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Week Ahead (15 February)

W/C Monday, 15 February – Pro-independence parties to start government formation talks after Catalan elections

Yesterday’s election marks the first time that pro-independence parties have won over 50% of the vote in Catalonia, but it should be noted that turnout was very low, at 53%, down from 79% in 2017, and that the result was achieved with 640,000 fewer votes than the parties received at the last regional election.

The law establishes a 20 day period to constitute the new Parliament, after which the speaker of the house will consult with the political parties to propose candidates for the presidency. After this, a process which can last a maximum of 10 days, a vote is called where an absolute majority is required. Should this not be achieved, a second vote takes place within 48 hours where a simple majority is required.

W/C Monday, 15 February - New Italian government to take office

Mario Draghi’s new cabinet – a mixture of technocrats and pragmatic politicians – has been well received by financial markets and by the Italian public. Among the most immediate priorities facing the new government will be the re-writing of the Recovery Plan and defining its governance. Draghi’s creation of a new Ministry of Environment Transition, has one eye on the EU Recovery Fund, which allocates 37% of its budget to the green transition.

Monday, 15 February - ECOFIN to hear update on progress of ratification of own resources decisions in member states

ECOFIN will hold an informal meeting on Monday to discuss inter alia progress on the ratification of the own resources decision. As part of the agreement reached last year on a new multiannual financial framework and the recovery fund, member states committed to introducing new methods of raising revenue in order to fund the largest borrowing programme in its history.

The ratification of the decision by all member states must be completed before disbursements from the recovery fund can begin. It is understood that to date, six member states have ratified the decision, namely France, Slovenia, Portugal, Croatia, Cyprus and Bulgaria. New revenue-raising measures which could be introduced under the own resources decision include a carbon border adjustment mechanism and a digital levy by January 2023, and a financial transactions tax within the lifespan of the new multiannual financial framework (2021-2027).

Tuesday, 16 February - Eurostat Q4 GDP and unemployment statistics to be released

Eurostat will release its latest batch of statistics on GDP and unemployment on Tuesday. The release will show conditions as they stood in Q4 2020, a quarter characterised by the reimposition of lockdowns across Europe as the second wave of the pandemic took hold.

The previous batch of data show that the eurozone recorded its sharpest recorded increase in quarterly GDP growth in Q3. Compared with Q2, when GDP plummeted by 11.8%, an increase of 12.6% was recorded across the eurozone in Q3. In the EU as a whole, whereas GDP fell by 11.4% in Q2 2020, it rose by 11.6% in the third quarter. The results for Q4 will not be so positive and will further illustrate the economic damage inflicted on member states by the ongoing economic crisis.

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