The national governments’ response to the euro crisis was stuck under the weight of political and legal constraints, with a lull which could well extend beyond the summer. The ECB is the only institution which could unlock the situation. We think that Draghi’s speech in London on 26 July, provided it is complemented by swift coordination with the national governments, is a convincing plan to support the adjustment of the two systemic peripherals.
We review the political and legal conditions surrounding the various practical options. The news-flow must be interpreted with prudence, but our baseline – after both the French and the German finance ministers publicly saluted Draghi’s statement – is of a joint intervention by the ECB and the EFSF/ESM on the peripheral bond markets, possibly complemented by additional efforts on collateral and liquidity by the central bank.
The next two months in France could be dominated by, first, the possibility that the Supreme Court forces a constitutional revision for the endorsement of the European Fiscal Compact and, second, the unveiling in September of the 2013 budget. Next year the government faces a dilemma. Boosting potential GDP by raising the employment rate means reducing the tax wedge. This means either a significant rise in VAT – hence, further impairing consumer spending – or an earlier and decisive shift towards spending cuts
to maintain the fiscal consolidation on track.
In the UK, a sharp contraction in GDP prompted extensive discussion on a number of issues which we explore this week: the deficit reduction programme, the country’s AAA status, the divergence between growth and employment, and how much of the fall might be due to one-off events versus underlying weakness. Also in this week’s Focus Europe we assess the Troika negotiations with Greece, delve into the Slovenia’s funding risks and look at Hungary’s progress with its EU-IMF talks.
Deutsche Bank
New York, May 24 (FinanceEnquiry.com) – Analysts at Deutsche Bank Securities reiterate their HOLD rating on the shares of MakeMyTrip Limited (NASDAQ: MMYT). The 12-month target price has been reduced...
New York, May 23 (FinanceEnquiry.com) – Analysts at Deutsche Bank Securities reiterate their BUY rating on the shares of Carnival Corporation (NYSE: CCL). The 12-month target price has been reduced...
New York, May 22 (FinanceEnquiry.com) – A lot of handsets were released in the first quarter of the year and the current time and many more to hit in the coming period. But there is something in the...
New York, May 21 (FinanceEnquiry.com) – UK inflation decelerated more than economists estimate in last month to a seven-month low and manufacturer costs soared the slightest ever since 2009 seeing that fuel...
New York, May 20 (FinanceEnquiry.com) – Race is on for the mobile manufacturers and the same continues till the last month of the year. For now, mobile companies are just planning to be at the...
New York, May 17 (FinanceEnquiry.com) – Karbonn A111, the dual SIM (Mini-SIM) handset, entered the mobile industry two months ago – a period when a lot of mobile making companies launched their latest...
New York, May 16 (FinanceEnquiry.com) – In the race of launching mobile phones, Spice is not at all back foot. It kept on releasing stylishly designed handsets in the market at different...
New York, May 15 (FinanceEnquiry.com) – Two months ago, Huawei mobile makers launched Ascend Y300, a Mini-SIM handset, which has been created beautifully in the dimensions of 124.5 x 63.8 x 11.2 mm...
New York, May 15 (FinanceEnquiry.com) – Analysts at Deutsche Bank Securities report on US Daily Economic Notes.
In a research note published on May 14, the analysts mention that last...
New York, May 14 (FinanceEnquiry.com) – Karbonn A4, the nicer Dual SIM (Mini-SIM) mobile phone, has recently been released but in a very short duration, it has successfully grabbed interest of the buyers, who...
