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Week Ahead (20 September)

Thursday, 23 September – EU Council Working Party on Tax Questions to discuss tax measures related to national recovery and resilience plans 

On Thursday, EU Member State tax specialists will meet in Brussels to discuss, inter alia, national recovery and resilience measures in the area of taxation.  Several EU countries have been encouraged to implement changes to their respective tax codes as part of the reform element of the EU Recovery and Resilience Fund.  Per the OECD recommendation, ensuring that multinational businesses are subject to a minimum effective tax of 15% on all of their profits each year is a priority of large EU Member States, most notably France, and would apply to all multinational groups making more than €750 million in combined financial revenues. 

Thursday, 23 September - Bank of England Monetary Policy Committee meeting

The Bank of England's Monetary Policy Committee will meet this week amid comments from Governor Andrew Bailey that four of the eight members who voted now believe conditions could be right to consider interest rate increases.  However, two new members will join the Monetary Policy Committee this week.  Catherine Mann, former head economist at the OECD, will replace Gertjan Vlieghe as an external member, while Huw Pill takes over a chief economist from Andy Haldane, a noted hawk.   

The BoE will also consider its position on the easing of its bond buying programme in the context of the effect of the disruption of global supply chains on inflation and the recruitment difficulties many businesses are enduring at present.  The effect of the ending of the government's furlough scheme later in September, which may leave up to 1 million people without financial support, will also be a factor. 

Thursday, 23 September - Eurozone flash composite PMI to be released

The latest eurozone flash composite PMI report will be released on Thursday, providing an early look at economic conditions in September.  Manufacturers faced challenges sourcing materials throughout August and September, reflected in the increase of backlogs of work recorded.  The larger backlogs were not attributable to staff shortages, which fell through the month.  Bottlenecks in supply chains caused further inflationary pressures, with input costs recorded at near record highs. 

Thursday, 23 September - Deadline for submission to EBA consultation on common reporting changes

The European Banking Authority's public consultation on amending its Implementing Technical Standards (ITS) on supervisory reporting and asset encumbrance reporting closes on Thursday.  The consultation also seeks public feedback on reporting for the purposes of identifying global systemically important institutions, or G-SIIs.  The proposals are a step towards reducing costs for institutions, as envisioned in the EBA study on the cost of compliance with supervisory reporting requirements.  The EBA has also proposed that smaller, less complex institutions should not have to report on asset encumbrances in the granular detail expected of larger institutions.  

The EBA, in publishing the consultation in June, that it expects to be in a position to submit draft ITS to the Commission in Q4 2021 or Q1 2022, and that it expects the new requirements to be applicable from 31 December 2022.   

Friday, 24 September - German monthly business confidence index to be published as country prepares to go to the polls

The ifo Business Climate Index will be published on Friday, indicating current and future sentiment within the German economy. Recent BCI reports have shown that the expectations of businesses have fallen; in August, the index fell to 99.4 points after recording 100.7 in July, reflecting decreased optimism in the hospitality and tourism sectors. In manufacturing, while companies reported satisfaction with the current levels of business, the outlook for the coming months has significantly dampened, with the expectation level recording its lowest result since November last year.

This will be the final BCI report before the German federal election, which will be held on Sunday, 26th September. The final televised debate between the Chancellorship candidates of the three major parties took place on Sunday, with the SPD's Olaf Scholz again emerging as the victor, according to snap polls.

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