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Week Ahead (22 November)

Monday, 22 November – European Parliament to discuss co-ordinating restrictions as Covid-19 cases soar 

The European Parliament will today discuss how EU member states can better coordinate their responses to surging Covid-19 case numbers across the continent.  Austria has today entered a full national lockdown for what Chancellor Alexander Schallenberg has said will be a "maximum of 20 days”. Austria will also become the first European country to make vaccinations compulsory, a law that will take effect from 1 February. From this week, people in Greece must have a vaccine certification to enter indoor venues such as cinemas, gyms and museums.  Those over 60 must also show proof of receiving a booster vaccine for their vaccination certificates to remain valid.   

Several other member states have also announced new restrictions, including Germany and Sweden.  However, Poland has decided not to re-impose restrictions despite the relatively low vaccination rate of 53% of the total population.   

Monday, 22 November – European Parliament Committee to vote on Digital Markets Act

The European Parliament’s Committee on Internal Market and Consumer Protection (IMCO) will vote on the adoption of the Digital Markets Act today.  Following this a plenary vote will be held in the European Parliament between 13-16 December.  Once Parliament has agreed its position on the DMA, inter-institutional negotiations between the Parliament, Commission and Council can begin on the final shape of the act. 

Originally introduced by the Commission in December 2020, the DMA aims to regulate the digital market by preventing Big Tech from abusing their dominant market positions and to open up competition to smaller competitors.  The Parliament’s main political groupings agreed this week for the DMA to apply to companies with a market capitalization of at least €80 billion and that offer at least one internet service.  This agreement would impose obligations on companies such as Google, Apple, Facebook, Amazon and Microsoft as well as the Dutch company Booking and China’s Alibaba.   The IMCO will now vote on the compromise agreement on Monday. 

Tuesday, 23 November - Proposal for a European Single Access Point for company disclosures expected to be announced  

As part of its wider review of the Capital Markets Union, it is expected that a proposal for a regulation or directive of the European Parliament and Council introducing a European Single Access Point for company disclosures will be published on Tuesday.   

In the interests of transparency, financial services legislation in the EU requires the disclosure from companies of a wide range of information, related to inter alia a company's financial performance, its performance in meeting environmental or social targets, and information on the services it provides or the products it sells. The idea of the ESAP is to facilitate the flow and use of information to allow for the better allocation of capital across the EU.  It will encompass not only standard corporate disclosures but also non-financial information relating to Environmental, Social and Governance reporting (ESG) with the aim of supporting environmental objectives as well as improving the sustainable finance infrastructure in Europe.  Indeed, on 19 October, the European Central Bank cited the ESAP as a useful forthcoming tool to strengthen the capital markets union, saying that it could "help channel investments towards green projects, including on a cross-border basis". 

Wednesday, 24 November - Composite Eurozone flash PMI to be released

The latest composite eurozone flash PMI results will be released on Wednesday, showing the shape of the European economy through November.  October saw the index record its lowest score for six months as growth in the services and manufacturing sectors slowed. Ongoing supply chain issues leading to inflationary pressure on prices have been blamed for the slowdown through the month, the third such slowdown in as many months. 

Services continued to grow during October, albeit at a slower rate that that seen in September; the index fell from 56.4 to 54.6.  A shortage of materials and supply bottlenecks were identified as factors leading to a general decline in the output index of countries assessed in the PMI; Spain, France and Italy experienced their lowest output growth rates in six months while Germany registered an eight-month low.  Only Ireland increased the pace of its growth through October, recording 62.5 for a two-month high for one of its strongest performances on record.   

With the pandemic in the midst of a new surge and member states beginning to take steps to reintroduce restrictions, next week's flash results are likely to show a further slowdown in eurozone growth.  We anticipate that the full effect of the latest batch of restrictions will not be reflected in the data until next month. 

Thursday, 25 November - Minutes of ECB Governing Council meeting to be released

The European Central Bank will release the minutes of October's Governing Council meeting on Thursday. The minutes may provide insight into the thinking of members of the council at a time when speculation around a potential hike in interest rates is growing. Inflation rose to a 13-year high of 4.1% in October, with surging energy costs and supply chain issues blamed. Forecasts had suggested that the eurozone was on course of a rate of 3.7%. Stripping out volatile measures such as energy and food, core inflation rose to 2.1%, slightly above the ECB's target.

The October meeting saw the ECB hold its interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility at 0.00%, 0.25% and -0.50% respectively. The ECB is expected to confirm in the coming months that the €1.85 trillion Pandemic Emergency Purchase Programme, PEPP, will expire in March as planned, but it is thought likely that it will boost its regular asset purchase programme at the same time to discourage large-scale sell offs in the bond markets.

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