Greece’s finance chief said the next international aid payout to the country may be delayed as the European Union stepped up warnings about domestic political meddling in the Greek state.
Finance Minister Euclid Tsakalotos raised the possibility of the government in Athens failing to qualify on time for a 2.8 billion-euro ($3.1 billion) disbursement due in September from the euro area. That’s what remains of a 10.3 billion-euro tranche that finance ministers approved in principle three months ago.
“If there is a delay, it’ll be days not weeks,” Tsakalotos told Bloomberg News in Brussels on Monday before a meeting with EU Economic Affairs Commissioner Pierre Moscovici. “Part of the reason for the meeting is to discuss the process to ensure there aren’t delays.”
Slipping timetables have been a regular feature of loan payouts to Greece since it first turned to the euro area and the International Monetary Fund for a rescue in 2010. Now in it’s third bailout, the country faces continued creditor warnings about backsliding on overhauls that are a condition for aid.
The European Commission sent the latest salvo to Athens, saying on Monday that criticism of the former head of Greece’s statistical agency by allies of Prime Minister Alexis Tsipras risks undermining the credibility of Greek fiscal data. The commission, the EU’s executive arm, said the Greek government must push ahead under its aid program with commitments to curb political interference in administrative matters.
“The commission has long urged the implementation of the pillar of the program related to the modernization of the Greek state and public administration,” Margaritis Schinas, chief spokesman at the 28-nation body, told reporters in Brussels. “This also includes the need to depoliticize the Greek administration.”
The political controversy centers on Andreas Georgiou, who faces felony charges in Greece for reporting a 2009 budget deficit that was more than five times the EU limit and that unleashed the euro-area debt crisis. The EU has vouched for data submitted by the Hellenic Statistical Authority under Georgiou from 2010 to 2015 and validated by EU statistics office Eurostat.
Greek Minister of State Nikos Pappas, Tsipras’s closest aide, asked publicly in early August whether Georgiou inflated the spending gap to force the country into a rescue. Avgi, a newspaper affiliated with Tsipras’s anti-austerity Syriza party, labeled Georgiou an “executioner” in an Aug. 4 editorial.
The Greek government has committed to “upholding confidence in Greek statistics and defending them against any efforts to undermine their credibility,” according to an agreement in June between Athens and its international budget auditors. The depoliticization of the public administration is one of main targets set in the latest Greek bailout, according to a joint statement by euro-area leaders in July 2015.
Finance ministers from the currency bloc will discuss the matter when they meet on Sept. 9 in Bratislava, Slovakia, Schinas said. He reiterated the commission’s confidence in data produced since 2010 by the Hellenic Statistical Authority, also known as Elstat. The quality of the 2010-2015 data “is beyond any doubt,” Schinas said.
“The commission does not as a matter of principle comment on national legal proceedings and does not ask a member-state government to do so,” he said. “We are, however, concerned about statements in the media regarding the case that call into question the reliability of Elstat data.”
When President Barack Obama travels to Asia next week, he will try to reassure leaders in the region that he still has the clout to deliver U.S. approval for the sweeping Trans-Pacific Partnership, even though the two candidates vying to succeed him and a congressional leader have said the 12-nation trade deal should not move forward.
The trade pact is the economic pillar of Obama’s broader plan to shift U.S. foreign policy toward Asia and counter the rising economic and military might of China.
“It would be a real setback for Obama’s legacy and for the rebalance strategy if TPP were not to be ratified,” said Matthew Goodman, a former Obama foreign policy adviser now at the CSIS think-tank in Washington.
Domestic politics have put the deal’s future in doubt. U.S. Senate Majority Leader Mitch McConnell said on Thursday the Senate would not vote on the pact this year, punting it to the next president, who will take office on Jan. 20.
Both Republican Donald Trump and Democrat Hillary Clinton have said they oppose the TPP, citing past trade deals that have cost Americans jobs. As Obama’s Secretary of State, Clinton backed the Pacific trade deal.
Obama has said the TPP will boost labor and environmental standards – fixing some of the problems seen in past trade deals like the North American Free Trade Agreement – and give both large and small U.S. companies access to the world’s fastest-growing markets.
The White House said failure to approve the TPP would hurt U.S. interests in Asia, where some leaders made politically tough decisions to advance the deal.
“In this part of the world, which is the largest emerging market in the world, TPP is seen as a litmus test for U.S. leadership,” Ben Rhodes, Obama’s deputy national security adviser, told reporters on Monday.
“We would be stepping back from that leadership role, we would be ceding the region to countries like China who do not set the same types of high standards for trade agreements were we to not follow through with TPP,” Rhodes said.
Estimates of the potential economic impact of TPP vary, but most show little meaningful growth for the U.S. economy. Estimates from the Peterson Institute, an economic think-tank in Washington, suggest that TPP would raise growth by 0.5 percent after 15 years.
Even those estimates, which amount to a rounding error in U.S. economic output, have been criticized as being too optimistic due to their treatment of so-called non-trade measures that are included in the analysis.
But White House spokesman Josh Earnest said polls shows most Americans support the deal, creating “a path for us to get this done” before Jan. 20.
In an interview, Former U.S. Trade Representative Susan Schwab described the odds of the TPP passing as slim, but not impossible.
“There’s history of candidates criticizing previous administrations’ policies on trade and then having to figure out how to live with them in office, and they include presidents Obama and (former Democratic president Bill) Clinton,” said Schwab, who served as trade representative under former Republican President George W. Bush.
Obama arrives in China on Saturday where he will meet President Xi Jinping and attend the G20, and then travel to Laos for two additional regional summits, returning to Washington on Sept. 9.
Source: Reuters (Additional reporting by Timothy Gardner, Alana Wise and Timothy Ahmann; Editing by Andrew Hay)
European Central Bank money-printing has exposed the fault lines in Germany’s banking system, forcing its sprawling network of lenders to rethink their business models and slash costs.
Profits at one-time flagship banks of Europe’s largest economy are near the bottom of the pile among their regional peers. Germany’s nearly 2000 commercial, mutual and government-owned lenders have some of the thinnest margins in the region.
For years, most German banks’ strategy was based around winning new business by offering fee-free accounts and cash bonuses for switching lenders. They used the margins on their lending businesses to subsidise the cost of their retail operations and payment systems.
When rates were higher that model covered up inefficiencies in their businesses. German banks’ costs ate up around 73 percent of their earnings compared with 64 percent in the rest of the euro area in 2015, according to credit ratings agency Moody’s. This cost-to-income ratio has been above the bloc’s average for the last five years, the data show.
But negative ECB interest rates have exposed a dependence on interest margins and throttled earnings needed to invest in improvements and make sure they have the required amount of capital to protect the bank on a rainy day.
The pressure is expected to lead to mergers and closures over time but in the meantime, banks are trying new strategies.
Earlier this month Bavarian bank Raiffeisen Gmund – one of more than 1,000 German co-operative lenders – broke a long-held taboo. It said it saw no alternative but to start charging wealthy clients to deposit their money, as it did not want to cut back services or merge with other lenders.
“The only way we could really save on costs would be to reduce our presence in the market,” the bank’s head Josef Paul said.
Postbank, one of the pioneers of free customer accounts, this month introduced a 3.90 euro monthly fee for the “vast majority” of its 5.3 million current account holders.
Other banks are investing more in their digital offerings, but are still reluctant to give up their labour-intensive bricks-and-mortar branches.
Michael Kemmer, head of German banking association BDB, said such steps makes sense but the number of lenders in the fragmented market means ones that take the lead on fees and charges may end up losing business without reaping the benefits.
“The question is whether competition will allow it,” he said.
Online bank ING-Diba says it tends to see an uptick in regional demand for its free account when local rivals increase fees.
“Fees can go up somewhat but you cannot completely offset the negative margin,” ING Vice-Chairman Koos Timmermans told Reuters, adding that the German ING unit had no plans to scrap cost-free status for its accounts.
The German government is aware of the banking sector’s steady decline in earnings. But the decentralised political and economic structure, which gives a strong role to federal state governments, means Berlin is unable to force through wholesale reform of the financial sector.
“We see it but what are we supposed to do?” asked a high-ranking government official, who spoke on condition of anonymity.
Regional politicians enjoy the prestige and power to influence the local economy through public-sector savings banks and the landesbanks that provide them with wholesale funding.
“Politicians have traditionally looked at the German banking system as a utility to serve retail, and more importantly, SME and corporate clients to support the German economy,” said Katharina Barten, bank analyst at Moody’s.
The financial crisis that started nearly a decade ago saw No. 2 lender Commerzbank, a clutch of state-owned landesbanks and property lenders rack up billions of euros in losses. The government bailed them out, upsetting taxpayers and briefly raising pressure for reform.
Over the last five years, however, the banks have shaken off state support and largely put their finances in order, removing urgent pressure for consolidation and leaving the fragmented and low-margin market little changed.
The finance ministry says that the mix of international and regional lenders of different sizes proved its worth in the financial crisis. Smaller banks played a major role in ensuring unfettered lending to local businesses.
“German banks must find their own way to surmount the challenges facing them,” a ministry spokeswoman said.
There is no letup to competition on the horizon, regardless of whether banks are successful in making account charges stick.
“Each bank is pursuing some growth strategy but considering the saturation of the market and low demand, this is not something that would point to any recovery of margins; that’s going to remain a problem,” Moody’s Barten said.
Slashing costs – branches, staff and product offerings – is the main lever banks still have at their disposal but using it requires skill. UniCredit’s HVB has closed about half its branches and Deutsche Bank is pruning rapidly.
Total bank branches fell by about 1,300 last year to 34,000, Bundesbank data show.
But severance payments boost upfront costs and branch closures can poison relations with employees and clients.
Mergers and controlled closures of failed banks are expected to winnow down the players in the German market over the next few years.
The ranks of public sector savings banks have fallen by a few a year but still number more than 400. The co-operative bank network is making faster progress – shrinking by around 50 banks per year – and is expected to fall below 1,000 this year.
Local shareholders of four cooperative banks in a region north of Stuttgart voted in June to create VR-Bank Neckar-Enz to better face mounting regulatory and digital costs.
“At the same time, we predict a prolonged period of low interest rates that will successively reduce our most important source of revenue: net interest income,” the banks said in explaining the need for the four-way merger.
Source: Reuters (By Jonathan Gould, Additional reporting by Gernot Heller, Reinhard Becker, Alexander Huebner, Arno Schuetze, Andreas Kroener and Frank Siebelt; editing by Anna Willard)
Chicago Federal Reserve Bank President Charles Evans on Wednesday said he is increasingly convinced that U.S. economic growth has slowed permanently, a situation that will keep U.S. interest rates low for a long time ahead.
Embracing Harvard Professor Larry Summers’ so-called secular stagnation theory, Evans argued that an aging U.S. population and slowing productivity growth mean there is little reason for interest rates to rise either fast or far.
Expectations of low growth have become so embedded in corporate and investing behavior, he said, that even if inflation rises unexpectedly and the Fed has to raise rates faster than it now anticipates, a detrimental spike in long-term interest rates is unlikely.
“Long-run expectations for policy rates provide an anchor to long-run interest rates,” Evans said, according to a detailed outline provided ahead of his remarks to the Shanghai Advanced Institute of Finance in Beijing. “So lower policy rate expectations act as a restraint on how much long-term rates could rise following a surprise over the near-term policy path.”
Fed Chair Janet Yellen said last week that with the U.S. economy near full employment and inflation showing signs of rising toward the Fed’s 2 percent goal, the case for a U.S. interest-rate hike has strengthened in recent months. Traders responded to those and other somewhat hawkish comments from Yellen’s colleagues by adding slightly to their bets that the Fed will raise rates before the end of the year.
Evans, who does not have a vote on Fed policy this year, is known as one of the U.S. central bank’s most outspoken doves, generally in favor of delaying rate rises as long as possible so as to encourage hiring and investment.
Although he did not express any view in his prepared remarks on when the Fed should next raise rates, his argument suggests support for patience.
If inflation rose unexpectedly, he said on Wednesday, the Fed could probably tamp it down with something far short of a spike in rates.
“If necessary, we could normalize policy much faster than currently envisioned and still keep the pace gradual enough to avoid a disorderly change in financial conditions,” Evans said.
Source: Reuters (Reporting by Ann Saphir; Editing by Leslie Adler)
An ally of German Chancellor Angela Merkel said the U.K. will have to pay into the European Union’s budget if it wants the single market’s advantages, diminishing Britain’s prospects for a low-cost solution after its vote to exit the bloc.
Juergen Hardt, a lawmaker who speaks on foreign policy matters for Merkel’s Christian Democrat-led parliamentary caucus, cited the case of Norway, a non-EU nation that contributes to the bloc’s finances in return for market access. The issue wasn’t adequately addressed in the U.K.’s campaign leading up to the Brexit referendum in June, he said.
“If someone wants to benefit from the European Union single-market structures, he also has to contribute to the cost of that operation,” Hardt said in an interview in Berlin. “In Britain, before the referendum, nobody talked about that fact.”
Merkel and others in her government have repeatedly warned that Germany won’t let U.K. Prime Minister Theresa May pick and choose the EU’s benefits once she triggers the exit clause and talks on a new relationship begin. German Foreign Minister Frank-Walter Steinmeier joined Hardt in saying that the EU’s benefits come at a cost.
“The U.K. can’t rid itself of the duties of an EU member and at the same time keep the rights of an EU member,” Steinmeier said Tuesday at an event in Berlin. “We have to talk about this with great clarity on both sides of the English Channel.”
Hardt said in the interview that Britain shouldn’t expect special treatment on a halt to immigration.
“There’s no possibility to, for example, abridge the free movement of employees but to keep all the other freedoms” that EU members share within the single market, Hardt, 53, said on Monday.
Losing access to the EU’s single market is a threat to the U.K.’s financial industry, which would be deprived of so-called passporting rights that allow them direct access to clients in the EU. That makes the future of financial services a key part of the negotiations.
Merkel is seeking to steer diplomacy ahead of the first EU summit without Britain on Sept. 16 in Bratislava, Slovakia. Brexit’s impact will also be discussed this coming weekend at the Group of 20 meeting in China, a German government official said on Tuesday.
Greater cooperation on security and economic policy are among the topics for the Bratislava gathering, while differences over Europe’s biggest refugee crisis since World War II remain unresolved. With EU members such as Poland and Hungary rejecting a quota system for resettlement, leaders are likely to fall short of a permanent solution, Hardt said.
“I don’t expect a breakthrough of the refugee question,” he said. While a quota system would be the “gold standard,” EU countries are more likely to consider a system that includes a voluntary cooperation for reluctant states, he said.
Citizens first need to start “trusting” the EU again, Hardt said. “Then we have to think about the new structures, and then we have to think about the negotiations with the British people.”
Many EU countries have contacted the European Commission to express their support for the planned EU-U.S. free-trade deal (TTIP) after German and French ministers said talks should be ended, the EU trade chief said on Tuesday.
“I do not agree that TTIP negotiations have failed,” European Trade Commissioner Cecilia Malmstrom told a roundtable of reporters.
“Many countries have contacted us today to ask questions and say that they don’t agree with the French. So there will be a debate on these issues,” she said. Asked to say how many countries had been in contact, she said “several”.
Source: Reuters (Reporting By Philip Blenkinsop, editing by Robin Emmott)
The French trade minister on Tuesday called for an end to trade negotiations between the European Union and the U.S., the firmest sign yet of opposition in Europe to what would be the most ambitious trade deal in decades.
Matthias Fekl said that he would ask the European Commission, the EU’s executive arm, at a meeting of trade ministers late September to end negotiations over the Transatlantic Trade and Investment Partnership, generally known as TTIP. The Commission leads talks with the U.S. for the EU.
“France no longer politically supports these negotiations,” Mr. Fekl said on French radio. “The Americans are giving us nothing,” he added. “This is not how allies should be negotiating.”
Mr. Fekl’s comments show how skepticism of trade deals is surging on both sides of the Atlantic. In the U.S., President Barack Obama faces a tough battle in Congress to pass another major trade deal, the Trans-Pacific Partnership. Donald Trump and Sen. Bernie Sanders bolstered their support during the presidential race by strongly opposing trade deals, putting pressure on Democratic nominee Hillary Clinton to adopt a more skeptical stance on trade.
In Europe, politicians in the bloc’s biggest economic powers, France and Germany, find themselves under fire for supporting negotiations with the U.S. Marine Le Pen, the head of France’s right-wing National Front party, has repeatedly attacked President Franç ois Hollande for backing the talks.
German Vice Chancellor Sigmar Gabriel said on Sunday that “the negotiations with the Americans have failed. Just nobody says that.”
The U.S. and the EU agreed to start the talks in 2013. Most European nations, eager for policies to jolt the region’s sagging growth prospects, enthusiastically backed the negotiations.
The deal is expected to eliminate almost all tariffs and reduce regulatory red tape that acts to limit trade, establishing what would effectively be a vast, trans-Atlanic free-trade zone. But fears have persisted in Europe that the deal will require the region to accept U.S.-backed technologies, such as biotech crops, that the region opposes.
Lending to British consumers cooled in the month after the vote to leave the European Union, countering other signs that Britons had taken the decision in their stride, Bank of England data showed on Tuesday.
Consumer credit, which includes credit cards and personal loans, rose 1.181 billion pounds last month, the weakest increase since August 2015, taking the annual growth down to 10.1 percent from 10.3 percent.
That marked the first annual decline in consumer credit growth since December 2014.
Other data since the shock Brexit vote had shown little immediate impact on consumer demand. Retail sales rose rapidly last month, and there have also been signs consumer morale has recovered partially from a big fall following the referendum.
The figures also showed mortgage approvals for house purchases fell to 60,912 last month from 64,152 in June, the lowest since January 2015.
The Brexit vote had an immediate impact on Britain’s housing market, causing buyer interest and expectations of future sales to wither at their fastest pace in years, according to the Royal Institution of Chartered Surveyors.
RICS also reported that investment demand for British commercial property nosedived after the result.
Less comprehensive figures from the British Bankers’ Association showed the number of mortgages approved by British banks fell to its lowest in a year in the month following Britain’s vote to leave the European Union.
The number of approvals rose throughout most of 2015, following a slowdown the previous year when tougher checks on mortgage borrowers were introduced.
Net mortgage lending, which lags approvals, rose 2.665 billion pounds in July, compared with a 3.247 billion pound increase in June, the BoE said.
Lending to non-financial businesses increased 3.0 percent compared with July 2015, the strongest annual growth rate since records started in April 2012.
Source: Reuters (Reporting by Andy Bruce and Giles Elgood)
A free trade deal being negotiated by the United States and the European Union will be reached, but the talks will take more time than originally expected, Italy’s trade and industry minister said.
The U.S. and the EU have been negotiating the TransatlanticTrade and Investment Partnership (TTIP) for three years, and with no agreement in sight, France’s trade minister said on Tuesday that the discussions should be halted.
But Italy’s Carlo Calenda said it was essential for Italian exporters that the negotiations bore fruit. “TTIP will be sealed. It is inevitable,” he said in an interview with Corriere della Sera newspaper published on Tuesday.
Calenda said it would be difficult to reach a deal before U.S. President Barack Obama left office at the end of the year. “But we have to carry on. This accord is essential for Italy.”
France’s trade minister said the U.S. hasn’t offered anything substantial and that talks on the Transatlantic Trade and Investment Partnership should end.
“These negotiations are dead and France wants an end to them,” Minister of Foreign Trade Matthias Fekl said Tuesday on RMC Radio. “There is no political support in France for these negotiations.”
nts follow those of German Economy Minister Sigmar Gabriel, who said the day before in Berlin that TTIP talks “have de-facto broken down, even if no one wants to say so.”
The European Commission, which is carrying out the talks on the Europe Union’s behalf, on Monday responded to Gabriel’s comments by saying the talks are making progress and are entering a crucial stage. Italy’s Economic Development Minister Carlo Calenda said in an interview with Corriere della Sera that talks are going ahead but will require many more months.
Fekl said France would ask for an end to the talks in late September when EU trade ministers meet in Bratislava.
Fekl said the talks have been carried out in “obscurity” and “the Americans have given nothing.”
The TTIP talks have been held in several rounds since 2013. Because tariffs between the world’s two largest trading blocs are already low or non-existent, the talks have focused on sensitive and hard-to-resolve issues such as European bans on common U.S. agricultural practices such as chlorine-washed chicken and hormone-treated beef, and U.S. laws that limit many public contracts to local companies.
In the last financial year before Britain voted to leave the European Union, the country gained more foreign investment projects than ever before, the government said on Tuesday.
Some 2,213 investments were made in the year ending in March, up 11 percent from the previous year, the government said. That resulted in the creation or “safeguarding” of 116,000 jobs, it said.
However, the government did not provide a value for the investments, and it did not explain how the jobs were “safeguarded”. It did say 82,650 jobs were created, down from 84,603 jobs created the previous financial year.
The period covered by the government’s statement ended almost three months before Britain’s June 23 referendum on its EU membership. The vote to leave delivered a major blow to business confidence.
Multinational companies from consumer goods giant Unilever to carmaker Jaguar Land Rover had spoken out in favour of Britain remaining in the trading bloc. And some, such as carmaker Nissan, have said future investment will hinge on the deal Britain strikes with its former EU partners.
The United States was Britain’s largest source of inward investment, providing 570 projects, followed by China with 156 and India with 140, the government said.
Source: Reuters (Reporting by Paul Sandle, editing by Larry King)
U.K. job seekers are starting to see the impact of Brexit, with salaries under pressure and companies advertising more contract positions as they resist committing to permanent hiring.
The average advertised salary was 32,688 pounds ($43,174) in July, down 2.4 percent from a year earlier, according to an index by job search engine Adzuna published Tuesday. When inflation is taken into account, real earnings have fallen 3 percent, it said.
While the Bank of England expects continued wage growth, the weaker pound may push up inflation, eating into real incomes. Adzuna said Brexit has played a role in the “widespread stagnation” in salaries, as industries such as finance with higher-paid workers delay hiring and “wait for political and economic decisions to become clearer.”
The labor market remained relatively stable in the run-up before the European Union referendum, though there were some signs of weakness at the end of the second quarter. Companies added 172,000 jobs in the three months and the unemployment rate stayed at 4.9 percent.
“The resilience of the jobs market can’t be forgotten,” said Doug Monro, co-founder of Adzuna. “The unemployment rate has fallen to levels not seen since 2005 and this is hugely encouraging.”
The report showed the number of advertised positions rose 2.4 percent in July from a year earlier, though part time vacancies dropped 58 percent.
Optimism among Britain’s services companies has fallen sharply, with investment plans at their leanest for more than four years, as employers wait for clearer signs of what the Brexit vote means for them, a survey published on Tuesday showed.
The pace of growth in the three months to August was largely unchanged but expansion plans for companies in business and professional services were the weakest since May 2012, the Confederation of British Industry (CBI) said.
The CBI’s head of economic analysis and surveys, Anna Leach, said it was encouraging that employment numbers remained robust, especially in the consumer services sector, despite the shock decision by voters to leave the European Union in June.
“But looking ahead, the service sector faces a challenging environment in which to grow and invest, with uncertainty about demand weighing on firms’ minds,” she said.
The survey was conducted between July 28 and Aug. 12, covering 136 business and professional services firms and 61 consumer services firms.
Britain’s consumers have largely taken the June 23 referendum result in their stride but economists say firms are likely to rein in their spending while the country’s future relationship with the EU remains unclear.
Source: Reuters (Writing by William Schomberg; Editing by Louise Ireland)
Caretaker Prime Minister Mariano Rajoy asked the Spanish Parliament to give him a second term on Tuesday to protect the country’s economic recovery and deliver the budget adjustments that the European Union is demanding.
After two elections and an eight-month political impasse, Rajoy appealed to his opponents to step aside and allow him to govern, telling lawmakers there is no reasonable alternative to a government led by his People’s Party.
“The PP has been chosen by Spaniards as their preferred option on two occasions,” he said. “Spain urgently needs an effective government.”
Rajoy is trying to piece together the first administration since Spain’s traditional two-party system broke down with the emergence of Ciudadanos and the anti-establishment party Podemos at last December’s election. While the PP was the only group to increase its vote at a re-run in June and he has considerable common ground with the Socialists on policy, he’s struggling to clinch enough support because of unresolved corruption allegations against his party. If he fails this week, he has another two months to rustle up the votes before King Felipe has to call a third election.
Rajoy has secured support from the liberals of Ciudadanos and a lone nationalist lawmaker from the Canary Islands, giving him 170 votes in the 350-seat chamber. But with all the other party leaders opposed to Rajoy’s candidacy, the incumbent is set for defeat unless the grandees within the Socialist Party can persuade its leader, Pedro Sanchez, to back down at the last minute. Rajoy needs a majority to get through when the debate concludes on Wednesday. If he loses, a plurality will suffice at a second ballot on Friday.
The acting premier’s allies and opponents get to respond on Wednesday and then vote at the end of the day. Any attempt by the second-largest party, the Socialists, to form an alternative majority would have to rely on parties who support Catalan demands for a vote on independence, an idea which is anathema to many Socialists.
“My proposal is the only reasonable one under the current circumstances,” Rajoy said. “The alternative would be a government of a thousand colors, radical and that could put the unity of Spain at risk.”
If the parties fail to reach a settlement by the end of October, the timings set out in Spanish election law mean the next election could fall on Dec. 25. Still, a Christmas ballot would probably help the acting prime minister because PP voters have historically been more likely to turn out than supporters of other parties.
Euro-area economic confidence worsened more than analysts predicted in August in a sign that the reverberations of Britain’s decision to leave the European Union may finally be reaching companies and households.
An index of industry and consumer confidence fell to 103.5 from a revised 104.5, the European Commission in Brussels said on Tuesday. That compares with a median estimate of 104.1 in a Bloomberg survey of economists, and follows an unexpected increase in July.
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With European Central Bank President Mario Draghi leaving it largely to economic data to fine-tune policy expectations before next week’s Governing Council meeting, the release provides a case for more stimulus to sustain the recovery and revive inflation. The International Monetary Fund has already cut its forecast for euro-area growth next year on the back of the U.K.’s Brexit vote, and the ECB will release new projections next week.
“The weakness in the August reading is broad-based across all countries, with some exceptions, and across sectors,” said Frederik Ducrozet, an economist at Banque Pictet & Cie SA in Geneva. “It’s another reason to be cautious and dovish for the ECB. Maybe not in the next weeks, but in the next months.”
Inflation in the currency bloc probably accelerated to 0.3 percent in August from 0.2 percent the month before, leaving it well below the ECB’s goal of just under 2 percent, according to a separate survey. Eurostat will release preliminary figures on Wednesday, along with jobless data that is expected to show the unemployment rate dropped to 10 percent in July.
Sentiment in the industrial sector fell to minus 4.4 from minus 2.6, the lowest level in 18 months, according to Commission data. Confidence also slipped in services, retailing and among consumers, while a gauge for construction rose to an 8-year high.
Figures showed last week that confidence also subsided in the region’s two largest economies. Germany’s business climate as measured by Munich-based research institute Ifo unexpectedly declined the most in more than four years. Sentiment slipped in France, the nation’s statistics institute said.
French Education and Research Minister Vallaud-Belkacem and junior Minister for Foreign Trade Fekl, leave after the weekly cabinet meeting at the Elysee Palace in Paris
German Economy Minister Sigmar Gabriel on Tuesday said the United States had effectively ended talks on a free trade deal with the European Union because Washington had not wanted to compromise with its European counterparts.
The U.S. and the EU have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) for three years and both had aimed to agree a deal this year. A spokesman for the U.S. trade chief told Der Spiegel on Tuesday that talks on TTIP were progressing.
“I believe that the Americans have actively ended TTIP. I don’t see any willingness to compromise with the Europeans,” Gabriel told a news conference in Berlin.
He added that TTIP had no chance of being agreed before a U.S. election due in November.
Source: Reuters (Reporting by Michelle Martin and Joseph Nasr)
Talks on a free trade deal being negotiated by the United States and the European Union are making progress, a spokesman for the U.S. trade chief told Der Spiegel, contradicting the German economy minister, who said the discussions had failed.
The U.S. and the EU have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) for three years and both had sought to conclude talks this year, but differences remain.
Germany’s Sigmar Gabriel said on Sunday that talks had “de facto failed”.
But a spokesman for U.S. Trade Representative Michael Froman told the German magazine: “Negotiations are in fact making steady progress.”
French Trade Minister Matthias Fekl said on Tuesday that this round of talks should be ended and a new set started.
Source: Reuters (Reporting by Michelle Martin; Editing by Louise Ireland)