Week Ahead (2 December)

Monday, 2 December – ECB to release latest TARGET2 data

The ECB releases the latest TARGET2 data today.  Imbalances in the data have in the past been interpreted as reflecting funding stresses in the banking sector and a sign that financial difficulties were on the horizon. The new results will show how the land lay in the period between the ending of the European Central Bank's asset purchase programme in January of this year and the beginning of its new purchase scheme this month. 

Monday, 2 December - Decision due in French Digital Services tax case

The scrap between France and the US on the issue of the introduction of a digital tax may escalate today with the publication of a report by the United States Trade Representative, USTR.  The US is concerned that the introduction of such a tax could start a trend in which digital companies, including major players such as Amazon, Facebook and Google, are forced to meet new tax obligations worldwide. 

Donald Trump has been belligerent on the issue, threatening to impose billions of euro worth of tariffs on French products coming into the US if the digital tax goes ahead.  A 90 day truce, aimed at creating space for a framework agreement to be reached between the countries on the issue, expired last week, and there is concern that tit for tat trade tariffs could ensue.  It is more likely, however, that the issue will be parked until at least the OECD meeting in January. 

W/C Monday, 2 December - Three industrial crises put government stability in Italy at risk

The Italian government is dealing with industrial crises on three fronts that could put the stability of the Cabinet at risk.  Negotiations with the government are continuing after Arcelor Mittal announced its intention to withdraw from the Ex Ilva steel plant in Taranto.  No offer has been received for Alitalia yet, and the seventh deadline to present an industrial plan for the Italian flagship carrier has passed.  Thirdly, the government awaits the outcome of a technical report investigation the causes of the collapse of the Morandi bridge in August 2018.  The process could result in the withdrawal of Atlantia’s concession to run sections of Italy’s motorways which would negatively impact that company’s cashflow and likely result in the latter taking legal action against the state.   

Wednesday, 4 December - First formal meeting of the new College of European Commissioners to be chaired by President Ursula Von der Leyen

On Wednesday, newly appointed President of the European Commission, Ursula Von der Leyen, will chair the College of Commissioners for the first time. Mrs. Von der Leyen has already stressed that her top priority will be the presentation of a European Green Deal. Other headline issues she will deal with include the introduction of a legal instrument on a fair minimum wage, the proposal of binding pay transparency measures aimed at gender equality and the initiation of legislation on the human and technical implications of artificial intelligence.

Thursday, 5 December - Potential establishment of central AML authority

It is expected that the Economic and Financial Affairs Committee of the EU will agree terms for the establishment of an independent enforcement body with direct powers to combat money laundering.  The proposals to be made include a Europe-wide watchdog for dirty money and harmonisation of AML measures across member states. Ministers from several European states have issued a joint paper calling for the introduction of an empowered supervisory body in tandem with an enhanced AML regulation.