Week in Review (9 August)

Italy gets on snap election footing

After weeks of internal turbulence, Matteo Salvini decided last night to pull the plug on the coalition government presided over by Giuseppe Conte. He had been lobbied aggressively by elder statesmen of the Lega party to push for early elections in the hope of forming a right-wing alliance with Fratelli d’Italia, with Salvini atop as Prime Minister.

Attention will now turn to President Mattarella who will now look for alternatives to form a government or, more likely, dissolve parliament and call a snap election. Mattarella has full control over the timing of this process and may use this power to safeguard Italy’s public finances – a longstanding priority of his, as demonstrated by his refusal to accept the nomination of anti-euro professor Paolo Savona as economy minister. As a result, he may insist on having a technical government in place to oversee the passage of the 2020 budget before going to elections in November, or possibly even early next year.

Poland elections announced for October 13

On Tuesday August 6, it was confirmed by the Polish president’s office that the country will hold its parliamentary election on October 13. This follows a series of social benefits packages introduced by the ruling Law and Justice (PiS) party over the summer, including cash bonuses to families and one-off payment packages to pensioners. Particularly popular is the latest measure to exempt Polish and EU citizens in Poland under the age of 26 from personal income taxation provided that their incomes are under the threshold of 85,500 zlotys (€20,000) per annum.

Since coming to power in 2015, PiS has conflicted with the EU over environmental policy and judicial reforms. These conflicts could intensify following a win from the party.

Ireland probes Apple and Google over digital assistants

Ireland’s data protection authority (DPC) joins other regulators and lawmakers in Europe and the U.S. in examining privacy violations in the recordings of voice commands by digital assistants. It is being determined whether Apple and Google have violated privacy by employing human reviewers to listen to voice commands recorded by Siri and Assistant. In July, Apple announced it had halted this process and Google stated it had suspended similar checks across the EU.

Q2 UK GDP falls into contraction

Data released by the Office of National Statistics today shows UK GDP contracted in Q2 2019 for the first time since 2012. Showing particular weakness was the UK’s car manufacturing sector, where output contracted by 9.5% in Q2 – the biggest quarterly contraction since the financial crisis in 2009.

The numbers will strengthen the Johnson administration’s determination to bring forward a fiscal stimulus package to ward off any negative impact associated with no deal uncertainty and to put the conservative party on an election footing. It may also strengthen Johnson’s determination to have an election shortly after Brexit on 31 October. This is because it will not be known if the country has entered technical recession (two quarters of negative GDP growth) until Q3 GDP figures are released on 11 November.