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Week Ahead (4 May)

Tuesday, 4 May – Polish Sejm to vote on whether to ratify the “own resources” initiative necessary for the implementation of the EU Recovery Fund

Poland submitted its €58 billion recovery fund plan to the European Commission on Friday. However, as anticipated in our 15 March report, Law and Justice (PiS) will today need to rely on the Left alliance (Lewica) to ensure the legislation underpinning the “own resources” initiative passes through parliament.

Assuming Lewica does not renege on its commitment, the main outstanding obstacle to ratification will come from Finland following last week’s decision by the Constitutional Committee of Finland’s parliament that a two-thirds “supermajority” would be required in parliament in order to approve the own resources decision. With the government controlling 117 seats in the 200 seat parliament, opposition support will be required. It is hoped that the National Coalition Party, which controls 38 seats in opposition, will abstain in order to ensure the legislation is approved. The Dutch Senate must also ratify the own resources decisions while parliaments in Ireland, Austria, Hungary, Estonia and Romania are yet to vote on the measure.

Tuesday, 4 May - Madrid regional elections to take place

The importance Spain’s political parties are ascribing to today’s election in Madrid is well demonstrated by the resignation of Podemos leader Pablo Iglesias as Deputy Prime Minister to contest it as a candidate. Prime Minister Pedro Sánchez has also become heavily involved in the campaign, primarily to warn against the dangers of the far-right, rather than promoting his own party which has little chance of winning.

Indeed, opinion polls show the centre-right PP, which leads the outgoing administration, is on course to double its seat numbers to around 58-61 seats in the 136 seat assembly – not enough to govern on its own. Vox looks set to win around 9 seats which, if combined with PP, would be enough for a majority. PP leader Isabel Díaz Ayuso has not ruled out governing with Vox, which may create difficulties for PP and its leader Pablo Casado at national level, where he has sought to portray the party as a moderate force.

Wednesday, 5 May - Covid therapeutics strategy to be announced

The European Commission will present its strategy on Covid-19 therapeutics on Wednesday. The therapeutics strategy will lay out the Commission's proposals for purchasing drugs for the treatment of patients who have contracted the virus. It is expected that the Commission will indicate its desire to purchase monoclonal antibodies, or man-made antibodies that mimic the body's natural immune responses to infection.

The Commission is hopeful that a roll-out of medicines designed to treat the illnesses caused by the virus will help member states to confidently loosen the restrictions imposed on-and-off since March 2020.

Wednesday, 5 May - Commission to announce draft rules on state-backed investors

The European Commission will reveal legislation on Wednesday aimed at stopping European assets from being bought by companies backed by foreign state-backed subsidies. Margrethe Vestager, Commissioner for Competition, will issue the draft legislation which is seen as a response to a potential post-Covid spending spree by Chinese companies in Europe. With share prices in EU firms remaining deflated while much of the continent operates under restricted business and social conditions, the Commission's positioning on this issue represents a more protectionist stance for its companies.

The specifics of Vestager's plan are emerging, and provide that foreign firms acquiring more than 35% of an EU company with more than €100 million in turnover must alert the Commission where they have received more than €10 million in state aid. Failure to report such aid would result in punishment including fines and the vetoing of acquisitions. Similarly, foreign companies already operating in Europe which are in receipt of more than €200,000 in subsidies over three years may be forced to report such aid to the Commission.

Thursday, 6 May - Bank of England Monetary Policy Committee to meet

The Bank of England's Monetary Policy Committee will meet on Thursday. In the context of the reopening of the UK economy the committee's focus is likely to fall on the easing of its intervention in the economy, although a change in policy on the speed of its bond purchase programme may be held off until the next committee meeting.

Bond purchases are currently running at around £4.4 billion per week, from a total purchase envelope of £875 billion. While the BoE set a target of using the total envelope by the end of 2021, it will have to slow the rate of purchases in order to avoid using all available funding by October or increase the overall total. Given the good performance of the economy since reopening, a slowdown in the pace of purchases is likely in June.

Thursday, 6 May - Regional elections to be held in England, Scotland and Wales

Regional elections will take place in England, Scotland and Wales on Thursday. Around 5,000 council seats will be filled in England, alongside elections to the Scottish and Welsh Parliaments. The regional elections were postponed for a year following the outbreak of Covid-19.

The most important of the regional votes will take place in Scotland, where the question is not if the Scottish Nationalist Party will win, but by how much. Under Nicola Sturgeon the SNP have been campaigning for a second independence referendum, and are seeking an overall majority to boost its claim to that end. It won 63 seats in 2016, just shy of the 65 required for an absolute majority, and polls suggest that it will achieve a similar outcome this time around.

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