After appearing to be at loggerheads with the European Union, the Italian government presented new proposals that would mean it was borrowing less next year. In the face of disciplinary procedures from the EU, Rome finally tabled a new offer that would create a budget deficit of 2.04% for 2019, from the 2.4% that had initially created the tension. There are still some details to finalise and it is currently unclear exactly which policies will have to make way in order for the proposals to be achieved, but the news pleased investors.
Germany’s inflation rate for November came in as expected, while the ECB confirmed its bond-buying programme would close at the end of this month. It will be worrying to some that the Bank has cut its growth forecasts for the rest of this year and the whole of next. To think how good 2017 was for the eurozone and how this year has been. One wonders what will happen to the US next year, given that 2018 has been so good for the US economy.
It’s a busy end to the week for eurozone economic data, with a raft of purchasing managers’ indices on the schedule. We will see the flash readings of the composite, manufacturing and services PMI from both Germany and the eurozone for December. All are expected to have nudged up a little higher from the previous period’s reading. We will also see year-on-year wage growth figures from the eurozone for the third quarter of 2018.