Week Ahead (29 January)

W/C Monday, 29 January – European Commission likely to announce decision on the acquisition of Energy Exemplar by Blackstone and Vista Equity 

This week, the European Commission is likely to announce its decision on whether to allow the acquisition of Energy Exemplar by Blackstone and Vista Equity. 

Last October, Blackstone and Vista Equity partners announced the acquisition of Australia-based energy market software provider Energy Exemplar in a deal exceeding $1 billion.  The two buyout firms will each hold a 50% stake.  Energy Exemplar, based in North Adelaide, has experienced significant growth in recent years, with a compound annual rate of 30% since 2018. Although the Commission’s deadline for Phase 1 of the deal is on 5 February, a decision could come this week. The EU antitrust regulator may clear the deal after the completion of the preliminary review or initiate a four-month investigation if serious concerns about competition distortion arise. 

Tuesday, 30 January – AMLA host candidate cities to present their bids in European Parliament public hearing 

On Tuesday, the nine contenders for hosting the EU’s anti-money laundering authority (AMLA) will present their proposals in a joint public hearing co-hosted by the European Parliament and the Council of the EU.  

In the live-streamed session at the European Parliament, the nine candidate cities, including Rome, Vienna, Vilnius, Riga, Frankfurt, Dublin, Paris, Brussels, and Madrid, will have 10 minutes each to present their bids and 50 minutes for questions from MEPs and Council officials. This marks the first instance of public hearings being involved in the selection of a new EU agency location, following a 2022 court judgment granting Parliament an equal role with the Council in determining host cities for future agencies. The final decision on the agency's location will be made through a joint vote by Parliament and Council. 

Meanwhile, Germany and France have stepped up their lobbying efforts for Frankfurt and Paris to win the race, respectively. On the other hand, the Baltic states, namely Latvia and Lithuania argue that an element of ‘’geographical balance’’ is needed, given the overconcentration of agencies in Western Europe.   

On 12 December, EU lawmakers and finance ministers reached a provisional agreement on the creation of the EU anti-money laundering Authority (AMLA). Also, on 13 November, the European Commission confirmed the final list of the 9 bidding cities. However, the decision on its host city was deferred to the first months of 2024, due to a power struggle dispute between Council and Parliament on the exact selection process. The Belgian EU presidency has now sped up efforts to complete the process before Parliament dissolves in April. Failure to designate a host for AMLA by April could leave Europe without a crucial tool to address money laundering risks. 

Tuesday, 30 January – EU-US Trade and Technology Council; expectations for concrete outcomes remain low 

This week, the fifth EU-US Trade and Technology Council (TTC) will be held in Washington DC. The TTC was launched in 2021, aiming to coordinate transatlantic approaches to global trade, economic, and technology issues, and to promote ‘’democratic, market-oriented'’ values. The fifth TTC, originally scheduled for December 2023, will take place at the US State Department and include more formal talks, an informal lunch, and separate events led by EU digital chief Margrethe Vestager and EU trade chief Valdis Dombrovskis at the Atlantic Council and the US Chamber of Commerce, respectively. 

Key discussions are expected to revolve around achievements since the last summit, including praise for the G7's generative artificial intelligence code of conduct and industry collaboration on next-gen telecommunication standards. Emphasis could also be placed on sustainable trade and electric vehicle standards. Informal talks could also be held about critical raw materials and the response of social media platforms to the Middle East crisis. However, once again the ongoing EU-US trade dispute on steel is notably absent from the agenda. 

Hence, expectations for concrete outcomes are low. Instead, Tuesday’s TTC will largely pave the way for the next such summit scheduled for April in Belgium amid growing fears that the platform continues to lose steam.  Critics have argued that the TTC will need to start delivering more tangible outcomes or deal with more ‘’forward-looking’’ policies of common interest, such as the implications of China’s rise, in order to retain its relevance. 

Thursday, 1 February – Eurostat flash inflation estimate for January 

On Thursday, Eurostat will release its flash inflation estimate in the eurozone for January. In December, the European Central Bank (ECB) lowered its inflation forecasts for the next two years, projecting that the headline rate will run at 5.4% in 2023, falling to 2.7% in 2024 and 2.1% in 2025. In November, inflation dropped to 2.4%, its lowest point in over 2 years, moving closer to the ECB’s 2% target and indicating a broader deflationary trend. However, the following month, inflation rebounded to 2.9%, ending a seven-month streak of declines and once again sparking rate-cut debates. Furthermore, core inflation, excluding energy and food prices, stood at 3.4%.

As expected, the ECB yesterday decided to keep interest rates unchanged for a third consecutive time amid a worsening economic outlook. Yet, the minutes of its December meeting indicated that the GC is still wary of inflation, with eurozone central bankers agreeing that monetary easing will most likely start taking place in its June meeting, provided that inflation has been tamed. Nevertheless, in the event of a dramatic resurgence of energy and food prices, driven by an unforeseen geopolitical shock, inflation rates could once again spike, further complicating the job of the ECB.

Thursday, 1 February – Bank of England committee to decide on interest rates; expected to keep them at 5.25% for fourth consecutive time 

The Monetary Policy Committee (MPC) of the Bank of England (BoE) will meet on Thursday, with a fourth consecutive pause in rates priced in. On 14 December, the MPC decided to keep interest rates on hold for the third time in a row, following 14 consecutive meetings from December 2021 to August 2023 where rates were increased. The key interest rate was kept at 5.25%, which is already the highest level since the 2008 financial crisis.  

After remaining unchanged in September, inflation cooled more than expected in October and November dropping to 3.9%, its lowest level in two years. Despite a slight increase in December (4%), inflation, wage growth, and economic growth have fallen below the central bank’s expectations, prompting a reevaluation of its tough stance on borrowing costs. According to a Reuters survey conducted last week, none of the 70 economists expected a rate cut on Thursday. However, a slim majority of them now expects the BoE to start cutting rates as early as May, followed by three more cuts in 2024. Thus, in its meeting this week, the BoE may signal greater openness to rate cuts.