Week Ahead (9 September)

Tuesday 10 September, Final vote on confidence on the government in the Italian Senate

After a month of heated discussions, Italy has finally a new government. The last formal steps before the entry into office is a vote on confidence in both Chambers, foreseen today in the Lower House and on Tuesday in the Upper House.

While no problems are expected today, Tuesday’s vote may be tricky since the coalition forces are a few seats shy of reaching the required 161 senate majority. There is still an element of uncertainty given that some M5S Senators might not vote for the new coalition, although for the time being only one senator has publicly expressed his opposition. The government- supported by M5S, PD and LeU - is still not complete given that no Deputy-Ministers have yet been appointed.

Tuesday 10 September, Ursula Von der Leyen to announce the full list of commissioners and portfolios

After Italy designated Paolo Gentiloni as commissioner on Thursday, Von der Leyen’s roster of commissioners is now complete. The President herself announced via Twitter that she will communicate the full list of portfolios on Tuesday morning. The institutional package negotiated by the European Council back in July has already indicated Spanish socialist Josep Borrell as High Representative for Foreign Affairs, while Dutch Socialist Frans Timmermans and Danish liberal Margrethe Vestager will be Vice-Presidents of the College. The designated commissioners will then start preparing for the European Parliament hearings that will see them address designated committees between 1 October and 8 October.

Thursday 12 September, ECB Governing Council meeting

As noted in previous reports, in July Draghi gave the ECB’s strongest commitment yet to reaching its 2% inflation target, in what has been described as the “whatever it takes” moment for inflation. The ECB minutes, published in August, saw the view expressed within the Governing Council of the need to “convey its determination to act if the inflation outlook failed to improve, in line with its commitment to symmetry in the inflation aim.”

Given the continued weakness in inflation, and the risks posed to the Eurozone economy by the volatile global situation, we continue to think it highly likely (80% probability) that additional stimulus measures will be adopted on Thursday, which will involve, at a minimum, further deposit rate cuts plus a potential relaunch of quantitative easing programme (70% probability) in September.