Politics

Austria faces difficult government formation

Austria has voted. As expected, the ÖVP won the National Council elections by a considerable margin. However, the increase in votes to about 38.4% (official final result without postal vote) was somewhat higher than expected. After a break of several months, Sebastian Kurz is likely to become Austrian Federal Chancellor again. But the crucial question is: Who will be the new ally of the ÖVP? After the surprisingly strong performance of the Greens, the ÖVP has three possible partners at its disposal: SPÖ, FPÖ and Greens. The ÖVP has the largest overlap in terms of content despite the affair and the previous coalition break with the FPÖ. In view of the now shifted balance of power, the ÖVP would also set the tone even more clearly in a turquoise-blue alliance. It is also clear, however, that voters are currently very critical of the FPÖ. Kurz believes that a relaunch of…

Spain – political uncertainty persists, but does nothing

In the end, Pedro Sanchez, the previous prime minister, could not secure enough support among the other parliamentary parties to guarantee his re-election. As a result, the Spanish king has overturned his candidacy for prime minister. The most likely date for a new election is 10 November. The EU Commission’s deadline for submitting the draft budget for the year 2020 (until mid-October) can hardly be met under these conditions. For the time being, however, we do not see any noticeable impact on economic development. Economic growth slowed somewhat in the spring to 0.5 percent compared with the previous quarter. This is primarily due to a fundamentally weaker growth environment, from which the Spanish economy cannot completely escape. However, we still see the fundamental upward momentum as intact. Domestic consumption in particular is likely to remain an important source of support in the coming quarters. This is partly due to the…

Attack on oil production in Saudi Arabia

At the weekend there was a drone attack in Saudi Arabia on the largest worldwide oil refinery („Abkaik“) and the oil field („Khurais“). The state-owned company Aramco then reported a production loss of 5.7 MMBD, which is about half of the kingdom’s total production and about 5 percent of the world’s oil supply. In the history of oil, there was no such event in the history of production loss. Even the war in Iraq and the Iranian Revolution had less influence on oil production. The price of oil rose sharply due to the news and peaked at over USD 70. In the course of the day, however, the price fell noticeably and currently stands at around USD 66. It is to be expected that a) Aramco will be able to restart a good portion of production in a few days and b) the inventories of the state-owned company will be…

Small, high growth dynamic and highly indebted

  In the course of the global financial and debt crisis, Portugal and Greece entered a deep economic crisis together. In the meantime, the tide has turned. With growth rates of 0.5% and 0.8% respectively, Portugal and Greece are among the growth drivers in the euro zone. At this point, however, the similarities have already largely ceased. The starting position that led to this result is quite different for both countries. The fact that Portugal made the leap out of the red much earlier is mainly due to the fact that the country began implementing extensive structural programmes at an early stage and in many cases even exceeded the requirements of the „Troika“. In Greece, on the other hand, the precarious budgetary situation left the incumbent governments with little choice but to comply with the Troika’s demands and pursue tough reform measures. Often, however, the conditions were implemented incompletely or…

Hope – once again

The last few days have brought a slight easing in the situation with regard to the greatest political risks for the global economy. In the UK, the immediate threat of a no deal brexit on 31.10.2019 seems to have been averted for the time being. In Italy, a cooperation between the Social Democrats and the 5-star movement was agreed, ruling out the possibility of rapid new elections and a possible march-through of Salvini’s Lega for the time being. And finally, the USA and China will at least again agree on meeting dates, which is also a step forward in view of the disagreement of the last few weeks. These developments have already been received with great relief on the financial markets. Yields on German government bonds have recovered somewhat from their low, and prices on the stock markets have also risen. Italian government bonds also benefited significantly. However, the relief…

Brexit – a didactic play for game theory

The course of the Brexit and the question of whether it should take place with or without a contract have long since abandoned rational considerations. In fact, it is only a matter of convictions and the will to assert one’s own convictions. Prime Minister Boris Johnson’s latest move is no exception. With the forced pause imposed on Parliament, Johnson is certainly reaching his constitutional limits, perhaps a little beyond them. In terms of negotiating tactics, however, it is a good move. His threat to the EU to actually implement a no-deal brexit has thus gained a great deal of credibility. This has reduced the British Parliament’s room for manoeuvre and its ability to thwart Prime Minister Johnson’s plans. For Johnson, the pressure to reach an agreement with the EU has actually increased in recent days. For example, government analyses gave clear warnings of impending shortages of food and medical supplies…

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