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Europe

EU integration greatly influences policy-making at the national level, and the EU itself is a major actor on the world economic stage. Most of the conditions governing the economic and business environment for European companies and consumers - especially in respect of the financial markets - are decided at the European level. For this reason, Deutsche Bank Research analyses and appraises the latest developments in the EU and EMU. European banks and financial markets are a major focus in this regard.

153 Documents
November 15, 2018
Region:
Tensions in financial markets have increased significantly since the populist/Eurosceptic Five Star/League in Italy took power in May and presented a budget in violation of EU rules. In an unprecedented move, the European Commission sent Rome back to the drawing board. Italy has now provided the Commission with its latest fiscal plan – which is not much different from the old plan. [more]
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October 31, 2018
Region:
The workhorse framework of macroeconomics and monetary policy relies on the build-up of inflationary pressures across the cycle as the economy tightens, and firms have no choice but to raise wages, which ultimately lifts consumer prices. Within that narrative, the estimation of slack in the economy – the output gap – is crucial to monetary policy authorities. A positive output gap means that the economy is away from its long-term steady-state equilibrium, and unsustainable cost pressures are building up. Currently, the OECD / IMF / European Commission estimate of the output gap in the euro-area is slightly positive and reaching close to 1% by the end of next year. [more]
2
October 24, 2018
Region:
Accelerated by the consequences of the financial/economic and migration crisis, the influence of anti-European, anti-migration movements with a populist playbook in the EU is growing. For the EU, the next crucial stocktaking of voters’ sentiment will be the 2019 elections for the European Parliament on 23-26 May. The European political landscape and with it the composition of national parliaments in the EU member states has changed over the last five years and in some countries substantially so. These shifts can be expected to be reflected in the next European Parliament as well, and – as already the case in the Council – impact European policymaking. [more]
3
October 23, 2018
Region:
The European banking industry remains in restructuring mode. Most institutions are focused on increasing profitability and returns to shareholders. In contrast to previous periods of rising net income, the key this time is exiting less attractive parts of their business rather than expanding across the board. Hence, most P&L and balance sheet components have declined year-over-year, with one major exception: profits. Capital levels have suffered from new, more conservative accounting rules on loan loss provisions. [more]
4
October 12, 2018
Region:
During the last few years, the expansion of digital infrastructure in the EU has been carried out more slowly and less comprehensively than politically intended. The EU’s objective of ensuring fast broadband coverage of more than 30 megabits per second for all Europeans by 2020 seems out of reach. There are economic and regulatory reasons for the insufficient progress with digital infrastructure improvements. However, inadequate digital infrastructure puts companies at a disadvantage versus US competitors, but increasingly also versus Chinese players. The European Commission estimates that more than EUR 500 bn will need to be invested by 2025 to achieve the goal of a “gigabit society”. [more]
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September 18, 2018
Region:
Analyst:
The constraints that forced a rapid slowing of euro area GDP growth momentum from 3% to 2% annualized in H1 — the pass through of earlier FX appreciation, the slowing of exports to China, the rise of the oil price — have eased or reversed somewhat, helping stabilize the economy through mid-year. Whether this can be maintained is a function of still-robust fundamentals (cyclical and structural drivers) vs. accumulating risk factors. [more]
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July 2, 2018
Region:
The UK’s exit from the EU will have significant repercussions for the financial industry, notably investment banking. London as the primary European hub is likely to lose its full access to the single market. Currently, financial services exports play a major role for Britain and almost half of them go to the EU. Without the surplus it generates from providing investment banking services to EU customers, Britain’s current account deficit would be 40% higher. Following Brexit and the likely loss of the single European passport, non-EU banks will have to set up or build-out subsidiaries in the EU-27 with own capital, liquidity, corporate governance and fully-fledged operations. This could lead to an additional EUR 35-45 bn of capital being ‘ring-fenced’. This represents a further leg of banking balkanisation with trapped capital, liquidity and resources – profitability will be under pressure and not all EU business models will be viable. [more]
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