Week Ahead (18 September)
Monday, 18 September – Tuesday 19 September - European Commission Vice President and Digital Chief Věra Jourová to visit China
This week, the European Commission Vice President Věra Jourová is heading to Beijing to meet Vice Premier Zhang Guoqing as part of an EU-China High-Level Digital Dialogue. This will be the second such meeting, following three years of hiatus. Ahead of the EU-China Summit, the Commissioner intends to outline the EU’s approach to technology security as part of the EU’s economic security strategy and the issue of AI, including its potential impact on human rights.
The Commissioner's visit follows last week’s State of the Union speech by Commission President Ursula von der Leyen where she announced an anti-subsidy probe into Chinese electric vehicles. The Commerce Ministry of China responded negatively leading to speculation that Beijing could retaliate, exposing European car companies, specifically German car brands who have a significant presence in China.
Nevertheless, German EPP leader Manfred Weber gave his full approval, stating “we do not want to see, as you said, Chinese electric vehicles benefiting from our ambitious climate approach.” He also added that the EU will ‘’have to activate our trade defense instruments to avoid another solar panel attack”. This is in response to an expected wave of bankruptcies in the European solar industry after the price of solar modules fell by 25% this year while the cost of production in Europe is now around double the world price of 15 cents per watt. In 2013, the European Commission imposed anti-dumping tariffs on Chinese solar panels in order to protect the European market.
Tuesday, 19 September – CJEU hearing on Google Shopping appeal against EU’s €2.42 billion antitrust fine to take place
On Tuesday Google’s legal representatives will be heard before the Court of Justice of the EU (CJEU), the EU’s highest court, to appeal the EU’s antitrust fine of €2.42 billion related to Google Shopping service.
The EU imposed this penalty in June 2017, stating that Google had unfairly leveraged its dominant search engine to divert traffic to its Google Shopping service, which allows users to compare products and prices from online retailers, gaining an unfair advantage over smaller European competitors. Despite an initially unsuccessful launch in 2004 under the name Froogle, the Commission claimed that Google began systematically favouring its shopping service in search results from 2008 onward, ultimately achieving a dominant position in search results.
Google had previously appealed to the EU’s General Court, which upheld the Commission’s fine in November 2021. The judges found no "objective justifications for Google's conduct" and concluded that the company had favoured its own Google Shopping service through more favourable display and positioning, while simultaneously demoting rivals through ranking algorithms.
Subsequently, Google lodged an appeal last year with the CJEU indicating its belief that certain aspects of the case require further legal clarification from the highest EU court while repeatedly denying favouring its own service.
Wednesday, 20 September – European Parliament to hold economic dialogue with Spanish Economy Minister Nadia Calviño amid her ongoing race for the EIB Presidency
On Wednesday, the European Parliament’s Economic and Monetary Affairs Committee (ECON) will engage in an Economic Dialogue and exchange of views with Nadia Calviño, Spain’s Minister for the Economy and Digital Transformation. The primary objective of this Economic Dialogue is to gain insight into the priorities and objectives set forth by the Spanish Presidency in the fields of economic governance, financial services, and taxation, allowing ECON members to better understand the initiatives and policy directions that Spain intends to pursue during its tenure.
However, the meeting will take place amid Calviño’s ongoing race to become the new head of the European Investment Bank (EIB). Calviño is currently the leading candidate alongside Margrethe Vestager, the EU’s antitrust chief. The winner will require 68% of the EIB share capital to back them which means that the position of France and Germany will likely be decisive. The outcome could particularly be influenced by the stance of French President Emmanuel Macron, who values the EIB's support for French nuclear and defence projects. Last week, Vestager warned that the EIB should not become ‘’a political fighting arena’’ for investments in nuclear energy or defence.
Also last week, Calviño’s candidacy received a boost, following the nomination of Germany’s Claudia Buch as Chair of its Supervisory Board. The other leading candidate was Margarita Delgado, a Spaniard. Buch’s nomination has been largely seen as a signal that Germany will support Calviño, even though the government still seems to be split over the issue. While Chancellor Scholz supports Calviño, Robert Habeck, the deputy chancellor and leader of the German Greens, and Christian Lindner, the finance minister and head of the liberal Free Democrats, are reportedly more inclined to support Margrethe Vestager. The process is likely to be finalised next month.
Thursday, 21 September – Bank of England committee to decide on 15th interest rate hike
The Monetary Policy Committee (MPC) of the Bank of England (BoE) will meet on Thursday and is expected to increase interest rates for the 15th consecutive time as it continues to battle the highest inflation rate among G7 countries.
On 3 August, the Bank announced its 14th consecutive rate hike to 5.25%, an increase from 5%, which was already the highest rate since 2008. The annual inflation rate slowed to 6.8% in July, down from 7.3% in June and from the peak of 11.1% last October. Meanwhile, core inflation stood still at 6.4%, raising market expectations that the next UK rates will peak below 6%.
Nevertheless, the UK’s inflation rate is projected to remain above the BoE's 2% target for an extended period, indicating that the Bank may need to continue its rate hikes. Thus, in a Reuters survey of 69 economists conducted last week, all but one of them expect another 25-basis point hike to 5.50% this week. Although a slight majority of economists anticipate that the Bank rate will reach its peak at 5.50% and remain at this level until mid-2024, 30 out of 65 respondents, foresee a peak of 5.75% or higher in the next quarter, with two experts even suggesting 6.00%.
Among BoE’s policymakers, there is division regarding the extent of further rate increases. BoE Governor Andrew Bailey mentioned being "much nearer" to the end of the rate-raising cycle, while others like Catherine Mann advocate for erring on the side of caution and continuing to raise rates.