 6.4% recorded in May.
In its Spring Economic Forecast, the European Commission revised growth for the Eurozone up to 1.0% and 1.6% in 2024 and 2025, respectively. However, the Commission’s growth forecast relies on the technical assumption that Russia’s aggression against Ukraine and the conflict between Israel and Hamas in the Middle East will not further escalate. Regardless of the volatility of energy prices, the overall geopolitical uncertainty, coupled with high interest rates and a shortage of skilled workers could set the eurozone’s sluggish economic growth in the coming months at risk. Furthermore, the eurozone’s largest economy, Germany, is expected to witness anaemic growth of just 0.1% in 2024, after entering into a technical recession in 2023, with implications for the growth prospects of the entire bloc.
All of the above is likely yo prompt the European Central Bank to cut rates for the second time in 2024 at the meeting of its Governing Council next month.
Thursday, 15 August – ONS GDP monthly estimate for June in the UK
On Thursday, the Office of National Statistics (ONS) will release its GDP monthly estimates for June. According to last month’s release of growth data, the UK economy showed signs of recovery in May 2024, with monthly GDP estimated to have grown by 0.4% after flatlining in April 2024. Over the three months leading up to May 2024, real GDP increased by 0.9% compared to the previous three-month period, marking the strongest growth since January 2022. This growth was primarily driven by a 1.1% increase in services output, while production output remained stagnant and construction fell by 0.7%. Year-on-year, GDP grew by 1.0% in the three months to May 2024 and by 1.4% in May 2024 compared to May 2023.
The recent broad-based recovery in the UK economy has been positively received by markets, coinciding with the newly-elected Labour Party's rise to power under Prime Minister Keir Starmer. In July, Goldman Sachs adjusted its GDP forecasts for the UK, increasing its predictions by 0.1 percentage points for 2025 and 2026, to 1.6% and 1.5%, respectively. The Labour Party’s significant parliamentary majority and business-friendly policies have led analysts to view the government as supportive of UK assets.
Further boosting economic sentiment, the Bank of England made its first rate cut since March 2020 earlier this month, reducing the base rate to 5%. This marked a significant shift after the Bank’s rate-setting Monetary Policy Committee (MPC) had raised the base rate 14 consecutive times from December 2021 to August 2023, where it peaked at 5.25%. This combination of improved growth outlook and monetary easing has added to the positive economic outlook for the UK. This week’s data will indicate the extent to which this optimism is justified.
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