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What's happening this week? (28-01-19)



Monday, 28 January – Greece plots return to the markets following successful Prespes vote


On 28 January Greece’s Public Debt Management Agency announced that it would soon look to tap markets ‘in the near future’.


The Public Debt Management Agency is looking to take advantage of favourable market conditions following the passage of the Prespes agreement, which was narrowly endorsed by 153 lawmakers in a vote on 25 January. A 5-year debt issue could be finalised as soon as tomorrow afternoon.


While our base case had been for elections to take place in May, having survived the withdrawal of its coalition partner, the option of holding off on national elections until autumn is gaining traction within SYRIZA. The two dates which are being touted for a potential general election are 29 September or 13 October


Tuesday, 29 January – May’s plan-b Brexit comes before Parliament


Theresa May’s Brexit deal will return to the House of Commons on 29 January. Votes held on a range of amendments will help to shape the direction of Brexit, and the extent to which parliament has control over it, in the coming weeks. We expect that speaker John Bercow will look kindly on amendments aimed at softening Brexit, including Yvette Cooper’s big to extend Article 50 and Dominic Grieve’s push for indicative votes.


The most significant pro-Brexit amendment comes from Tory MP Andrew Murrison. It proposes a 31 December 2021 expiry date for the Irish backstop. The DUP and some in the ERG have indicated that they could accept May’s deal if it is strengthened with a time limit on the backstop. However, this is unlikely to be acceptable to the EU. The first hurdle that Murrison will need to overcome is having his amendment approved by Bercow. The speaker rejected a similar amendment tabled by Murrison ahead of the first ‘meaningful vote’.


Our expectation is that Tuesday’s votes will make it much clearer as to the direction that Brexit will take ahead of March. For Theresa May to get anything close to resembling her deal through, she will likely need to rely on the Murrison amendment. Given the problems that it faces, we expect that a shift towards a softer Brexit, enabled by the series of anti no-deal amendments, will occur. In either case, we expect that an extension of Article 50 will be required. This is made explicit by the Yvette Cooper amendment, but we expect the government to look for more time from the EU even if Cooper’s amendment is not passed.


Thursday, 31 January – Eurostat Flash Q4 2018 GDP projections likely to reflect slowing Eurozone economy


Recent months have brought mounting indications of slowing economic growth in the Eurozone, with slowing industrial production in Germany and France, and slashed GDP forecasts in Italy.


While the Eurozone as a whole may not be in recession, Eurostat figures are likely to reflect a broad slowing of growth across the currency zone, and the risk of a future recession. Indications of a looming recession will in part be blamed on global factors, including the slowdown in China and the increase in protectionism. Awareness of this is likely to weigh on EU decision making regarding Brexit and trade with the United States.

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