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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.

168 (141-150)
April 11, 2013
Region:
The current crisis has demonstrated that the eurozone is still a very heterogeneous economic area. As the common monetary policy cannot stabilise a country which experiences an asymmetric shock, there is a growing debate about whether the architecture of the eurozone needs to be complemented by fiscal stabilisation instruments. While the synchronisation of business cycles and an effective absorption of regional shocks would be in the interest of all the euro countries, the main question is how this could be put into practice without creating undesirable incentives. After all, a deeper fiscal integration would hardly be manageable without redistribution components. [more]
141
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]
142
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]
143
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]
144
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]
145
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]
146
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]
147
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