EU Insight 12 November, 2021

Brussels, 12 November 2021

EU ECONOMY ON A POSITIVE TRAJECTORY, BUT MOUNTING HEADWINDS SUGGEST CAUTION

The latest economic forecast from the European Commission was presented this week. Growth projections for 2021 are lifted to 5%, up from 4.3%, although the 2022 forecast is revised downward, from 4.4 to 4.3%. The projections strike a positive tone overall, but also warn of mounting headwinds, considering the mounting fourth wave of COVID-19, the rise in energy prices, global supply chain’s bottlenecks and the rise of inflation. As for the latter, the forecast raises it to 2.4% in 2021 and to 2.2% 2022 – up by almost a percentage point for both years compared to previous projections.

FIGHT AGAINST COVID-19 CONTINUES, AS EU APPROVES TWO TREATMENTS AND A VACCINE

Ronapreve and Regkirona joined the list of approved COVID-19 treatments, after the European Medicines Agency green-lighted the two compounds as “promising therapeutics” – hence likely to be authorised under the dedicated EU strategy. Both treatments are employed during the early stages of infection and are based on antiviral monoclonal antibodies. At the same time, the European Commission approved the contract with the pharmaceutical company Valneva, in what is its eight such contract and with a view to purchasing an additional potential vaccine against COVID-19. The contract provides for Valneva to supply at least 27 million doses in 2022.

PRESIDENT OF EUROPEAN COUNCL VISITS POLAND AMID BELARUS MIGRANT CRISIS
President of the European Council Charles Michel travelled to Poland to meet Prime Minister Mateusz Morawiecki, as Brussels pressures Poland to accept EU assistance in managing the migration crisis at the Polish-Belarusian border. President Michel expressed the EU’s solidarity with Poland and called on the European Commission to propose all possible means to address the crisis. In a statement, High Representative Josep Borrell echoed Michel’s words, reiterating that the EU condemns the Belarusian regime for deliberately endangering Belarusian citizens’ lives and perpetrating state-sponsored illegal migration. Former European Council President Donald Tusk also called for EU action to “contain the escalation of tension on the Eastern border of the Union”.

EU WILL EXTEND EQUIVALENCE REGIME FOR UK CCPs BEYOND JUNE 2022

Earlier this week, Mairead McGuinness, Commissioner for Financial Services, announced that the European Commission will propose an extension to the equivalence decision for UK-based central counterparties (CCPs) in early 2022. Currently UK CCPs benefit for an equivalence regime that was announced in September 2020 and which expires on 30 June 2022. The Commission remains of the view that over-reliance on UK-CCPs for some clearing activities is a source of financial stability risk in the medium term. However, the extension of the current equivalence will come in order to address possible short-term financial stability risk, linked to an abrupt interruption in access to clearing services.

PARLIAMENT BACKS NEW COUNTRY-BY-COUNTRY REPORTING RULES FOR MULTINATIONALS

The European Parliament plenary endorsed new rules obliging big multinationals to publicly declare the taxes they pay in each EU country, to undermine tax avoidance. The vote closed a legislative process that began five years ago. The public country-by-country directive will apply as of mid-2023 to multinationals and their subsidiaries with annual revenues over €750 million – and which are active in more than one EU country. According to the agreement approved by MEPs, to facilitate the use of the information provided and to increase transparency the data provided by companies will need to be broken down into specific items.

COMING UP NEXT WEEK

• 15 November: Eastern Partnership Foreign Ministers meeting. On the agenda: Advancing the partnership, governance, and investment.
• 15 November: Agriculture and Fisheries Council. On the agenda: Forest strategy 2030, market situation for agricultural products.
• 15 November: Foreign Affairs Council. On the agenda: Current affairs, Western Balkans, Sahel.
• 16 November: EU-Uzbekistan Cooperation Council.
• 16 November: Foreign Affairs Council (Defence). On the agenda: European Defence Agency (EDA) Steering Board, EU training missions.
• 18 November: General Affairs Council (Cohesion). On the agenda: Contribution of cohesion policy programmes to the recovery, twin transitions.
• 19 November: Foreign Affairs Council (Development). On the agenda: Union water in external action, with a focus on Central Asia.

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • Twitter: @KreabEU