WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Ahead of this Sunday’s extraordinary meeting of EU leaders to endorse the Brexit Withdrawal Agreement, the UK and the European Commission agreed yesterday on a draft political declaration on the future UK/EU relationship. In a knee-jerk reaction, the GBP gained some ground against both the EUR and the USD but gains were relatively limited amid concerns that, although the Withdrawal Agreement and the political declaration will likely be endorsed by the EU Council on Sunday, it is questionable whether the UK Parliament will give its consent. Meanwhile, the EUR moved lower against the USD amid mounting concerns about the Eurozone’s growth outlook. The composite PMI dropped to a lower than expected 52.4 in November from 53.1 in October, raising concerns about the likelihood of a growth rebound in Q4 following Q3’s sluggish pace.
GREECE: The EFSF approved yesterday the implementation of a set of medium-term debt relief measures for Greece, which are estimated to lead to a cumulative reduction of Greece’s debt-to-GDP ratio of around 30 pps until 2060. The Bank of Greece publicised yesterday its proposal for a systemic solution to NPEs through a centralised management scheme. The scheme foresees the transfer of a significant part of NPEs along with a part of the deferred tax credits (DTC) which are booked on bank balance sheets, to a Special Purpose Vehicle (SPV).
SOUTH EASTERN EUROPE
ROMANIA: In its European Autumn Semester report, the EU Commission urged Romania once again to contain its fiscal deficit.
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