Week Ahead (27 September)
W/C Monday, 27 September - German parties to begin coalition talks after Sunday's federal election
The first steps towards a new government in Germany will begin this week. Preliminary results show that the Social Democratic Party, led by Olaf Scholz, has taken the highest percentage of the vote in Sunday's federal election. The SPD took 25.7% of votes, marginally ahead of the CDU/CSU which received 24.1%. The Green Party received its largest ever share of the vote at 14.8%, leaving it in a strong position to enter government in coalition with one of the larger parties. The FDP took 11.5% of the vote, making it the fourth largest party.
The next steps for German political parties are clear. Today, each party will hold meetings of their executives to establish their positions in advance of interparty negotiations, while newly elected MPs will hold meetings later in the week. The newly elected Bundestag must hold its first meeting no later than 30 days after the election, i.e., 26 October. As flagged in previous reports, Angela Merkel will remain as caretaker Chancellor until a government is formed.
Monday, 27 September - Google appeal over €4.3 billion antitrust fine to begin
Google's appeal of the European Commission's €4.3 billion fine for abusing its dominant position in the mobile phone market gets underway today. The Commission's competition directorate issued the fine in July 2018 on foot of an investigation into whether the company's requirement that smartphone manufacturers pre-install Google apps amounted to a suppression of competition and impeded the development of the market. Google announced its appeal of the decision in October 2018.
Monday, 27 September - Christine Lagarde to participate in monetary dialogue with ECON committee
Christine Lagarde will appear at the European Parliament's Committee on Economic and Monetary Affairs today. Three topics will be discussed, namely the recent rise in inflation, the risks facing the European economy post-pandemic, and the outcome of the ECB's monetary policy review.
Following September’s ECB Governing Council meeting, Lagarde announced that the Council had unanimously agreed to slow the rate of bond purchases under its €1.85 trillion Pandemic Emergency Purchase Programme. Lagarde did not specify what the new rate of purchase would be, but it is expected to fall from the current rate of €80 billion per month to between €60 billion and €70 billion over the coming quarters. As a reminder, the ECB completed an 18-month strategy review in July in which it decided to change its inflation target from "below, but close to, 2%" to a 2% medium-term target.
Wednesday, 29 September - First EU-US Trade and Tech Technology Council meeting to take place
Officials have confirmed that the first meeting of the new EU-US Trade and Technology Council, scheduled for this Wednesday, will go ahead. The meeting had been in some doubt due to the announcement last week of the Australia/United Kingdom/United States ("AUKUS") defence agreement, which prompted anger in Europe.
The TTC will be co-chaired by U.S. Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo, and Trade Representative Katherine Tai, together with European Commission Executive Vice-Presidents Margrethe Vestager and Valdis Dombrovskis. Ten working groups, covering diverse issues, will also be established, while the meeting will also focus on the global shortage of semi-conductors, which has impacted on the production of an array of goods, including automobiles, electronics and medical devices.
Friday, 1 October - Flash estimate of Eurozone inflation to be released
Flash inflation data for September will be released on Friday. The Eurostat release on inflation for August showed that the Eurozone inflation rate increased to 3.0%, up from 2.2% in July. The inflation rate was -0.2% in July of last year. In the European Union as a whole, inflation reached 3.2%, up from 2.5% in July. In August 2020, the EU-wide inflation rate stood at 0.4%. The data show that inflation in August reached a ten-year high, a full percentage point above the European Central Bank’s target of 2%.
Core inflation, which strips out items which are prone to fluctuation including energy, food, alcohol and tobacco, also rose again having fallen between June and July; it reached 1.6% in August, up from 0.7% from the previous month. Analysts have suggested that inflation has not yet peaked, with energy price rises anticipated across Europe during the coming quarter.