Week Ahead (26 August)

Friday, 30 August – Deadline for EU capitals to submit their nominees to the next Commission   

On 30 August, a deadline set by European Commission President Ursula von der Leyen for EU Member States to submit their nominees to join the 2024-2029 Commission expires.  Last week, von der Leyen started interviewing some of the candidates for the next Commission put forward by Member States.   

EU governments have largely ignored von der Leyen’s request to submit one male and one female candidate. Of the 21 EU capitals that have named their Commissioner picks so far, none have done so. Five have put forward female candidates with the remaining 16 putting forward males.  It remains to be seen how and whether von der Leyen reacts to Member States ignoring her requests for gender parity.  

From the remaining six nominations, Spain is expected to endorse Teresa Ribera, the Minister for the Ecological Transition and the Demographic Challenge since 2018, who is heavily linked to a climate-related portfolio. Italy is likely to nominate Raffaele Fitto, the Minister of European Affairs and Cohesion Policy since 2022, who is eyeing an economic portfolio. 

The issue of gender parity is also likely to be a contentious topic in the European Parliament hearings scheduled for late September or early October before the new Commission is set to take office on 1 November.  The Parliament has internal rules emphasising the need for gender balance in assessing commissioner candidates. Austrian Socialist MEP Andreas Schieder has already warned that ‘’weak’’ male candidates may face rejection in pursuit of a gender-balanced Commission. However, the Parliament also largely ignored these gender-balanced rules in its own appointments of its committees’ Chairs last month. 

Friday, 30 August – Deadline for interested parties to submit comments regarding EU tariffs on Chinese made EVs 

On Tuesday, the European Commission announced its finalised tariff rates for EVs produced in China.  More specifically, BYD will face an additional tariff of 17%, SAIC 36.3%, and Geely 19.3%. Companies that cooperated with the investigation will be subjected to a 21.3% tariff, on top of the existing duties of 10% applying already to all cars made outside the bloc. These rates are marginally lower than the provisional ones announced by the Commission in July. It is worth mentioning that Tesla also had its rate lowered after Elon Musk’s company had requested an individual investigation into its operations in China. Despite being the largest exporter of EVs from China to Europe, Tesla managed to secure a considerably lower tariff rate of 19%, including a 9% additional levy on top of the existing 10%. 

Last Wednesday, Beijing announced its latest retaliatory move by launching an anti-subsidy investigation into imports of EU dairy products. The inquiry will scrutinise nearly all EU dairy imports from April 2023 to March 2024, with a broader period for assessing industrial damages from January 2020. The products under investigation include various types of cheese, curd, and high-fat milk and cream. This move also follows the launch of investigations into EU pork and brandies earlier this year. 

Interested parties have until 30 August to submit comments on these final duties. Last month, EU capitals expressed broader support for the originally announced duties in their non-binding vote, despite fears of Chinese retaliation. A final vote on whether to keep these provisional tariffs in place for five years will take place before 30 October.  Despite scepticism in certain EU capitals, including Berlin, about further retaliatory risks, a qualified majority of 15 countries representing 65% of the EU’s population would be required in order to overturn the tariffs. 

Friday, 30 August – Eurozone flash inflation estimate for August 

On Friday, Eurostat will release its flash inflation estimate in the euro area for August.  In July inflation rose to 2.6%, a slight uptick from 2.5% in July, above the initial market expectations that it would slow to 2.4%, while the previous year saw a much higher rate of 5.3%. More importantly, core inflation, which excludes volatile energy and food prices, held steady at 2.9%, indicating persistent underlying price pressures that are still well above the ECB's 2% target. In terms of contributions to the annual euro area inflation rate, services had the largest impact (+1.82 percentage points), followed by food, alcohol & tobacco (+0.45 pp), non-energy industrial goods (+0.19 pp), and energy (+0.12 pp).  

This slight rise in inflation, combined with expectations of upcoming Federal Reserve rate cuts, has pushed the euro to a 9-month high against the US dollar, its strongest level since late December 2023. It remains to be seen whether this latest slight uptick could have an effect on the next monetary policy meeting of the Governing Council of the European Central Bank (ECB), scheduled for 12 September. 

Despite market expectations for a rate reduction, the ECB is not committing to any specific rate path. This cautious stance is reflected in the recently-published minutes from the ECB's July meeting, where GC members expressed concerns about the uncertainty in the economic outlook and the pace at which inflation will return to the 2% target. ECB members also stressed the importance of data-driven decisions, noting that the current economic environment requires patience and flexibility. The GC agreed that it ‘’could afford to be patient and wait for more data to confirm that disinflation was indeed on track’’ before making any definitive moves on interest rates.  Therefore, the release of the latest inflation data this week will provide the market with a better indication of what to expect in September’s monetary policy meeting.