.png)
W/C Monday, 1 April – European Commission likely to announce decision on Lone Star’s acquisition of ERIKS
This week, the European Commission is likely to announce its decision on whether to allow Lone Star’s acquisition of ERIKS, a Dutch specialised industrial service provider, from SHV, a coal trading company. Lone Star is a leading US private equity firm with expertise across real estate, equity, credit and various other asset classes globally.
The acquisition was announced in March 2023 and the involved parties filed a notice of the proposed deal to the European Commission on 11 March. The completion of this transaction is anticipated in the first half of 2024, pending regulatory approvals. DG COMP may clear the deal after the completion of the preliminary review or initiate a four-month investigation if serious concerns about competition distortion arise.
Wednesday, 3 April – Eurostat flash inflation estimate for March
On Wednesday, Eurostat will release its flash inflation estimate in the eurozone for March, a week ahead of the 11 April monetary policy meeting of the ECB Governing Council (GC). Inflation dropped to 2.6% in February, down from 2.8% the previous month, continuing its overall downward trend and moving closer to the ECB’s 2% target. The news came a week before ECB decided to keep its rates unchanged for a fourth consecutive time, at a record high of 4%, amid a worsening economic outlook.
Last month, the ECB lowered its inflation forecasts for the next two years, projecting that the headline rate will run at 5.4% in 2023, falling to 2.3% in 2024 and 2.0% in 2025. Also, according to the Commission’s Winter Economic Forecast, released in February, inflation rates in the euro area are forecast to decline from 5.4% in 2023 to 2.7% in 2024 and 2.2% in 2025. However, elements of the ECB GC remains wary of inflation due to a series of factors, including elevated wage growth, scrutiny on corporate profits, and geopolitical volatility threatening supply chains.
Thursday, 4 April – ECB to release minutes of its March meeting amid growing debate over monetary easing
On Thursday, a day after the release of flash inflation estimates, the ECB will release the minutes of its March meeting, where the Governing Council (GC) left interest rates unchanged at 4%.
In a speech in Paris last week, Francois Villeroy de Galhau, called for an immediate start to interest rate cuts as a precaution against economic downturn risks, deeming inflation risks as "balanced" and growth risks as "on the downside." He also proposed a ‘’moderate cut’’ to initiate the process, maintaining flexibility in rate adjustments for future council meetings. Villeroy's stance is supported by an increasing number of ECB policymakers. Last Wednesday, his Italian counterpart Piero Cipollone also supported easing the restrictive monetary stance, citing the need for wage recovery to bolster the fragile economic rebound, in his first monetary policy speech since joining the GC last November. He warned against the risks of delayed productivity growth and recovery if rates are kept high for too long, indicating a preference for an April rate cut.
However, more hawkish figures like Robert Holzmann and Klaas Knot, the central bankers of Austria and the Netherlands respectively, continue to urge caution against reigniting inflation through premature rate cuts, indicating a preference for postponing rate cuts until at least June. ECB’s President Christine Lagarde also stated in March that she will not commit to a path of pre-set interest rate cuts. Hence, according to the latest Reuters survey, all 77 surveyed economists expect the ECB would maintain the deposit rate at 4.00% on 11 April, with 90% of respondents foreseeing the first cut occurring in June. Against this backdrop, investors are likely to pore over Thursday’s minutes to look for further indications of monetary policy easing in the short term.
Thursday, 4 April – Friday, 5 April – EU-US Trade and Technology Council; restrictions on the import of legacy Chinese chips to form part of discussions
This week, the sixth EU-US Trade and Technology Council (TTC) will be held in Leuven, Belgium. The TTC was launched in 2021, aiming to coordinate transatlantic approaches to global trade, economic, and technology issues, and to promote ‘’democratic, market-oriented'’ values.
Although the fifth US-EU TTC, held in January, failed to lead to concrete results, it was largely deemed a preparatory one for April. According to the draft conclusions of this week’s summit, the two sides are set to unveil a joint vision for the development and cooperation on 6G technology, including the establishment of global technical standards and an outreach plan to promote the development of 6G networks. They also plan to align their research and innovation efforts, focusing on areas such as AI, cloud solutions, security, and energy efficiency. Moreover, the discussions will also cover the use of Chinese semiconductors, with the EU likely to announce the launch of a review into the risks of using lower-end legacy Chinese chips in critical supply chains, mirroring a similar initiative by the US.
On a political level, the EU’s potential announcement of this review could be used as a concrete example of a coordinated transatlantic approach towards China within the framework of the 6th TTC. Besides responding to critics arguing that the TTC is losing steam, it could also demonstrate signs of bolstered unity ahead of the US election, in the absence of a final breakthrough in certain areas of bilateral tensions, such as the steel dispute.