Week Ahead (6 July)

W/C Monday, 6 July - Charles Michel to present EU budget proposals to member states

The President of the European Council, Charles Michel, will present the latest proposals for the new multiannual financial framework (MFF) in the second half of this week. At a meeting with ambassadors last week Michel outlined a potential route to unanimity among member states on an issue which has been rumbling on for some time. Michel pledged to maintain the size and ambition of the proposed €750 billion recovery fund and to preserve the mooted balance between loans and grants. More frugal countries, including the Netherlands, Sweden, Denmark and Austria, reacted strongly against the proposed balance, but are likely to be in favour of Michel's proposal to slightly reduce the size of the MFF. They are also likely to be happy with the news that rebates - the process by which some wealthier member states receive discounts on their contributions to the European budget - are to be retained, along with a strengthened role for the Council in terms of how member states spend EU money.

Michel will meet several heads of state this week in an effort to increase the prospects of a deal. He will meet the Mark Rutte, the Dutch PM who has loudly opposed a deal on the terms proposed, and will also engage in a mini-summit with the presidents of the EU institutions on Wednesday. Rutte, the most prominent of the leaders of the "frugal four" group, will also meet Angela Merkel in Berlin on Thursday.

Talks will continue in advance of the special European Council meeting, scheduled for 17 and 18 July. The Council wants an agreement to be reached by the end of July.

Wednesday, 8 July - IHSMarkit/REC UK Report on Jobs due to be released

The latest IHSMarkit/REC UK report on jobs will be released on Wednesday. The jobs update follows the announcement earlier this week that the UK's economy has experienced the largest quarterly contraction since Q3 1979, with a 2.2% decline in GDP. Last week more than 12,000 people in the UK have lost their jobs, with the retail and aviation sectors hit particularly hard.

An Office of National Statistics data release in June, covering the period February to end of April 2020, showed a decline in many areas, including the total number of weekly hours worked, which was down a record 94.2 million (8.9%) from 959.9 million hours on the previous year.

Last week more than 100 companies, entrepreneurs and trade organizations in the chemical and pharmaceutical industry wrote to the British PM, to warn against erecting barriers to doing business with the EU. The letter stated that failure to secure a trade deal with the EU would put more people out of work and lower living standards. The deadline by which the United Kingdom could request an extension to the transition period expired this week, and continued efforts to find common ground in negotiations have failed to deliver results. Indeed, face to face talks between the EU and UK in Brussels ended abruptly last week with no progress reported.

Wednesday, 8 July - Italian Constitutional Court to make ruling on Atlantia case

The Italian Constitutional Court will rule on Wednesday on an appeal by Autostrade per l'Italia as to whether the Italian government erred in excluding the company from being a part of the rebuilding of the Morandi Bridge in Genoa in 2018. The result of the appeal will have implications for the final settlement of the long-running dispute between the company and the government. It is understood that some members of the government are hoping that the Court will decide in ASPI's favour as it might lead to a conclusion to the saga.

Dealing with the dispute has caused tensions within the coalition. M5S, the largest party, wants to strip the company of its concessions, but the Democratic Party and Italia Viva both point to the cost - estimated at several billion euro - and the potential damage to Italy's investment prospects as reasons to leave the concessions in place.

Thursday, 9 July – Election of new Eurogroup president to take place

The election of a new head of the Eurogroup will take place on Thursday. Three finance ministers from member states are vying to replace Mário Centeno, the Portuguese Minister for Finance whose two and a half year term expires on 13 July. The candidates are Nadia Calviño, the Deputy Prime Minister and Minister of Economic Affairs and Digital Transformation of Spain, Paschal Donohoe, the Irish Minister for Finance, and Pierre Gramegna, Minister for Finance of Luxembourg.

There is no clear favourite for the position as head of the informal but influential body, which meets once a month to discuss matters of common concern. Calviño would represent a like-for-like replacement for Centeno, as a social democrat. That may count against her as Europe stares into huge economic challenges. The presence of her compatriot Josep Borrell in a high-level role may also damage her prospects, although she would be the first woman in the office if elected. Donohoe or Gramegna may represent safer choices.