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Week Ahead (24 August)




W/C Monday, 24 August - EU Parliament's Rapporteurs meet to discuss draft legislation on Recovery Fund

The European Parliament's special rapporteurs are expected to present the first draft of legislation towards the establishment of the "Recovery and Resilience Facility", a major aspect of the €750 billion recovery fund. They will meet today to thrash out remaining sticking points and are said to be hopeful of publishing a draft of the legislation by Wednesday.

The parliament has said that it will seek oversight of the administration of the fund, which may be problematic. Under the 21 July agreement the European Commission would have responsibility for distributing moneys from the fund. A governance provision agreed at the summit was that individual member states could stall pay-outs to other member states if there are doubts as to whether the funding is being used for the agreed purposes, such as greening economies or digital transformation. Any material change to what was agreed in July could lead to the reopening of negotiations which could lead to a delay in member states receiving funding – something they will be keen to avoid.

Thursday and Friday, 27 and 28 August - Jackson Hole meeting of Central Bankers to be held

The annual Jackson Hole Symposium for the world's central bankers will be held virtually on Thursday and Friday this week. Philip Lane, the ECB's chief economist, will speak about the outlook for the eurozone economy and its response to the crisis. Lane's speech will be watched carefully for clues about the future of the Pandemic Emergency Purchase Programme, PEPP.

The meeting follows last week’s release of the minutes of July's ECB governing council meeting at which hawks pushed for the PEPP €1.35 trillion funding envelope to be viewed as an upper limit rather than a target. Despite this, with the minutes also showing concerns of a delayed surge in unemployment, plus weak PMI data released on Friday, we think it likely that the €1.35 trillion PEPP envelope will be expanded later this year.

Friday, 28 August – Fitch to review Ireland rating

Fitch will review Ireland's credit rating on Friday. The agency most recently affirmed Ireland's outlook as stable and awarded it an A+ rating in late February. However, the effects of the Covid-19 pandemic mean that this week's rating review will be conducted under different circumstances. In April, Fitch revised the outlook for AIB Group Public Limited Company (AIBG) and Bank of Ireland Group Public Limited Company (BOIG) to negative from stable. It stated that it considered the "large Irish banks as more vulnerable to SMEs experiencing distress and drawing down on overdrafts and credit facilities" and that "banks are also sensitive to a more permanent rise in unemployment levels". Fitch also said that it believes that an increase in impaired assets was likely.

Friday, 28 August - Economic Sentiment Indicator & Business Climate Indicator to be released by Eurostat

Eurostat will this week release the Economic Sentiment Indicator and Business Climate Indictor for August. The data tracks sentiment from various sectors, including industry, retail, services, manufacturing and construction.

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