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Week Ahead (8 May)

W/C Monday, 8 June – Irish Government formation talks make progress

Leaders of Fine Gael (FG) Fianna Fáil (FF) and the Green Party (GP) will continue government formation talks this week. Following talks on Sunday there is a growing optimism that agreement can be reached, although serious hurdles remain to be overcome before a new government is formed. It is understood that agreement is in sight on the issue of the pension age, which FF wishes to maintain at 66 while FG's demand that income tax and the Universal Social Charge are not increased is also close to being agreed. Agreement was also reached on protecting welfare rates and a retrofitting scheme for homeowners.

However, negotiations on the GP core demands are not progressing as well, with its requirement for carbon emissions to be reduced by 7% per annum to 2030 a particular sticking point. A further complication arose when the GP Deputy Leader and lead negotiator for the party in the government formation talks, Catherine Martin, confirmed that she would stand against current party leader, Eamon Ryan, in a leadership contest. Under GP rules a leadership contest must be held within six months of a general election. Deputy Martin was among the GP deputies to originally vote against entering into government formation talks, and under her leadership the party may take a tough approach to the implementation of its policies.

Tuesday, 9 June – EU Trade Ministers to discuss candidate to take over at WTO

On Tuesday, EU Trade Ministers will discuss their preferences for a European candidate to take over from the Brazilian Robert Azevêdo as head of the WTO. Azevêdo is deemed to have failed as WTO head because he was a career diplomat when a political heavyweight was required to make progress with the Trump administration.

The current European trade commissioner Phil Hogan fits the mould of political heavyweight while Spain’s Foreign Minister Arancha González, Dutch trade minister Sigrid Kaag and the British former EU Trade Commissioner Peter Mandelson are all thought to be candidates.

Wednesday and Thursday, 10/11 June - Basel Committee on Banking Supervision to meet

The Basel Committee on Banking Supervision (BCBS) meets on Thursday and Friday. It is likely to build on the work of a policymaker meeting of 26 May where it was outlined that national authorities have registered more than 1,600 actions with the FSB since the onset of the pandemic, helping to ensure fiscal resilience.

The European Banking Authority has also taken a strong hand with regulatory actions, and last week introduced new Covid-19 reporting requirements to ensure that financial watchdogs have a clear picture of the financial health of banks. New regulatory reporting and public disclosure requirements will cover the application of payment moratoria, the forbearance applied to existing loans plus public guarantees for new lending due to the coronavirus. The measures will have effect from 30 June, after which supervisors will have to either enforce the new rules or explain why they chose not to enforce them.

Thursday, 11 June - Formal Eurogroup discussions on agreeing EU rescue package to commence

The Eurogroup will meet on Thursday to begin formal discussions on the European Commission's €750 billion recovery fund proposal. The Commission's proposals will be subject to rigorous debate and will likely have to be modified to have any chance of materialising. While supporters of the recovery fund point to a potential new dawn in terms of shared debt and fiscal solidarity, compromise will need to be sought with the more fiscally conservative member states. As unanimous agreement between member states is required, a deal may involve a reduction in the amount of grant money available from the fund.

The European Council is also due to resume talks on the Multiannual Financial Framework on 19 June. A spokesperson for the EC President Charles Michel said that the June meeting would, "Be a thorough preparation for a next summit at a later date which should if possible be a physical meeting" – suggesting that agreement is not close.


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