Latest news with #SavingsandInvestmentUnion
Yahoo
29-04-2025
- Business
- Yahoo
How investors can navigate European markets through uncertainty
Markets have been up and down over the past several weeks, with a level of volatility not seen in a considerable time. Uncertainty breeds volatility, but looking past the noise, one finds Europe in a reasonable position. Since the start of the year, European stock markets have been outperforming US equities as investors noted the strong relative value compared to the highly priced US markets. Moreover, European markets are benefiting as governments' spending plans for increased defence and infrastructure should filter into improved growth. European consumers, despite expressing confidence concerns in various surveys, have demonstrated resilience in the recent period of high inflation and interest rates. Household savings rates are high across many economies, and employment levels remain stable. A further growth catalyst could come from the European Commission's enactment of the Savings and Investment Union, which would channel European savings into support for the expansion of European companies. Further, the Commission needs to continue rapidly on its path to adjusting internal barriers to trade and investment within Europe, simplifying regulation and focusing on improving trading relationships with other economies. As the US administration continues its efforts to reposition the global trading environment, financial markets are likely to remain volatile. While the threat of tariffs had been well flagged, the magnitude and breadth of the proposal clearly spooked markets. The recently announced pause will provide time for countries to negotiate less severe terms, for companies to prepare for the impact on their supply chains, and for investors to fully evaluate their impact. As for Europe, we expect the tariff issue, if enacted, to impact growth, cutting into a previously improving position. It will be critical for investors to filter out the noise. There are many questions that remain unanswered and could still impact some firms more severely than others. For example, the largest European sectors with an exposure to trade with the US are the automotive and pharmaceutical sectors. If we examine credit markets, we see investors pricing in a rising level of risk, but not yet to a level that would suggest any severe scenarios are on the horizon. Credit spreads have widened, but so far, only to their five-year historical average levels, not nearly to the wides seen during the pandemic period and the Russian full-scale invasion of Ukraine in early 2022, with its subsequent period of highly elevated energy pricing. Part of the reason for this is that many European companies have repaired their balance sheets, improved their financing, and adjusted their margins after weathering the recent crises. European banks are also in strong shape, and corporate default rates are relatively low. Related What this week's stock market volatility means for European investors The euro as a safe haven: Is it here to stay? As highlighted on KBRA's Credit Compass podcast, KBRA DLD's European Index of private credit default expectations are for a default rate of only 1.25% in 2025. While the severity of the tariff impact could move the needle with respect to these levels, we will have to wait and see how various countries and companies react. Gordon Kerr is European Macro Strategist at global rating agency KBRA.
Yahoo
27-04-2025
- Business
- Yahoo
How investors can navigate European markets through uncertainty
Markets have been up and down over the past several weeks, with a level of volatility not seen in a considerable time. Uncertainty breeds volatility, but looking past the noise, one finds Europe in a reasonable position. Since the start of the year, European stock markets have been outperforming US equities as investors noted the strong relative value compared to the highly priced US markets. Moreover, European markets are benefiting as governments' spending plans for increased defence and infrastructure should filter into improved growth. European consumers, despite expressing confidence concerns in various surveys, have demonstrated resilience in the recent period of high inflation and interest rates. Household savings rates are high across many economies, and employment levels remain stable. A further growth catalyst could come from the European Commission's enactment of the Savings and Investment Union, which would channel European savings into support for the expansion of European companies. Further, the Commission needs to continue rapidly on its path to adjusting internal barriers to trade and investment within Europe, simplifying regulation and focusing on improving trading relationships with other economies. As the US administration continues its efforts to reposition the global trading environment, financial markets are likely to remain volatile. While the threat of tariffs had been well flagged, the magnitude and breadth of the proposal clearly spooked markets. The recently announced pause will provide time for countries to negotiate less severe terms, for companies to prepare for the impact on their supply chains, and for investors to fully evaluate their impact. As for Europe, we expect the tariff issue, if enacted, to impact growth, cutting into a previously improving position. It will be critical for investors to filter out the noise. There are many questions that remain unanswered and could still impact some firms more severely than others. For example, the largest European sectors with an exposure to trade with the US are the automotive and pharmaceutical sectors. If we examine credit markets, we see investors pricing in a rising level of risk, but not yet to a level that would suggest any severe scenarios are on the horizon. Credit spreads have widened, but so far, only to their five-year historical average levels, not nearly to the wides seen during the pandemic period and the Russian full-scale invasion of Ukraine in early 2022, with its subsequent period of highly elevated energy pricing. Part of the reason for this is that many European companies have repaired their balance sheets, improved their financing, and adjusted their margins after weathering the recent crises. European banks are also in strong shape, and corporate default rates are relatively low. Related What this week's stock market volatility means for European investors The euro as a safe haven: Is it here to stay? As highlighted on KBRA's Credit Compass podcast, KBRA DLD's European Index of private credit default expectations are for a default rate of only 1.25% in 2025. While the severity of the tariff impact could move the needle with respect to these levels, we will have to wait and see how various countries and companies react. Gordon Kerr is European Macro Strategist at global rating agency KBRA. Sign in to access your portfolio
Euronews
02-04-2025
- Business
- Euronews
Fact-check: The EU will not 'confiscate' Europeans' savings to spend on defence
ADVERTISEMENT The EU executive is not looking to "confiscate" up to €10 trillion in money stashed away in European citizens' savings accounts to spend on defence, despite a claim circulating widely on social media. Euroverify has detected the false allegation on X , TikTok , Facebook and YouTube , fuelled by an article published on the Russian state news agency TASS . The disinformation campaign falsely accuses Brussels of wanting to dip into taxpayers' savings to "fund its war machine" and "militarise the EU." The unfounded claims seem to have been pieced together following an announcement made by the Brussels-based EU executive on 19 March. On that day, the Commission unveiled a new proposal for the Savings and Investment Union (SIU) – a rebrand of the former Capital Markets Union – in a fresh push to encourage European citizens to invest their savings in EU assets rather than leaving them sitting in bank accounts. The proposal aims to centralise market supervision and offer tax incentives to savers. In fact, the Commission's goal is to ensure savers generate more revenues while allowing the bloc itself to make much-needed strategic investments. Euro coins and banknotes are shown by a salesclerk at a shop in Vilnius, 1 January, 2015 AP Photo The executive says some €10 trillion euros of citizens' savings are currently in low-yield savings accounts, and that €300 billion of those are invested in non-EU markets each year. In a speech in Frankfurt on 6 March, the European Commissioner for Financial Services Maria Luís Albuquerque said, previewing the proposal: "Europeans are among the best savers in the world, yet they are not getting significant returns on their savings," she added. "This is simply not fair." "The Savings and Investment Union has as a goal that citizens get more and better return on their money, but also that (...) businesses have access to the much needed capital," European Commission President Urusla von der Leyen said at a summit of EU leaders on 20 March. In no way does this mean the EU executive would access citizens' private savings accounts. The bloc in fact has some of the strongest regulations in the world designed to protect savings accounts. Why are users claiming savings will be spent on defence? The establishment of a robust European Savings and Investments Union is considered pivotal for strengthening the bloc's competitiveness and freeing up investments in critical sectors, including in defence. It could free capital for small and medium-sized business as well as larger enterprises to funnel more investments into strategic projects, including to ramp up the continent's defence industrial base. "Both in Brussels and in Member States we need to find the instruments to channel the enormous amount of private savings to the investments we need, from energy to innovation, from industry to housing, from digital to space or defence," Albuquerque said. The EU executive unveiled a separate proposal earlier in March to "re-arm" the continent in response to Russia's war of aggression in Ukraine and the threat it represents for the wider continent. Ukrainian servicemen fix a bomb on a Vampire attack drone on the front line near Chasiv Yar, 31 March, 2025 AP Photo That proposal is worth up to a potential €800 billion, although the headline figure is considered highly hypothetical. ADVERTISEMENT The bulk of that sum would be released by tweaking the EU's fiscal rules to allow member states to spend more on defence without triggering the so-called excessive deficit procedure, a mechanism the EU uses to keep countries' deficit and debt in check. The Commission would also look to raise money on the capital markets to then loan up to €150 billion to member states to spend on defence. Guntram Wolf, a senior analyst at think tank Bruegel, told Euronews last month that this surge in spending could put "some pressure on prices" and push up inflation "at least slightly," but that otherwise taxpayers would not bear burden as a result of the plan.
Yahoo
04-03-2025
- Business
- Yahoo
Ursula von der Leyen annoucnes ReArm Europe plan to boost European defense capabilities
European Commission President Ursula von der Leyen presented on March 4 the ReArm Europe plan aimed at strengthening the defense capabilities of European countries. The announcement comes amid seismic geopolitical shifts as U.S. President Donald Trump upends Washington's long-standing policy on Ukraine and Russia while casting doubt on his commitments to transatlantic security. "The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates, and whether Europe is ready and able to act with speed and with the ambition that is needed," von der Leyen plan consists of five points designed to increase defense spending, as well as defense procurement and first step is to unleash the use of public funding for defense at the national level. The European Commission is proposing to activate the National Escape Clause of the Stability and Growth Pact, which would allow member states to significantly increase their defense spending without triggering the excessive deficit member states would increase their defense spending by 1.5 percent of GDP on average,this could create fiscal space of close to 650 billion euros ($28 trillion) over a period of four years, according to von der Leyen. The second point is a new instrument that will provide 150 billion euros ($6.5 trillion) of loans to member states for defense investments, "to spend better and spend together." "We're talking about pan-European capabilities domains like, for example, air and missile defense, the artillery systems, missiles and ammunition, drones and anti-drone systems, but also to address other needs from cyber to military mobility, for example," von der Leyen said. According to the president, with the new equipment, member states can significantly increase their support for Ukraine and provide military aid for it third point of the plan is aimed at increasing investment in the defense sector. The European Union will therefore introduce additional opportunities and incentives for member states to decide whether they want to use cohesion policy programs to increase defense last two areas of action cionsider mobilizing private capital by accelerating the Savings and Investment Union and through the European Investment Bank, von der Leyen said. The ReArm Europe plan could mobilize close to 800 billion euros ($34.8 trillion) of defense expenditures for "safe and resilient Europe," the president added."Europe is ready to assume its responsibilities," she said. "This is a moment for Europe and we are ready to step up." Read also: BREAKING: Trump halts military aid to Ukraine, Bloomberg reports We've been working hard to bring you independent, locally-sourced news from Ukraine. Consider supporting the Kyiv Independent.
