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Week Ahead (3 May)


W/C Tuesday, 3 May - Commission to announce new sanctions package against Russia

The European Commission is working on a new set of sanctions targeting Russian economic interests, and is expected to present its sixth package later today.  Talks over the weekend focused on those countries which are most heavily reliant on Russia for their oil and gas supplies. Slovakia, the Czech Republic and Hungary expressed misgivings about a potential embargo on Russian oil, citing their need to develop alternative sources of energy and the attendant infrastructure. In contrast to the approach to date, which has seen Europe move unanimously against Russian interests, the sixth package is expected to allow for a phased approach for these countries, allowing them to continue to import Russian energy for a longer period. Germany has warned that the expected embargo will cause economic difficulties for every EU country.

Tuesday, 3 May - Mario Draghi to address European Parliament on Russian gas imports to Europe

The Italian Prime Minister, Mario Draghi, will speak at the European Parliament today on the need for clarity on rules governing the importation of Russian gas to Europe. Russia has demanded that European countries pay for their gas supplies in roubles, which has led to concerns that doing so would violate aspects of the sanctions imposed on Russia on foot of its invasion of Ukraine. Italy relies on Russian-originated gas for 40% of its energy supply per annum.

On Monday Draghi said that a lack of clarity could cause chaos in the energy sector and could lead to a fractured approach to payments across Europe. The European Commissioner for Energy, Kadri Simson, said later on Monday the Commission would provide the clarity sought around what companies are allowed to do while the sanctions remain in place.

Thursday, 5 May - Northern Ireland Assembly elections and UK regional elections to take place

Local assembly elections will be held in Northern Ireland on 5 May.  Polls have consistently shown that Sinn Féin is likely to emerge as the largest political party in Northern Ireland following the election.  If this happens, the party would be eligible to take the position of First Minister for the first time in a symbolic blow to northern unionists.  Under the rules governing the Stormont Executive, however, the second largest party must agree to take the position of Deputy First Minister for an executive to be formed.  It is unclear whether the DUP would make such a decision.  In the event that the DUP does not nominate a Deputy First Minister, direct rule from London may be the most likely outcome.  The outcome may be more complicated again, as a new poll shows that Sinn Féin is on course for 26.6% of the available seats, while the DUP and the non-aligned Alliance Party are now tied for second on 18.2%. The Ulster Unionists have fallen back to 12.1% while the SDLP has risen slightly to 10.5%. 

Local elections in England, Scotland Wales and Northern Ireland will also be held on 5 May.  All local council authority seats in England, Wales and Scotland are up for grabs, with the exception of those seats which are located in areas recently subject to boundary reviews.  As well as local issues, dominant themes of the election will be the government's response to issues including the cost-of-living crisis and the war in Ukraine, and the electorate's response to the ongoing "Partygate scandal".  

Thursday, 5 May - Bank of England Monetary Policy Committee expected to increase interest rates

The Bank of England Monetary Policy Committee will meet on Thursday, with expectations high that it will increase interest rates for the fourth meeting in succession.  Rates may jump to 1%, with some MPC members flagging last month that further rate hikes over the coming months will be required to anchor expectations around inflation.    

The Governor of the Bank of England, Andrew Bailey, said last week that the BoE was now "walking a very tight line between tackling inflation and the output effects of the real income shock, and the risk that that could create a recession and pushes too far down in terms of inflation."   

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