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Week Ahead (30 November)

Monday, 30 November - Deadline for CDP to table a new offer for Autostrade per l'Italia likely to be missed as Genoa prosecutor’s office scheduled to finalise investigation

The Italian government is determined to force Atlantia to sell its stake in Autostrade per l'Italia SpA (ASPI) to Cassa Depositi e Prestiti (CDP), a state bank. Atlantia has complained to the European Commission that this forced sale by the Italian government is in contravention of the rules of the European Union Single Market.

Atlantia also complains that the government is holding up the sale by refusing to sign off on a new economic and financial plan (PEF) for the motorway concession which ASPI submitted on 23 July. Although sign-off on the PEF appears likely in the coming weeks, Fabrizio Palermo, the CDP CEO, said yesterday that, before proceeding, his consortium partners Blackstone and Macquarie want to see the outcome of the Genoa prosecutor’s office investigation into ASPI’s maintenance, or lack thereof, of the motorway network in Genoa. This should be concluded by 30 November with a hearing to take place in January 2021. In any event, the 30 November deadline for CDP to table an offer will be the latest in a series of missed deadlines and the saga rolls on.

Monday, 30 November - Eurogroup to discuss 8th enhanced surveillance report and policy contingent debt measures for Greece

The Eurogroup will meet today to discuss inter alia the European Commission’s eighth enhanced surveillance report of Greece. Barring any unexpected objections, the Eurogroup will sign off on the Commission’s approval for the disbursement of €767 million from eurozone central banks’ earnings from Greek bond holdings (SMPs and ANFAs) that will be used to ease Greece’s debt.

While the report was positive, in the debt sustainability analysis, in a scenario where GDP growth is lower than in the baseline, Greece’s gross financing needs would rise above 20% of GDP in the mid-2030s, thereby rendering Greece’s debt unsustainable.

Key to ensuring this scenario is avoided will be support from the EU’s Recovery and Resilience Facility (RRF). Greece will be allocated a total of €12.5 billion in loans and €19 billion in grants.

Deputy Finance Minister Theodoros Skylakasis has said that the Greek government “will start spending the money of the Recovery Fund from the beginning of the year, at [its] own risk, and from [its] own resources”. The first projects will therefore begin with national resources from January 2021, while the European resources are expected by June 2021.

Tuesday, 1 December - Flash estimates for inflation to be released

The latest flash estimates for EU and Eurozone inflation in November are due to be released on Tuesday. The new data is likely to reflect the deep impact of the second wave of the pandemic on the European economy through a month which saw many member states re-impose restrictions on citizens.

The Eurozone annual inflation rate was -0.3% in October 2020, unchanged from September, matching the flash estimates. The inflation rate during the same period last year was 0.7%.

Across the European Union annual inflation was 0.3% in October 2020, stable from September. The rate in October 2019 was 1.1%. By member state, the lowest annual rates were registered in Greece (-2.0%), Estonia (-1.7%) and Ireland (-1.5%). The highest annual rates of inflation were recorded in Poland (3.8%), Hungary (3.0%) and the Czech Republic (2.9%).

Tuesday, 1 December - Target Balance Statistics to be released

On 2 December the ECB will release the latest data on the balances in its TARGET2 mechanism, incorporating data up until the end of October 2020. 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. According to the Bank of Italy, Italy’s Target 2 liability was up to €546.3 billion in September, the largest amount on record. Bundesbank liabilities stood at €1.152 trillion in September.

However, rather than showing a financial crisis, the return of TARGET2 imbalances coincided with the ECB's asset purchase programme. The frontloading of purchases under the ECB’s PEPP will continue to be reflected in Target 2 data.

Thursday, 3 December - Sixth Anti-Money Laundering Directive to come into force

The Sixth Anti-Money Laundering Directive comes into force on Thursday. The directive must be transposed into national law in member states by Thursday, after which relevant regulations must be implemented by 3 June 2021.

The directive introduces new criminal provisions aimed at disrupting and blocking access by criminals to financial resources, including those used for terrorist activities. Headline actions include a comprehensive definition of ‘criminal activity’, the identification of 22 separate predicate offences, increased maximum imprisonment terms of 4 years and allowing judges to impose additional sanctions and measures, including temporary or permanent exclusion from access to public funding and the imposition of fines, among other possible sanctions.

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