What's Changing? - Europe

 

Please see below selected Europe-related change from 2015 and earlier, For change from 2016 onwards, please see What's Changing? - Economics.

 

December 2015

• Finland's government is drawing up plans to give every one of its citizens a basic income of 800 euros a month and scrap benefits altogether. A poll commissioned by the agency planning the proposal, the Finnish Social Insurance Institute, showed 69% supported the basic income plan.

 

 

• See Russia Macro Monthly: Geopolitics sustains economic uncertainty.

 

 

 

 

November 2015

 

 

 

• It's been a difficult year for the EU, concluded The Economist Intelligence Unit. Europe is facing not one, but three, existential crises: a monetary crisis, a borders crisis, and a political crisis. While an immediate exit of Greece from the Euro has been averted, expect that to come back by the end of the decade. Greece's debt is still unsustainable, and the political barriers to a realistic write-down are as insurmountable as ever. On borders, the influx of refugees is testing the limits of national delegation and cooperation, as well as of the principle of free movement of people. Finally, one of Europe's largest countries—the UK—is getting ready for a referendum that could well see it leave the Union.

 

 

• The European Parliament published a background briefing which sets out the extent to which banking supervisors and banks' external auditors currently exchange information, and explains why in future they shall establish a more formal effective dialogue (article 12 of the Audit Regulation). Responsibilities for the enforcement of accounting rules and the review of accounting rules (expected loss model under IFRS 9) are briefly set out as well.

 

 

 

• The number of jobless in France rose to a new record in October even as the wider measure of people looking for work showed tentative signs of stabilising. Figures from the labour ministry showed 42,000 additional people were out of work last month, bringing the total number of jobless to 3.59m.

 

• Signs that the attacks in Paris have impacted France's service sector have emerged in the latest survey by Markit.The firm said a rapid fall-off in trade was behind its index falling from 52.7 in October to 51.3 in November.

 

• Meanwhile, domestic politics are in turmoil in the aftermath of the deadly events, with President Hollande using them to increase his authority, argued Eurasia Group, forecasting that his government will use them to justify more deficit spending; and that the centre-right will suffer in upcoming regional elections from divisions exposed by the attacks.

 

 

• Germany is more dynamic than the rest of continental Europe: its unemployment rate fell from 11.7% in 2005 to 6.7% in 2014. And it is more balanced than its fellow European dynamo, the UK, where the economy is dominated by London and the financial-services industry. This success has attracted a growing crowd of admirers. However, in 2016 Germany will fall back to earth, warned The Economist. The fall began in 2015 when it was revealed that Volkswagen, Germany’s biggest company and the world’s second-biggest carmaker, had used clever software to circumvent American emissions standards. The troubles will deepen in 2016.

 

 

• Please see some of more thoughtful and significant recent commentary on the Greek debt crisis.

 

 

• The EIU believes that the Italian fiscal deficit will remain around 3% of GDP and the public debt will reach 137% of GDP in 2015. After a protracted recession the economy is recovering. Real GDP is set to expand by 0.7% in 2015 and 1% in 2016.

 

 

 

• Luxembourg, the country once known as the European ''Death Star'' of financial secrecy, is looking to improve its image. Buffeted by the accusations that it was helping multinational corporations evade billions of dollars in taxes, the country has embarked on a long-term rebranding effort that the government hopes will help the world see it with different eyes. The effort has yet to yield a catchy slogan, but it may not matter. Unless you remember similar exercises that centred on the themes ''The eternal and fascinating Romania,'' or ''I feel SLOVEnia,'' your image of Luxembourg is probably set. This is not the view of a cynical resident or just another analyst. This is the opinion of the man who coined the phrase ''nation branding'' in the 1990s.

 

• Eurasia Group is upgrading its short-term trajectory to neutral based on the belief that the EU will ease sanctions in the first half of next year to secure Moscow's cooperation on Syria. Long-term trajectory remains negative because of structural problems that are unlikely to be addressed during the 2016–2018 national electoral cycle.

 

 

 

• British Prime Minister David Cameron sent a letter to European Council President Donald Tusk on the reforms he wants to the UK’s relationship with the EU. Key elements of renegotiation included: Protection of the single market for Britain and other non-eurozone countries; Boosting competitiveness; Allowing Britain to opt out of the EU’s ambition to forge an “ever closer union,” and strengthening the role of national parliaments; and Restricting access to benefits for EU migrants.

 

• UK GDP rose by 0.5% in the three months to September, down from 0.7% in the second quarter. The slowdown is being led by the manufacturing sector, which is seeing a renewed recession as output has now fallen for three consecutive quarters, suffering a 0.3% decline in the three months to September.

 

 

 

 

October 2015

 

 

• German exports fell by 5.2% in August, the most since early 2009, underlining the slowdown in China, Germany’s fourth-largest export market.

 

 

• There are now some signs of improvement in the lending environment across Italy, the eurozone’s third-largest economy. According to the Abi, the Italian Banking Association, lending to Italian residents grew by 0.2 per cent on an annual basis in August, marking the first increase since 2012. Bank of Italy data has suggested a similar tendency.

 

 

• Deloitte Digital, the firm's global digital consulting agency, launched operations in Central Europe and started by acquiring Digital One, one of the most experienced digital agencies in Poland, based in Lodz. The combination of creative and marketing execution capabilities of Digital One with Deloitte’s strategy and technology consulting and industry knowledge is designed to define a brand new, disruptive model in this category, built on the biggest, complementary assets of both digital agency and a consultancy.

 

 

• Russia, China, India and Brazil were all given a vote of confidence in the World Bank’s “Doing Business” report, creeping up the bank’s often controversial annual rankings in part thanks to a change in methodology. Russia, which is in the midst of a crippling recession and facing international isolation and sanctions thanks to its interventions in Ukraine, moved from 62nd to 51st place in this year’s list, putting it ahead of EU economies such as Greece and Luxembourg and within spitting distance of others such as Belgium and Italy.

 

• In The systemic roots of Russia’s recession, Bruegel claimed that recession in Russia has become a fact since mid-2014, and examined the structural and institutional roots behind it.

 

 

• The UK dipped back into deflation in September, as consumer prices fell year-on-year by an annualised 0.1%. Core inflation, which excludes energy, food, alcohol and tobacco, rose by 1%. The unemployment rate fell to 5.4%, the lowest since 2008.

 

 

 

September 2015

 

 

• The disruptive force of technology threatens to uproot many of the industries on which Europe has built its prosperity and challenge the balance of power across the world, claimed the Financial Times. This technological challenge is convulsing all governments, societies and economies, but some US tech entrepreneurs have warned that Europe might be particularly exposed to the fast-changing “techno-geopolitics” of the world.

 

 

• Other financials was the best-performing of the monitored EU sectors in August, according to latest PMI® data from Markit. Software & services placed second in the Output Index league table, while solid growth was also evident in real estate, technology equipment and banks. As a result, data broken down by broad sector suggested that overall growth of activity in the EU was largely driven by financials and technology. Meanwhile, output fell in chemicals for the first time so far this year, with construction materials the only other category to report a contraction.

 

 

• See also: Key Facts about EU Financial and Related Professional Services - Sept. 2015 report.

 

 

 

• Eurozone unemployment fell to its lowest level in three years, hitting 10.9 per cent in July amid encouraging data from countries such as Italy that have been hardest hit by the region’s economic crisis. The 213,000 fall in eurozone joblessness has left the rate at its lowest since February 2012. Across the region, 17.5m people in the labour market remain without work. In Spain, the jobless rate fell to 22%. Greece, Portugal and Ireland - all recipients of economic rescue packages - have witnessed dips of about two percentage points over the past year to 25%, 12.1% and 9.5% respectively. Italy’s unemployment rate dropped unexpectedly to 12% in July.

 

 

• Portugal revised its budget deficit for 2014 up to 7.2% of GDP from 4.5% after adding the cost of its bail-out of Banco Espírito Santo to the national accounts. It had hoped it could avoid including the cost, but the collapse of the sale of BES’s surviving “good bank” forced it to adjust the public books. The country remains on course for a deficit of 2.7% this year.

 

 

• Source's Iberia consulting market - 2015 provided detailed insight into Spain and Portugal Consulting markets in 2014 and 2015.

 

 

 

 

• A UK exit from the EU would probably hurt the City in the short term, but it would not spell disaster, claimed Capital Economics. The City’s competitive advantage is founded on more than just unfettered access to the single market. And an EU exit would enable the UK to broker trade deals with emerging markets that could pay dividends for the financial services sector in the long run.

 

 

• UK annual inflation rate dipped to zero in August. It has now been 0.1% or lower for seven months, even though growth is robust and wages are rising, somewhat undermining the claim in February by Mark Carney, the governor of the Bank of England, that “this is a temporary phenomenon”. Inflation in the euro zone was meanwhile revised down to 0.1%.

 

 

 

August 2015

 

 

• The eurozone’s economy grew by 0.3% from April to June by comparison with the previous three months, slightly less than the 0.4% that it registered in the first quarter. The surprisingly feeble showing comes despite the European Central Bank launching a big bond-buying programme in March and a depreciated euro, which should boost exports. Germany’s GDP expanded by just 0.4% in the quarter and France recorded zero growth. Still, Greece grew by 0.8% and Spain by 1%. The currency bloc remains on course for its best annual economic performance since 2011.

 

 

 

• In Ireland, Deloitte announced plans to hire 400 new employees over next four years, adding to its current staff of almost 2,000. The hires will be across technology and strategy, human resources and operations, with the first 100 in big data analytics and business intelligence.

 

• Russia’s economy contracted by 4.6% in the second quarter compared with the same period in 2014, the largest drop in six years, marking the country’s first recession since the financial crisis in 2009. The Federal Statistics Office did not offer any details with its first estimate, but analysts said the preliminary figure was likely to be revised downward as sectoral statistics — which includes retail sales, industrial production and household incomes — pointed to an even steeper drop in real terms. The contraction was slightly worse than analysts’ consensus estimate. Economists warned that the renewed slide in oil prices, which has pushed the rouble lower, would make a quick recovery even more unlikely.

 

 

 

July 2015

 

• According to the Eurozone Chartbook for July 2015 from Oxford Economics, momentum in the Eurozone remains positive. Growth in Q1 was strong compared to the average of the past five years, at 0.4% over the quarter. The latest activity data suggest that the eurozone recovery has, if anything, gained further momentum in Q2. Oxford's GDP indicator points to quarterly GDP growth of about 0.5% in the second quarter. However, the pace of recovery is likely to remain very different across member states and even stronger exports and investment will not be in a position to significantly boost growth until next year.

 

 

 

• The following analyses and reports were done by CEEMEA Group and are posted in Spark with their permission. These reports is for internal reference purposes only and are not intended for external distribution. If you quote any statistics from this report, please reference them appropriately and indicate the CEEMEA Group as the source: Business and economic outlook for Belarus - July 2015, Business and economic outlook for Croatia - July 2015, Business and economic outlook for Kazakhstan - July 2015, Business and economic outlook for Serbia - July 2015, Business and economic outlook for Slovenia - July 2015 and Business and economic outlook for Ukraine - July 2015.

 

 

• Deloitte has been joined by Stratosfera, a leading Polish consulting firm offering strategic marketing services. Owing to the combination of the global industry competence and strategic consulting experience of Deloitte with the know-how and innovative approach of Stratosfera, clients will be offered a new, broader range of marketing strategy and brand positioning services under the Stratosfera by Deloitte brand.

 

 

• See also: CEE Economic and Market Data for business and economic outlooks for Central and Eastern Europe countries.

 

 

 

• Germany targeted cross border M&A volume stands at $28.2bn in 2015 YTD, up 25% from the $22.6bn announced in 2014 YTD and the highest YTD volume since 2008 ($31.9bn). Canada is the top acquiring nation into Germany for the first YTD on record, with $13.2bn in 2015 YTD.

 

 

 

• Netherlands' export-driven economy has suffered as a result of the Eurozone crisis, according to Eurasia Group. In 2014 the economy emerged from a recession in which GDP contracted by 0.7% in 2013. After 0.9% growth in 2014, the Dutch economy is expected to grow 1.6% in 2015 and 1.7% in 2016. Unemployment has increased significantly; it peaked in 2014 at 7.4%. It is now expected to start to recover and drop slightly to 7.1% in 2015 and 6.9% in 2016.

 

 

 

• PwC launched its latest UK Economic Outlook report. The report looks in detail at UK economic trends and prospects as well as the longer term challenges relating to housing supply and productivity growth. This is a regular report produced three times a year by the Economics & Policy UK team on behalf of PwC as a whole and complements the international projections in our monthly Global Economy Watch reports.

 

 

 

June 2015

 

 

• The Conference Board leading economic index (LEI) for France edged up in April, helped by large positive contributions from building permits and stock prices. In the six-month period ending in April 2015, the leading economic index increased 1.0 percent (about a 2.0 percent annual rate), up slightly from 0.9 percent (about a 1.8 percent annual rate) over the prior six months. In addition, the strengths among the leading indicators have become slightly more widespread than the weaknesses over recent months.

 

 

• Size matters because much of the growth in the French consulting market comes from the huge multinational corporations headquartered in France, claimed Sourceforconsulting. Starved of growth in the domestic economy, they’re setting their sights on markets further afield in their quest to find growth. And to do that, many clients prefer a firm with a global reach to match their ambitions. The ability to scale up pretty much anywhere and offer a breadth of services clearly favours the big, global consulting firms.