Week Ahead (29 March)

Monday, 29 March – Negotiations on a corporate tax transparency bill to commence  

A proposal to force multinationals with annual revenues of over €750 million to reveal their tax payments and activities in each Member State of the European Union, which had been stalled since 2016, will be the subject of negotiations this afternoon between the European Parliament and EU Member States represented by the Portuguese Presidency of the European Council.

The Portuguese aim to have an agreement by the time their Presidency ends on 1 July. However, the negotiating process will not be straightforward. The European inter alia Parliament wants companies to provide their tax details from wherever they operate across the world while the Council’s proposal is limited to their EU activities. 

W/C Monday, 29 March - Dutch parties to debate negotiations leak in setback to government formation talks

Dutch political parties will attempt to regroup this week after a difficult beginning to government formation talks. Discussions had begun last week, with D66 appointing Kajsa Ollongren as its chief negotiator following its strong performance in the 17 March elections. However, talks were postponed on Thursday after she was diagnosed with Covid-19.

Controversy ensued later in the day when she was photographed leaving the talks carrying documents pertaining to the negotiations, close-ups of which revealed comments on several of the parties to the talks. This generated anger among the Christian Democrats as the documents contained a line referring to the future of one of its prominent members, Pieter Omtzigt, who had been involved in the childcare benefit scandal which forced Rutte's third cabinet to resign. Wopke Hoekstra, the leader of the CDA, described the notes as "bizarre" and said that he had not discussed any of the topics covered in the note held by Ollongren. Ollongren resigned from the negotiations along with her VVD counterpart, Annemarie Jorritsma.

The far-right PVV and FvD were joined by the CDA, CU and PvdA, among others, in their call for a parliamentary debate on the issue. The controversy has already damaged relations between potential coalition partners which, if not repaired, risks delaying the formation of a new government while the country is struggling with rising Covid-19 numbers.

Wednesday, 31 March - Flash Eurozone inflation for March to be released

Flash inflation data for March will be released on Wednesday.  Data from February revealed that the annual inflation rate in the euro area was 0.9%, the same level recorded in January. This represented a year-on-year decline of 0.3%. Across the European Union as a whole, inflation rose by 0.1% to 1.3% in February, but declined by 0.3% year-on-year. Excluding energy, food, alcohol and tobacco, core euro area inflation dropped back to 1.1% from the 1.4% recorded in January.

Thursday, 1 March - TARGET balance statistics to be released 

On Thursday, the ECB will release the latest data on the balances in its TARGET2 mechanism, incorporating data up until the end of February 2021. TARGET2 imbalances have been highlighted as indicative of a return to the malaise which engulfed the Eurozone in 2010/2011. 

Certain German commentators like to point to Italy’s TARGET 2 imbalances as evidence of danger to the German taxpayer.  Italy’s TARGET2 liability was €481.7 billion in January, down from €516 billion in December.  The Bundesbank surplus stood at €1.055 trillion in January, down from the record high of €1.135 trillion in December.