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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.

167 (141-150)
January 31, 2013
Region:
Analyst:
High investor demand is fuelling corporate bond issuance in the EU. Deleveraging in some countries and the fact that some banks are paying roughly the same or even higher rates for their refinancing than their customers no doubt has pushed corporate debt markets. But the main driver for the high issuance volumes seems to be investors’ search for yield in a low interest rate environment. As sovereign bonds are offering historically low yields, corporate bonds have turned into a significant investment alternative in the present market conditions. However, in an era of Knightian uncertainty and high liquidity, strong growth in corporate bond market calls for attention to potential overheating. [more]
141
November 27, 2012
Region:
For the EU members that have ratified it, the Fiscal Compact is set to come into force at the beginning of 2013. Among other things, the signatories to the Compact pledge to introduce a debt brake at the national level by 2014. Our progress report shows that numerous euro countries have already implemented debt brakes, five of which have constitutional status. Others, by contrast, still have to provide evidence that they are serious about the institutional anchoring of sound fiscal policy. [more]
142
November 20, 2012
Region:
The political dynamics in Europe have shifted against universal banks in recent months. This is a dangerous development that threatens the key role such banks play in modern economies and risks eliminating many of the advantages universal banks have to offer: in a “one-stop shop”, they provide their customers with a broad range of tailor-made services, higher volumes of credit and lower funding costs than narrower “specialist banks”. In addition, thanks to the diversification of their operations and the potential to leverage revenue and cost synergies, universal banks tend to be more stable than specialist banks. They also provide for diversity in bank business models and are better positioned to monitor the financial health of specific clients as well as to spot unsustainable risk accumulation across financial markets. [more]
143
November 14, 2012
Region:
Since the start of 2011 the financial and sovereign debt crises have forced roughly half the governments in the euro area to accept a premature end to their term of office. So far, the elections in the crisis countries have established the conservative camp as the clear winner at the polls. The established major parties continue to dominate the political system in many countries. Nevertheless, the electoral successes of right-wing populist and newly established left-wing factions may hamper the formation of properly functioning governments in future. If the economic outlook for the young generation does not improve, this trend could continue. [more]
144
October 5, 2012
Region:
Analyst:
Since the financial crisis, the countries of Europe have been faced with the difficult challenge of consolidating their budgets while at the same time promoting economic growth. One approach is a growth-conducive tax system, which keeps distorting effects of taxation on the growth factors – labour, capital and technological progress – as small as possible. Tax reforms carried out in the EU to date are steps in the right direction. Increasing economic policy coordination in Europe offers the chance to implement further structural reforms. [more]
145
August 24, 2012
Region:
We assess the economic outlook for the Western Balkan region, including Croatia, Serbia, Albania, Bosnia-Herzegovina, Macedonia, and Montenegro. Each country in the region is on the road to EU accession, though they are at very different stages of the process. The most advanced, Croatia, is set to become the EU’s 28th member towards the middle of next year. For the rest, it could be a long road given the economic and political challenges that they face, and also a sense of enlargement fatigue among some existing member states. [more]
146
July 27, 2012
Since 2006 the European Union has increasingly been looking to sign deep and comprehensive free trade agreements with emerging markets. In the meantime it has also been turning its attention to some industrialised nations. A trade agreement with South Korea has already come into effect. Although the EU is pinning great hopes on India and a number of ASEAN states, it is also keen to conclude similar agreements with Mercosur, Canada, Ukraine and virtually all of the Southern Mediterranean countries. It is even considering Japan and the United States as potential partners. If the European Union's bilateral free trade strategy were fully implemented by the end of this decade, it would give a moderate boost to trade, welfare, growth and employment in the EU and would often provide a much stronger stimulus in the partner countries concerned. This free trade strategy is also highly ambitious in terms of its diplomatic objectives because issues that have so far received insufficient attention – such as trade in services, technical trade barriers and foreign direct investment – are to be better regulated. Whether the EU – currently the world's largest trading bloc – is ultimately successful with this strategy will in many cases be decided by domestic politics in the partner countries. The fundamental question of whether a deep bilateral strategy should perhaps be complemented by a parallel multilateral approach as a matter of considerable urgency will be especially pertinent in transatlantic relations. However, there is also a risk of tensions within the international system. [more]
150
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