Funcas Europe

Economic and political instability, both domestically and globally, have led to increased volatility in EU sovereign risk premiums, with France particularly affected. While the EU’s flexible fiscal rules offer temporary relief, long-term fiscal reforms are necessary to address underlying imbalances and return greater stability to EU sovereign debt markets.

On 13 March 2024, the ECB announced a new operational framework to manage its shrinking balance sheet, fundamentally altering its relationship with the banking system and financial markets. The major impact will be felt by 2026-2027 as the Eurosystem’s balance sheet decreases, requiring the ECB to adapt its monetary policy while preserving financial stability.

Este artículo explora la reciente evolución de los diferenciales de deuda soberana de Francia y algunos países de la periferia europea frente a Alemania, y analiza los riesgos a medio plazo.

Este artículo examina los retos del BCE para reconectar la política monetaria con las necesidades del sistema bancario.

In a new episode of the Future is Blue podcast series we covered the implications of the Mario Draghi report, a landmark document that calls for urgent and bold reforms to address Europe’s economic decline. Joined by Sander Tordoir, Chief Economist at the Centre for European Reform, and Raymond Torres, Director of Funcas Europe, we examine Draghi's proposals and the challenges they pose to EU leaders.

In a recent episode of the "Future is Blue" podcast, Carlos Carnicero Urabayen sat down with Alice Faibishenko, Senior Advisor at Funcas, to discuss the latest developments in the European Central Bank's (ECB) monetary policy. The conversation covered the ECB's recent rate cut, contrasting approaches with the U.S. Federal Reserve, and the broader implications for financial markets, financial sectors, and households and firms, particularly in Spain.

In a recent episode of the "Future is Blue" podcast, Carlos Carnicero Urabayen sat down with Alice Faibishenko, Senior Advisor at Funcas, to discuss the latest developments in the European Central Bank's (ECB) monetary policy. The conversation covered the ECB's recent rate cut, contrasting approaches with the U.S. Federal Reserve, and the broader implications for financial markets, financial sectors, and households and firms, particularly in Spain.

La recuperación que se esperaba a inicios de año no se está materializando, a tenor del débil avance del PIB de la eurozona en el segundo trimestre, un 0,3%, lo mismo que el trimestre anterior. Los resultados, sin embargo, son dispares: las economías con más peso de la industria como Alemania tienen un comportamiento peor que las más dependientes de los servicios, particularmente del turismo, como España.

In the latest episode of the Future is Blue podcast, host Carlos Carnicero Urabayen covers the post-election economic outlook for Europe, joined by Sander Tordoir, Chief Economist at the Centre for European Reform, and Raymond Torres, Director of Funcas Europe. The discussion centers on the key economic challenges and opportunities facing the EU as the new political cycle gets into motion after the European elections.

In a recent episode of Funcas’ Future is Blue podcast, we hosted Professor Iain Begg from the London School of Economics and Political Science and Raymond Torres, Director of Funcas Europe, to discuss the European Union (EU) budget and the pressing need for its reform. We covered the historical context, current challenges, and potential future directions for the EU budget

In a recent episode of Funcas’ Future is Blue podcast, we hosted Professor Iain Begg from the London School of Economics and Political Science and Raymond Torres, Director of Funcas Europe, to discuss the European Union (EU) budget and the pressing need for its reform. We covered the historical context, current challenges, and potential future directions for the EU budget

An analysis of EU trade and foreign direct investment flows reveals a relative decline in the EU’s competitive position, notably with respect to the US and China, with the EU now a major net exporter of capital to invest in companies located in other countries. Greater participation by member states in the single market has played a mitigating role but is insufficient to offset the broader weakness unless supported with strategies for revitalising investments within the bloc.

Este artículo repasa la reorientación de los intercambios internacionales que se ha producido desde la pandemia, con especial atención a la posición relativa de la Unión Europea (UE) con respecto a EE. UU. y China. En base a este análisis, se esbozan algunos de los principales retos para la política económica europea y española.

In a recent podcast interview, Carlos Carnicero Urabayen spoke with Hans Dubois, a Senior Research Manager at Eurofound, about the pressing issue of housing affordability in Europe

Spain has long grappled with the challenge of unemployment. In recent decades, the labor market has stood as a testament to the country's economic challenges. Yet, as a recent Future is Blue podcast episode highlights, there is a budding resilience in the Spanish labor force, highlighting evolution from the historical trends of high unemployment, particularly during times of economic uncertainty.

In a new Future is Blue podcast show hosted by Carlos Carnicero Urabayen, Sander Tordoir, Senior Economist at the Centre for European Reform, delved into the intricate dynamics of the global geopolitical landscape, the rise of economic nationalism and Europe's strategic positioning amidst the assertive manoeuvres of superpowers like the United States and China.

Este artículo pone de manifiesto que la Política Agrícola Común (PAC), pese a su progresiva multifuncionalización, ha perdido demasiadas competencias en favor de otras políticas comunes para consagrarse como ‘LA’ política alimentaria exclusiva de la Unión Europea.

Recent economic challenges and geopolitical rivalries have transformed the perception of the benefits derived from international trade and cooperation. While the early 1990s saw the creation of trade agreements and open economies marking a period of global transformation and collaboration, the past two decades have seen globalization viewed more as a source of risks than as a catalyst for growth.

La economía europea ha capeado mejor de los previsto las consecuencias de la pandemia, la guerra en Ucrania, la crisis energética y el giro copernicano de la política monetaria. Una recesión de gran magnitud ha podido evitarse, y las previsiones apuntan a una ligera recuperación en el transcurso del año, evidenciando una resiliencia notable.

Following a long negotiation period, the EU has reached an agreement on new fiscal rules. The revised framework represents a compromise between the more hawkish positions which advocate a rapid return to fiscal balance and the need for a gradual approach that preserves growth prospects.  What will be the impact of the new framework for Europe’s economy in the medium and long term?

Following a long negotiation period, the EU has reached an agreement on new fiscal rules. The revised framework represents a compromise between the more hawkish positions which advocate a rapid return to fiscal balance and the need for a gradual approach that preserves growth prospects.  What will be the impact of the new framework for Europe’s economy in the medium and long term?

In the last days of its rotating presidency, the Spanish government successfully led negotiations in the Council of the European Union to agreement on a new regime for macroeconomic policy coordination. Once agreed by the European Parliament, the new framework will significantly increase national ownership of fiscal consolidation, while at the same time easing the path of adjustment in comparison with the framework it replaces.

Este artículo señala que el nuevo marco de coordinación de las políticas macroeconómicas debería fortificar los esfuerzos por frenar los desequilibrios macroeconómicos y reducir la volatilidad no deseada de los mercados financieros.

Before we close 2023, we wanted to share with you some of our most successful content of the year.

Today we take a bit of a step back and reflect on key developments that have impacted European public finances in the last couple of years.

La Unión Económica y Monetaria (UEM) se ha visto afectada por tres shocks de distinta naturaleza y, en consecuencia, ha ido transformando su gobernanza para hacerles frente, pero siempre lo ha hecho con retraso.

El NGEU fue adoptado en 2020 con el objetivo de paliar los efectos de la pandemia. Casi tres años después, parece ser un buen momento para hacer un balance preliminar de su implementación y discutir su futuro.

Este trabajo analiza, en primer lugar, la dinámica reciente de la inflación en la eurozona, con el fin de entender su origen (ligado a la superposición de la doble perturbación de oferta provocada por la pandemia y la invasión de Ucrania) y evolución prevista.

La Unión Europea es un importante nodo del comercio internacional agroalimentario y debe asumir una responsabilidad importante en relación a la seguridad alimentaria global, lo que exige adaptar la Política Agraria Común al Pacto Verde Europeo, y contribuir al desarrollo de nuevas tecnologías, clarificando la regulación de algunas de ellas.

La recuperación de la economía europea que se esperaba tras la pandemia se ha visto afectada por la sucesión de perturbaciones de oferta, cuyo origen es esencialmente geopolítico.

El presente trabajo muestra que el mercado único impulsó la integración comercial, y apunta a efectos positivos en términos de resiliencia asociados a la integración de la cadena de suministro dentro de la UE.

La política industrial, tan denostada en décadas anteriores y ausente de los tratados fundacionales de la Unión Europea, ha vuelto a tomar un carácter protagonista en la dinámica estratégica de países como Estados Unidos y China. También en Europa, tras la crisis financiera y la pandemia del COVID-19, se ha ido construyendo una política industrial más proactiva, acompañada de tratados bilaterales que han liberalizado el comercio con países con los que existe una relación más estrecha.

La Unión Económica y Monetaria (UEM) se ha visto afectada por tres shocks de distinta naturaleza y, en consecuencia, ha ido transformando su gobernanza para hacerles frente, pero siempre lo ha hecho con retraso.

Con la puesta en marcha de la Estrategia Global de la UE en 2016 se abre la puerta a la expansión de una política industrial de defensa que se encontraba hasta entonces en un estado embrionario.

En un período en que el poder económico y empresarial se desplaza del Atlántico al Pacífico, los datos que analizamos en este artículo corroboran que Asia se está convirtiendo en un destino importante de las inversiones internacionales europeas a pesar de las guerras comerciales y las sanciones.

En este artículo se analiza la evolución del protagonismo de la Unión Europea en la globalización comercial y se resumen los principales rasgos de la nueva política comercial de la Unión Europea a través, por un lado, de los acuerdos de nueva generación y, por otro, de los instrumentos para potenciar la autonomía estratégica abierta.

Today we take a bit of a step back and reflect on key developments that have impacted European public finances in the last couple of years.

Today we take a bit of a step back and reflect on key developments that have impacted European public finances in the last couple of years.

The European Commission's decision to investigate the impact of state subsidies on Chinese electric vehicle (EV) imports in the European market has ...

Monetary policy remains immersed in an intense battle to stem inflation. We are seeing a quick succession of interest rate increases and, consequently, raising eurozone borrowing rates across the board. Credit has already contracted, and the cost of debt has increased, but the duration of the tightening cycle remains unclear as monetary authorities have signaled that their policy approach remains conditional upon the path of inflation.

Whether or not there is a reform of the rules for European macroeconomic policy coordination, policymakers across Europe will need to begin consolidating their fiscal accounts. The high rate of inflation in the wake of the pandemic has eased some of that adjustment burden, but the swift monetary tightening introduced to calm rapid price increases will add to the challenge.

The shift in the macroeconomic environment facing the financial sector and the attendant switch in monetary policy tack, together with the recent episodes of financial turbulence in a number of markets, have strengthened the European Central Bank’s resolve to reinforce the resilience of the European banking system. Despite the current environment’s risks, through an assessment of the ECB’s supervisory priorities, recent findings support the strength and adaptability of the European banking sector, so mitigating the probability of future episodes of financial turbulence, such as those observed in other regions.

Although the ultimate price stability target has not changed and overnight interest rates remain the channel for policy transmission to the economy, the ECB’s balance sheet has taken on greater purpose relative to its traditional role as a support instrument for monetary policy. Against this backdrop, with the ECB now embarked on the path of policy “normalisation”, it is timely to assess whether it is possible to return to the way things were before 2007, given that excess liquidity is determined by factors exogenous to monetary policy and can coexist with it indefinitely, even if policy is restrictive, as it is today.

China's debt has been rising dramatically over the past decade. Some are arguing that this represents a risk for its own stability and that, ultimately, considering China's size, a bursting of the debt bubble could trigger a new episode of global financial stress.

Este artículo hace balance del trasunto de la política monetaria desde la crisis financiera hasta hoy.

Este artículo analiza la necesidad del BCE de reforzar la capacidad de resistencia del sistema bancario europeo ante eventos de inestabilidad.

El panorama fiscal europeo experimentó un giro significativo a raíz de la pandemia de COVID-19,
resultando en un aumento pronunciado de la deuda pública. En respuesta, la Comisión Europea invocó
la “cláusula general de salvaguardia” del Pacto de Estabilidad y Crecimiento en marzo de 2020 para
permitir un gasto público adicional.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

An examination of industrial policy in the EU and Spain reveals the need to reduce key external dependencies, or interdependencies, as well as arrive at an adequate path that avoids protectionist retaliation to the recently passed US Inflation Reduction Act, while at the same time harnesses the economic potential of the bloc. Going forward, taking into consideration current obstacles and limitations both at the EU and Spanish level, it will be necessary to embrace the appropriate industrial policy measures to ensure the transformation of the Spanish economy, in particular through maximisation of NGEU funds.

Este trabajo realiza una revisión de los principales debates abiertos actualmente para la concepción, diseño e implementación de la política industrial en la UE y en España.

Today we discuss EU-China economic relations, a critical topic. China is the EU's second-largest trading partner, and the EU is China's largest trading partner, highlighting the high degree of economic interdependence. However, this relationship poses significant challenges such us trade imbalances (to the detriment of the EU), emerging technological gaps, state subsidies and claims of unfair competition.

Given the importance of the evolution of prices to the outlook for monetary policy and hence, the overall macro picture, in today's newsletter we focus on the recent performance of one of the EU countries where disinflation is most visible, namely Spain.

There are some good news in this front. Inflation in the eurozone has fallen to its lowest level since Russia invaded Ukraine

Welcome to our newsletter about European economic affairs bringing together top experts from academia and think tanks to discuss the most pressing economic challenges of today. Future is Blue is promoted by Funcas. 

This week we are taking a closer look at the recent evolution of the Euribor, the key reference for the European financial markets, in terms of its impact on the banking sector.

A few weeks ago we were discussing about the improved economic prospects for 2023 and the possibility to avoid a recession this year in the EU. 

In the meantime, however, financial markets have entered a period of turbulence in the aftermath of the collapse of Silicon Valley Bank. To get a grasp of the economic impacts for Europe of this new shock, we have reached out to Iain Begg, Professor at LSE, who's joining our podcast show this week with Raymond Torres, Funcas Europe Director, and Carlos Carnicero Urabayen, our host. More details below.

Assessing the recent evolution of euro interest rates reveals that following the significant upward shift in short-term rates since the summer of 2021, long-term rates may have already stabilised at restrictive levels. Under this scenario, as short-term rates keep increasing, longer-term rates could gradually stabilise, generating a downward sloping yield curve.

Since the great recession, shadow banking has been growing worldwide, especially in the US and the Eurozone. However, monetary tightening and new capital requirements for private equity will likely slow down shadow banking growth.

Este artículo realiza una revisión analítica de los nuevos niveles de tipos de interés alcanzados recientemente por el euro, recogiendo y anticipando las subidas aprobadas por el Banco Central Europeo (BCE) y el inicio de la normalización de su balance, así como el nuevo contexto de inflación en la eurozona.

Did you know that 2022 marked a record year for rate increases? All around the world central bankers raised interest rates a 200 times, smashing the last record which dated to 2006 (120 increases).

Este artículo repasa repasa la evolución del Pacto de Estabilidad y Crecimiento, incluyendo las reformas de 2005, 2011 (Six Pack) y 2013 (Two Pack), así como el establecimiento de las cláusulas de flexibilidad en 2016 y del margen de discreción en 2017.

El presente trabajo repasa la evolución y los resultados obtenidos por el marco de gobernanza fiscal de la UE durante las últimas décadas, a fin de encuadrar las actuales negociaciones políticas de reforma. Se pone énfasis en un reto fundamental para avanzar en la integración en el ámbito fiscal: la idea de que esta puede alcanzarse sin ir acompañada de una mejor cooperación o representación.

A lo largo de este artículo se identifican las principales deficiencias y limitaciones observadas en la aplicación práctica del del marco fiscal nacional y europeo. La AIReF aporta su visión y unas propuestas de elementos para la reforma.

Did you know that 2022 marked a record year for rate increases? All around the world central bankers raised interest rates a 200 times, smashing the last record which dated to 2006 (120 increases).

The PMI Composite Index posted 47.3 in October 23-month low. Private sector business activity across the euro area fell at the sharpest pace since November 2020, extending the downturn into a fourth straight month.

La economía internacional afronta el nuevo año intentando digerir los efectos de las sorpresas negativas acumuladas desde principios de 2020 que han provocado el mayor desequilibrio entre oferta y demanda de las últimas décadas.

Is the IMF getting it right with its latest predictions about the world economy? According to its latest global outlook, the world economy will slow this year as central ...

2022 was characterised by uncertainty, economic and financial markets volatility, and most
importantly, an acceleration in the regime shift in which the global economy is immersed.
Although many questions remain unanswered, 2023 should shed some more light on
key future international economic trends, with the search for a new equilibrium in prices, economic policy and geopolitics the main variables to watch.

Recent quantitative tightening decisions undertaken by the ECB are important to reduce surplus liquidity and improve the functioning of the monetary transmission mechanism in the euro area. Nevertheless, they pose important risks for commercial banks, central banks, government finances, and the ECB itself.

Analiza los riesgos y oportunidades
que tendrá la reducción del balance del Eurosistema para
los bancos comerciales y los gobiernos de la eurozona.

What to expect in Europe's economy in 2023? We can't think of a more pertinent question to restart our podcast series this season.

The PMI Composite Index posted 47.3 in October 23-month low. Private sector business activity across the euro area fell at the sharpest pace since November 2020, extending the downturn into a fourth straight month.

Los precios energéticos ya producen efectos de segunda ronda que lastran las perspectivas.

It's been quite a year for stock markets globally. The losses have been massive and financial actors are having to confront a highly uncertain environment.

It's been quite a year for stock markets globally. The losses have been massive and financial actors are having to confront a highly uncertain environment.

The ECB is facing an extraordinary situation in which it is unable to rely on an economic slowdown alone to curb inflation. Only with decisive and swift action on normalisation of both interest rates and its monetary policy toolkit, comprised of legacy long-term liquidity injections and asset purchases, can the ECB prove its determination to bring inflation back in line with official targets and anchor inflation expectations.

The ECB´s targeted longer-term refinancing operations, or TLTROs, were designed to be one of the key mechanisms to keep credit flowing through the banking system to the real economy during the crisis. Beyond the negative impact on banks´ earnings of recent changes to TLTRO terms in order to better align them with other monetary policy instruments, the European and Spanish banking systems have sufficient liquidity to handle the maturity or prepayment of their TLTRO funds, as well as to meet anticipated credit growth next year, thanks to their excess reserves, evolution of retail deposits and funds, and planned bond market issuance.

Este artículo revisa las diferentes medidas de política monetaria adoptadas por la institución desde la irrupción de la pandemia y proporciona una explicación de su motivación, así como varios análisis de impacto del PEPP sobre la economía española y sobre el área del euro en su conjunto.

En este artículo se analizan las opciones disponibles para esa reconducción y sus implicaciones para la liquidez bancaria.

El objetivo de este artículo es revisar dos aspectos de la política monetaria: la definición de la estrategia de normalización en un contexto “nada normal”, en el que la inflación se ha disparado, y la gestión del legado de la instrumentación de la larga etapa anterior –trece años— de posición acomodaticia, que tuvo que enfrentarse a dificultades de trasmisión a los mercados monetarios y de deuda pública relacionada con la crisis bancaria y la del euro.

On 22 October, Giorgia Meloni was officially sworn in as Italy’s prime minister. The new Italian government will have to tackle soaring energy prices and support struggling families and businesses, among other challenges.

The PMI Composite Index posted 47.3 in October 23-month low. Private sector business activity across the euro area fell at the sharpest pace since November 2020, extending the downturn into a fourth straight month.

Is globalization going into reverse mode? Disruptions in supply chains caused by the Coronavirus lockdowns, together with the war in Ukraine and the economic and trade war that the West is fighting with Russia are more and more seen as evidence of a deglobalization trend. Obviously, the implications of a deglobalizing world are enormous for the world economy and for the EU in particular.

Policy responses across Europe to address the energy crisis have obvious similarities, but they also show some relevant differences. Dependencies on Russian gas and the health of public finances to provide state aid are two of several factors that are conditioning how EU Member States are responding individually to this challenge.

Policy preparations for Europe's most complicated winter are under way. EU countries have approved a number of measures in the last few weeks to guarantee energy supplies and support private consumers and businesses to cope with expensive bills.

Back-to-school will be bumpy for businesses and citizens in Europe. We are experiencing a record level of inflation and the cost of everyday essentials like energy and food is rising much faster than average incomes.

After a couple of weeks off, we are restarting our activities today. We hope you are making the most of your summer break.
In today's newsletter, we are sharing with you our latest podcast featuring Alice Faibishenko, Senior Advisor at Funcas think tank and a founding partner of the E3 Partnership, a firm focused on market intelligence and advisory services.

The PMI Composite Index reached 52 in June, the lowest level since February 2021. This suggests a marked slowdown in economic activity at the end of Q2.

After Christine Lagarde announced a few days ago a substantial increase in interest rates (0,5%) and an anti-fragmentation mechanism - so called TPI - to prevent another debt crisis, we've asked Raymond Torres, Funcas Europe Director, to explain the main drivers behind this important decision. Don't miss our latest podcast.

Higher and more persistent than expected inflation disrupted the ECB’s initial forward guidance from late 2021. As the ECB pivots to unwind stimulus more aggressively to tame inflation, it must minimize fragmentation risk and the disruption of monetary policy transmission across eurozone financial markets.

As economic prospects deteriorate sharply, there are questions about what will happen to the real estate sector and the housing market. Are we safe from the bubble burst nightmare days that we suffered during the global financial crisis a little over a decade ago?

El Banco Central Europeo (BCE) se enfrenta a un verdadero dilema, al intensificar el ritmo de retirada de los estímulos monetarios para hacer frente a una inflación desbocada, al tiempo que evita el riesgo de fragmentación de los mercados financieros de la eurozona y de una disrupción potencial del mecanismo de transmisión de la política monetaria.

Back in the 70s developed economies were particularly hit by rising prices and low economic growth. There were two oil crises, currency turmoil and rising unemployment. Inflation reached 15% in the US in 1980.

As the war in Ukraine has now gone on for over 100 days, its global economic consequences are becoming more and more visible and represent quite a concern for policymakers.

The euro-zone economy started 2022 on a weak note but the improving health situation suggests that growth will pick up over the rest of the quarter. The PMI-HIS Markit Composite output index of the Eurozone in January reached 52,3. Pointing to the weakest increase in business activity since the headline index moved back into growth territory last March.

Today we are covering how State guarantee programs have played a key role to support businesses during Covid and what are the broader implications of these programs for our economies.

The emergency measures rolled out in Germany, Spain, France and Italy to mitigate the
impact of the war in Ukraine provide a short-term solution to the budding energy crisis.
However, their long-term efficacy is questionable, and they also exacerbate tensions
between inflation-curbing targets and energy model transformation ambitions, highlighting
the importance of formulating a big-picture plan to transition away from the recent measures
towards a long-term, sustainable energy strategy.

La pandemia ha acelerado significativamente el proceso de digitalización financiera: según la encuesta online de ODF-Funcas, el 36 % de los clientes bancarios accede actualmente todos o casi todos los días a la banca online, frente al 17 % de antes de la pandemia.

El artículo realiza una revisión de los planes de choque puestos en marcha en los principales países de la UE para afrontar el incremento exponencial de los precios energéticos tras la invasión de Ucrania.

Today we are here to cover the global battle for the production of semiconductors and whether Europe has a real plan to lead in this area.

This week we are covering Europe’s mounting public debt. There is widespread agreement that EU governments had to act quickly and massively in response to the crisis.

It's been over one month since Russia started the invasion of Ukraine. Since the 24th of February, the EU, together with key allies such as the UK, the US and others, have approved up to five rounds of sanctions against Russia, targeting some of its most critical sectors but leaving - at least for now - gas and oil outside of the equation.

Looming ECB policy normalisation will likely lead to the rebalancing of relative prices for EMU peripheral sovereign debt. Nonetheless, improved economic fundamentals, the ECB’s commitment to preventing fresh episodes of financial fragmentation and favourable prospects for European integration should help reduce the risk of episodes of intense stress in the eurozone sovereign debt markets.

El cambio de tercio que se inicia en la política monetaria del BCE vendrá acompañado de un reequilibrio en el precio relativo de la deuda soberana de los países de la periferia.

Today we are back to cover sanctions, perhaps the word that's been pronounced the most in the EU political corridors over the last few weeks.

Sadly the crisis in Ukraine has turned into an actual war. Russia started a few days ago a full scale invasion of the country, and we are witnessing one of the most significant armed conflicts in Europe since the II World War.

The euro-zone economy started 2022 on a weak note but the improving health situation suggests that growth will pick up over the rest of the quarter. The PMI-HIS Markit Composite output index of the Eurozone in January reached 52,3. Pointing to the weakest increase in business activity since the headline index moved back into growth territory last March.

La pandemia de la COVID-19 marcará un antes y un después en el entorno y el desarrollo de la política monetaria del BCE. Este artículo comienza por repasar y valorar de forma conci­sa las principales medidas de política monetaria instrumentadas para hacer frente al impacto económico de la pandemia. Tras ello, el análisis trata de enmarcar el debate sobre dos de los retos a los que el BCE habrá de hacer frente en los próximos años. En primer lugar, deberá de prepararse para normalizar los tipos y la com­posición de su balance, minimizando el impac­to sobre la estabilidad financiera y resistiendo las presiones para que retrase el necesario ajuste.

En este artículo se describe la rápida, flexi­ble y eficaz actuación del BCE y sus efectos sobre la estabilidad financiera de la eurozo­na, como respuesta a la COVID-19.

This week we are revisiting the topic with concrete ideas on how the new rules should actually take shape.

A new emphasis on policy coordination to mitigate the economic consequences of the COVID-19 pandemic led to a faster than expected European economic recovery, particularly compared to the Global Financial Crisis. However, policy coordination is still a challenge and will require a clear understanding of an unfamiliar economic context, together with strong agreement among European policymakers.

El mix de políticas económicas, basado principalmente en la interacción de las políticas monetaria y fiscal, ha desempeñado un papel esencial en promover la recuperación económica de Europa durante la pandemia, habiéndose visto reforzado por un ambicioso programa fiscal a nivel europeo como representa el Plan de Recuperación Next Generation EU.

This week we are revisiting the topic with concrete ideas on how the new rules should actually take shape.

This week we are revisiting the topic with concrete ideas on how the new rules should actually take shape.

This week we are revisiting the topic with concrete ideas on how the new rules should actually take shape.

This week we are taking a close look at what happened at the UN COP26 Glasgow summit. Are we going in the right direction in the fight against climate change after this important event?

This week we are taking a close look at what happened at the UN COP26 Glasgow summit. Are we going in the right direction in the fight against climate change after this important event?

The main short-term indicators suggest the euro-zone’s economic recovery might slow markedly in Q4, as supply shortages intensified, which caused a slowdown in manufacturing and service sectors.

This week we are touching on the issue of labour shortages, a challenge that is affecting most advanced economies and that could complicate recovery after the pandemic.

The main short-term indicators, notably PMIs, suggest phase, though still strong is losing momentum as as supply shortages take their toll, especially in manufacturing

This week we are covering the energy price crisis. This is a subject that is very concerning as many fear we are approaching an expensive winter.

The results of the ECB’s monetary strategy review announced in July suggest Christine Lagarde has succeeded in her promise to transform how the ECB works and how it communicates with the outside world. However, her first real test will come as the Bank begins to unwind its unconventional monetary policy instruments.

This week we are focusing on the results of the German election. The stakes are obviously high for Germans, but also for Europe as a whole. It’s no secret the weight that the future German government will have on the EU’s key economic discussions.

El Banco Central Europeo (BCE) anunció en julio los resultados de la revisión de su estrategia de política monetaria. Como aspecto destacado, el Consejo de Gobierno ha definido un objetivo de inflación simétrico del 2 %. No obstante, la forma en que los responsables de la política monetaria reaccionan ante las desviaciones de su objetivo no es simétrica.

Al abordar la descripción de los fondos europeos es necesario diferenciar dos grandes paquetes: Marco Financiero Plurianual. Ciclo ordinario de fondos europeos que se fija a siete años. Aquí se circunscriben los fondos FEDER, horizonte Europa,…, y el bloque de recursos vinculados al Fondo Europeo de Recuperación. España recibirá 150.000 millones de euros por este concepto.

The main short-term indicators, notably PMIs, suggest that the recovery gathered momentum in the last few months. In August, the PMI-IHS Markit Composite Output Index of the Eurozone reached 59, slightly below the level of July (60,2), which marked the highest value since June 2006. This suggests that the Eurozone private sector is growing at its fastest rate for the last two decades, underpinned by increasing levels of output in both manufacturing and services sectors.

This week we are taking a look at Europe’s main economic risks. What are the main concerns for policymakers as they come back to their office after the summer break? We’ve hosted a podcast conversation with Raymond Torres, Funcas Europe Director, and Carlos Carnicero Urabayen, Future is blue editorial coordinator.

We start the new course with a video interview about the Fit for 55 Commission proposal, the legislative roadmap to trigger a green transformation in Europe and meet the target of cutting greenhouse emissions by 55% in 2030. Our editorial coordinator Carlos Carnicero Urabayen has interviewed Lara Lázaro, Senior Analyst at Elcano Royal Institute. More on this below.

On 8 July 2021, the European Central Bank revealed its revised monetary policy strategy. It had been a long time coming: the previous strategy had been in place for eighteen years and even then had not changed much from the original strategy agreed in October 1998, just prior to the launch of monetary union. A review to be concluded by the end of 2020 had been announced in January 2020, but was extended in April 2020, because of the pandemic, until the second semester of 2021.

Spain is one of the countries which has most to gain from Next Generation EU, the key European-wide blueprint intended to kick-start the recovery from the Covid-19 crisis. For decades, particularly since the debt crisis of 2010, many of us demanded a comprehensive reform package to modernise the economy. Such a plan is now available and was endorsed by the European Commission on the 16th June.

Previsiones económicas para la zona euro, 2021-2022

[a] Contribución al crecimiento del PIB.
Fuente: Eurostat y Funcas (previsiones).

Descargar (formato pdf)

The main short-term indicators, notably PMIs, suggest that the recovery gathered momentum in the second quarter In June, the PMI-IHS Markit Composite Output Index of the Eurozone reached 59,5, leaving the index at its highest index level since June 2006.

This week we are covering the prospects for a global recovery from the Covid crisis. We have reached out to Professor Karnit Flug, Vice President of Research and Willian Davidson Senior Fellow for Economic Policy at the Israel Democracy Institute, to discuss current trends.

While the effect of COVID-19 on Spanish business demographics has been unprecedented, it has also been unequal, with certain sectors hit harder or recovering faster than others.

In comparison with peer countries, Spain’s manufacturing output held up relatively well amidst a historic contraction in GDP.

This week we are talking about inflation. The advanced economies have experienced remarkably low levels of inflation over the last decades. Now things are changing, and policymakers and central bankers are keeping a close look at it on both sides of the Atlantic.

It happens that we aren’t sure what’s happening." Ortega y Gasset’s paradoxical axiom serves as a guide in this EU hour where the vaccination of the population, -a critical factor for success (and survival) in the face of the pandemic-, reveals the Union’s poor performance.

This week we are covering the Spanish recovery plan to fully understand how the Spanish government is working to take full advantage of the EU Next Generation programme.

With governments daily announcing ever more extensive economic support packages, fiscal and other rules discarded, and monetary policy about as easy as it could conceivably be, the macroeconomic paradigm prevailing across Europe has been transformed. The questions now are what next and how will matters evolve as the Covid-19 economic crisis abates? A much-discussed answer has been modern monetary theory (MMT), an approach to macroeconomic policymaking that had already gained considerable traction prior to the pandemic.

The EU regulation governing the Recovery and Resilience Fund, which came into force in February, commits member states to submitting national recovery and resilience plans by the end of April. The European Commission will then have two months to evaluate the plans, which the Council is expected to approve by the end of July.

This week we are covering the Spanish recovery plan to fully understand how the Spanish government is working to take full advantage of the EU Next Generation programme.

This month the IHS Markit Composite Output Index of the Eurozone increased by 4,4 points, thus leaving the index at an eight-month high. With a final value of 53,2, the Eurozone recorded a return to growth for the first time since October.

Since the start of the year, the world economy is witnessing a significant increase in a wide range of commodity prices as well as lags in the delivery key inputs, such as semi-conductors.

One of the most worrying consequences of the crisis generated by the pandemic is the deterioration of the financial situation of European companies.

This week we are covering state aid, a policy instrument that is becoming more and more critical as the pandemic is hitting the EU economies for longer than expected. We’ve had a video discussion between Peter Bofinger, Professor for Monetary and International Economics at Würzburg University, hosted by Future is blue editorial coordinator Carlos Carnicero Urabayen.

The European Commission recently issued a communication to EU member states to clarify its medium-term fiscal policy stance

Even though the IHS Markit Composite Output Index of the Eurozone demonstrated a slower rate of contraction, shifting from 47,8 in January to 48,8 in February, the indicator remains below the no-change mark of 50 for the fourth consecutive month. In addition, the latest data suggests a sustained two-speed economy with a manufacturing and service sector that keep moving further apart.

This week we are covering Italy’s economic prospects under the new leadership of Mario Draghi. We’ve recorded a podcast discussion with Orsola Costantini, Economic affairs officer at UNCTAD, hosted by Carlos Carnicero Urabayen, Future is blue editorial coordinator.

This week we are covering Europe’s mounting public debt. There is widespread agreement that EU governments had to act quickly and massively in response to the crisis.

This week we are having a closer look at the impact of vaccine delays on Europe’s economy. Don’t miss our podcast where Christian Odendahl, Chief Economist at the Centre for European Reform, and myself respond to questions from Brussels journalist Carlos Carnicero Urabayen. More details below.

The IHS Markit Eurozone PMI Composite Output Index reached 47,8 in January, well into negative territory and down from 49,1 the month before.

The debate over the deactivation of the ‘general escape clause’ highlights the tension between the need for active fiscal stimulus and fiscal sustainability.

Las conversaciones en el seno de la Comisión Europea sobre la posible desactivación de la cláusula general de salvaguardia podrían iniciarse dentro de unos pocos meses, aunque si las consecuencias económicas de la pandemia continúan agravándose, es muy posible que sean pospuestas.

This week we are covering what to expect for the European economy in 2021.

In December 2020, the ECB decided to continue its regular Asset Purchase Programme and the Pandemic Emergency Purchase Programme for at least another year. By the end of 2021, the ECB may have accumulated close to 5 trillion euros worth of bonds on its balance sheet.

The Eurozone composite PMI for December points to a contraction of activity for the second consecutive month, with an overall drop in demand and new orders.

On our side, we have prepared this first newsletter of 2021 looking ahead to try understand what will matter the most over the next few months.

This week we are very pleased to share with you a new podcast, the first of more to come about Europe’s economic and policy-related challenges. We hope that over the next months we will bring new ideas for a more inspiring debate about Europe.

As part of the debate on the impact of the EU recovery plan, a lot of emphasis has been put on the low absorption rate of EU cohesion funds.

Este documento revisa las diferentes medidas de política monetaria adoptadas por el BCE desde la irrupción de la pandemia

As predicted by the IHS Markit analysis of September, the Composite Output PMI for the Eurozone shrunk again in October, namely from a 50.4 to a plain 50.

El contexto de partida está marcado por la crisis sin precedentes en tiempos de paz originada por la COVID–19, que está sacudiendo los cimientos económicos, institucionales y sociales en Europa.

This week we are covering the fiscal situation of Spain. Santiago Lago Peñas,Professor of Applied Economics and Director of the Governance and Economics (University of Vigo), has recently published a report with worthy insights on the impact of the pandemic on Spain’s public finances and the way forward to reduce its public deficit.

While the Next Generation EU (NGEU) recovery package was launched to counteract the economic ramifications of COVID-19, its success will depend on reversing the divergence between the economic performance of Spain and the EU, which pre-dates the crisis.

This week we are covering new insights on the health of the Spanish economy. A freshly published report by Funcas brings some new light on how Spain was doing before the pandemic in comparison to other EU Member States and what are the opportunities to relaunch the economy next year by taking advantage of EU funds.

As part of the debate on the impact of the EU recovery plan, a lot of emphasis has been put on the low absorption rate of EU cohesion funds.

This week we are talking about the coveted COVID-19 vaccine. Recent news on different trials showing effectivity of about 90% are understandably generating huge expectations for the recovery of our lives and pockets.

As predicted by the IHS Markit analysis of September, the Composite Output PMI for the Eurozone shrunk again in October, namely from a 50.4 to a plain 50.

This week we are covering the US elections. I've published an article with Juan Moscoso del Prado, Director of Global Affairs at Deusto Business School, where we argue that Biden’s biggest challenge will be to reduce the US internal divisions while keeping the US international economic leadership. I've included some of our main points below.

The ECB’s Targeted Long-Term Refinancing Operations, or TLTRO, are non-standard monetary policy measures adopted in the aftermath of the Eurozone banking crisis.

This week we are covering the just announced budget proposal for 2021 presented by the Spanish government. In a nutshell: its expansionist nature goes in the right direction but some forecasts in it seem quite optimistic.

This week we are analysing why Spain may not apply for an EU loan under the Next Generation EU programme. Before we get into details, let me advance that current borrowing costs are so low that incentives for extra borrowing under the new programme are missing. Other countries may face the same situation.

The IMF is bringing a more positive perspective for 2020 for most advanced economies. Global output would fall by 4.4% compared to 5.2% as anticipated during the summer. Interestingly, the IMF is not broadly embracing austerity as the right answer, as it did 10 years ago. The shock for the eurozone in 2020 is now expected to be 1,9% milder, but the perspective for Spain is not getting any better (the IMF expects a decline of 12,8% GDP.) We hope you enjoy the video.

As explained in a previous note (1), the European Commission’s Next Generation EU recovery plan foresaw member states submitting national recovery and resilience plans by April 30 as annexes to their national reform plans.

As explained in a previous note (1), the European Commission’s Next Generation EU recovery plan foresaw member states submitting national recovery and resilience plans by April 30 as annexes to their national reform plans.

Pazos Vidal has given us an assessment of what we know so far about Spain's recovery plan. Don't miss the video-interview where he covers the challenge of successfully absorbing EU funds, involving coordination between regional and central governments and reforming the public administration.

The Covid-19 pandemic has drastically changed the agenda of the European Union. Managing the associated economic crisis and the recovery have become the most important items.

At its latest meeting on September 9-10, the ECB Governing Council took no monetary policy actions, despite the surprise drop in eurozone inflation in August and the rise in the euro’s exchange rate

At its latest meeting on September 9-10, the ECB Governing Council took no monetary policy actions, despite the surprise drop in eurozone inflation in August and the rise in the euro’s exchange rate

The European Council of July 17-21 agreed on a €750bm Covid-19 recovery plan. This was part of a political agreement on the next EU budget

The recovery fund dominated the agenda of last weekend’s European Council, which also agreed on the EU’s 2021-2027 multiannual financial framework or “EU budget”.

The package agreed by European leaders after five days of intense debate is a major step forward for the political integration of the EU.

OECD forecasts indicate that Spain is one of the countries most impacted by COVID-19.

El Plan Europeo de Recuperación junto con el programa de compra de activos del Banco Central Europeo configuran los dos ejes principales de la respuesta de la Unión Europea ante la crisis económica derivada del COVID-19.

One of the most powerful bodies which, along with the ECB, will determine the extent to which Europe will overcome the economic crisis which erupted as a result of the Covid-19 pandemics is not a well-established institution, but an informal club, namely the Eurogroup.

Texto introductorio que aparecerá en los listados.

La crisis del COVID-19 ha impactado con una virulencia extraordinaria sobre la sociedad y la economía españolas.

mayo 2020

Previsiones económicas de Funcas para la eurozona 2018-2019

[a] Contribución al crecimiento del PIB.
Fuente: Dirección de Coyuntura y Estadística de Funcas (www.funcas.es); Haver Analytics.

Since the start of the Covid-19 crisis there has been a heated debate regarding the use of government guarantees in order to support lending to the private sector.

El intenso debate sobre la prolongación de la política monetaria acomodaticia del Banco Central Europeo (BCE) se centra alrededor de tres cuestiones principales: las contingencias negativas a las que debe hacer frente dicha política, la transmisión de la política monetaria a la economía real y la co.

Desde el inicio del año, la economía de la eurozona ha acelerado su recuperación. Los indicadores de actividad y de confianza de los consumidores han repuntado, mejorando ligeramente los niveles anteriores a la crisis.

Indicadores económicos de Funcas para la eurozona 2017-2018

The eurozone economic recovery has accelerated since the start of the year. Activity and consumer confidence indicators have spiked, slightly outperforming pre-crisis levels (Exhibit 1). Meanwhile, international trade flows both within the eurozone and with third countries have increased, in line with the recovery in global markets. GDP grew by 0.6% in the first quarter and 1.9% relative the same quarter of 2016 (Table 1). All countries in the single currency saw a pick-up in growth compared to the last quarter of 2016.

El análisis de los ciclos económicos de las regiones europeas pone de relieve la existencia de importantes asimetrías que dan lugar a la configuración de distintos caracterizados por patrones de comportamiento diferentes.

Los esfuerzos del Banco Central Europeo (BCE) en aras de la integración monetaria y de potenciar las indicaciones prospectivas (forward guidance) de política monetaria tienen por objeto mejorar el funcionamiento de la unión económica y monetaria.

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Este artículo revisa brevemente la actuación del BCE desde mediados de 2014, cuando la autoridad monetaria inició una nueva fase de política monetaria expansiva.

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Ahora que las condiciones macroeconómicas se están normalizando a ambos lados del Atlántico, ha llegado el momento de que los bancos centrales desmantelen el arsenal de medidas que han implementado durante los últimos años.

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En este artículo se revisan las respuestas de la política monetaria a la crisis para, a continuación, discutir su repliegue una vez consolidado el crecimiento y, en concreto, determinar si la falta de tensión inflacionista en Europa debería o no retrasar el cambio de tono de la políti.

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Este artículo se dedica a discutir las posibles vías de consecución de una mayor integración fiscal. Para ello, se analiza el papel que desempeñan los gobiernos centrales, en el marco de una federación, como órganos encargados de dar forma a las políticas fiscales subnacionales.

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Los modelos de unión fiscal incorporan equilibrios entre mecanismos de compartición de riesgos y, para que sea políticamente aceptable, también reglas e instituciones orientadas a reducir dichos riesgos.

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En este trabajo se analiza el presupuesto de la actual Unión Europea (UE-27) teniendo presentes los objetivos y funciones propias de la hacienda federal de una unión fiscal avanzada.

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Como respuesta a la crisis de deuda soberana en la zona del euro, se ha efectuado una reforma profunda de la gobernanza fiscal en la Unión Europea.

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La competencia fiscal, especialmente en lo relacionado con el impuesto sobre sociedades, es un tema muy debatido en la Unión Europea.

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La zona del euro no es un Área Monetaria Óptima (AMO), no dispone de estabilizadores automáticos y por lo tanto necesita una unión fiscal para sobrevivir. El Tratado Intergubernamental de Estabilidad Fiscal de 2011 (FC) retrasa más que ayuda a la necesaria unión fiscal.

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Trilema (también llamado «trinidad imposible »): elección entre tres opciones favorables, siendo solo dos posibles simultáneamente.

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La Gran Recesión ha puesto de relieve las serias deficiencias existentes en el diseño de la unión monetaria. Un área monetaria necesita instituciones monetarias, pero también instituciones fiscales comunes.

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El artículo explica cómo el BCE, con sus medidas convencionales y no convencionales, cumplió con su mandato de mantener la estabilidad de precios a partir de 2007.

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Las medidas recientes del BCE se pueden caracterizar como políticas monetarias fuera de balance con la estructura de los contratos derivados. Tales iniciativas pueden tener profundos efectos en los mercados financieros y la economía.

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La inflación de la zona del euro es inferior al 1 por 100 desde octubre de 2013, y las expectativas de inflación a medio plazo son muy inferiores al 2 por 100. Los pronósticos de retorno al objetivo de inflación han sido equivocados.

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La crisis financiera y los problemas derivados de su posterior agravamiento, del deterioro de las condiciones fiscales y de la situación de fragilidad de los sistemas bancarios de algunos países europeos, contribuyeron a incrementar el grado de fragmentación de los principales mercado.

Nos encontramos ante el proceso de negociación bilateral en materia de comercio internacional más ambicioso de la historia.

The EU and the US are involved in the most ambitious trade liberalization negotiations process ever witnessed. The road ahead will necessarily require surpassing existing difficulties in a number of relevant issues foreseen on the negotiators’ agendas.

El objetivo de este artículo es pasar revista a la actuación del BCE desde su creación, cen- trándose en elanálisis del funcionamiento de su estrategia, su política de comunicación, y sus instrumentos y procedimiento de política monetaria.

El artículo examina el presente y las perspectivas dela política europea de la competencia.

This article describes the four coordinates of the Eurosystem monetary policy -its aim, its strategy, the operating framework and the approach- bearing in mind the essential features denoting the monetary policy of the euro area with regard to any other country's or region's.

This article carries out a review of the main structural and competitive features of the European banking sectors and of the impact caused by EMU.

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El trabajo tiene por objeto, en una primera parte, establecer una descomposición del crecimiento económico en los países de la Unión Europea en las tres últimas décadas entre utilización de inputs y factor residual,atendiendo al esquema contable propuesto por Solow.