Week Ahead (3 October)

W/C Monday, 3 October – U.S could unveil executive order on transatlantic data transfers, aiming to address EU concerns over surveillance practices

This week, the U.S government could unveil its long-anticipated executive order on transatlantic data transfers, even though the recent disasters caused by hurricane Ian on the southern U.S has shifted President Biden’s focus and could further defer the announcement on Privacy Shield 2.0. The new data transfer framework will aim to address the EU’s long-standing concerns over U.S surveillance practices

Since the July 2020 decision by the Court of Justice of the European Union (CJEU) to invalidate the Privacy Shield agreement, there has been no legal framework for commercial cross-border data transfers between Europe and the U.S. The new Transatlantic Data Privacy Framework will aim to address this regulatory gap and will be particularly welcomed by U.S advertisers and publishers whose businesses rely on the use of European consumer data. As a draft has already reportedly been finalised, it could be signed by President Biden and published in the coming days. The executive order will be followed by a ratification process by the European Commission, which could take up to six months. Hence, a new transatlantic data framework could be ready by March 2023. Yet, it could once again be challenged by the CJEU, further delaying its enforcement.

Monday, 3 October - Eurogroup to meet amid ongoing inflationary pressures and growing fears of recession

The Eurogroup will meet today in Luxembourg to discuss the macroeconomic situation in the euro area and potential policy responses to high energy prices and ongoing inflationary pressures. Eurostat flash inflation released today shows that Eurozone inflation hit 10% in September, up from 9.1% in August. At 40.8%, energy inflation accounted for the bulk of the increase but core inflation also rose to 4.8% - ahead of expectation. A Eurozone recession appears increasingly likely with the ECB’s own forecasts projecting GDP stagnation in Q4 2022 and Q1 2023. The German Bundesbank has warned of ‘’mounting signs of recession in Germany’’ – such a scenario will have repercussions for the broader EU economic outlook, given Germany’s status as its largest economy.

Last month, the ECB announced an unprecedented rate hike of 75 basis points raising interest rates to their highest level since 2011, despite increasing fears of a looming recession. According to the ECB’s updated forecast, inflation is expected to average 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024. The next monetary policy meeting of the ECB’s governing council is scheduled for 27 October and, given today’s inflation figures, another 75 basis points hike is the least markets will expect.

Wednesday, 5 October – Financial services committee to discuss ‘’Report on vulnerabilities in the EU commercial real estate sector’’

The financial services committee (FSC) of the Council of the European Union will meet on Wednesday to discuss the latest iteration of the European Systemic Risk Board (ESRB) Report on vulnerabilities in the EU commercial real estate sector’. Since the publication of the last version of the report in 2018, there have been several developments affecting the CRE market, including a global pandemic in 2020 that led to a surge in remote working, and the ECB’s decision to raise interest rates in July 2022, for the first time in almost 11 years amid ongoing inflationary pressures and a looming recession.

In February this year, the ECB Single Supervisory Mechanism raised concerns over the Eurozone property market, acknowledging it as a ‘’key vulnerability’’ for eurozone banks for 2022-24. The ESRB report is likely to feed into the ECB’s work on identifying the exposure of eurozone banks toward both commercial and residential real estate.

Thursday, 6 October – Inaugural meeting of the European Political Community to be held in Prague; UK Prime Minister to attend despite initial misgivings

On Thursday, the European Political Community (EPC) will hold its inaugural meeting in Prague. EPC, proposed earlier this year by French President Macron, aspires to function as a political forum including non-EU countries with the key aim to promote cooperation among like-minded democratic states on transport, trade, infrastructure, and security.

A total of 44 leaders have been invited to the inaugural high-level meeting, with the UK prime minister Liz Truss expected to attend, despite having previously expressed scepticism over the initiative. Furthermore, the UK has reportedly offered to host the forum’s next summit, amid growing indications that it will take place in a non-EU country.

It remains to be seen whether Truss’ changed stance on the EPC illustrates a more pragmatic shift in her Cabinet’s policy on the ongoing dispute over the Northern Ireland Protocol. Truss’ government is currently facing a series of economic and political challenges. The British pound recently reached an all-time low, while recent polls suggest a 33% lead for the Labour party over Truss’ Conservatives.

Friday, 7 October – EU leaders to discuss the 8th package of sanctions on Russia during informal meeting in Prague

EU leaders will hold an informal meeting in Prague to discuss the latest round of EU sanctions on Russia proposed last week by the European Commission. The proposal came in the wake of President Putin’s decision to announce partial mobilisation of troops and hold referendums to annex Russian-occupied Ukrainian territories. The measures proposed by the Commission include a price cap on Russian oil, which was previously agreed at the G7 summit in July, and aims to stabilise EU energy markets while decreasing Russia’s revenues. Other proposed sanctions include a ban on imports of several steel products from Russia and a ban on the export of certain semiconductors. Moreover, the list of sanctioned individuals is expected to be expanded.

Although last week’s energy council saw 15 energy ministers urge President von der Leyen to come up with price cap options for all imports of natural gas to address high energy prices, the Commission insists that a broad cap on gas prices could pose risks to the bloc’s energy security. Nevertheless, the Commission remains open to a price cap on Russian gas imports in the coming months, which faces the staunch opposition of Central European countries like Hungary and Slovakia.