GERMANY: IFO Downwardly Revises Growth Projection
The IFO Institute has revised its growth forecast for Germany downward, to 0.1% in 2025 (from 0.2%), 0.8% in 2026 (from 1.3%) and 1.1% (from 1.6%) in 2027.
- On the infrastructure measures planned by the government, IFO comments: "The planned government investments from the special funds for infrastructure and defense, as well as further relief for companies and consumers will only have a delayed effect. A growth effect of 0.3 percentage points is expected for 2026 and 0.7 percentage points for 2027. “The German government’s measures will help in the short term but are insufficient to expand the production capacities of the German economy in the long term”.
- As a result, IFO has also revised Germany's production potential, "for 2027, it is 0.7 percentage points lower than forecast in autumn", they comment, not mentioning specifics in the initial press statement.
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EU-RUSSIA: Slovakia Raises Objections To Using Frozen Russian Assets Pre-ECOFIN
After the Belgian gov't indicated that it still remains unconvinced about the legality of EU plans to use frozen Russian assets held in the Union to fund Ukraine's war effort and reconstruction, Slovakian PM Robert Fico has voiced his opposition to using the ~EUR140bln held at Belgium's Euroclear as part of 'reparations loans'. The issue is set to be further discussed on 13 Nov in the Economic and Financial Affairs Council (ECOFIN) meeting of EU finance ministers in Brussels.
- Speaking to domestic broadcaster STVR on 9 Nov, Fico said “Slovakia won’t take part in any legal or financial schemes to seize frozen assets if those funds would be spent on military costs in Ukraine".
- Fico holds a strong hand when it comes to blocking the use of frozen Russian funds. While Belgium has been a strong supporter of sanctions on Russia, Slovakia and Hungary have frequently used the threat of vetoes in order to secure concessions from Brussels. The sanctions must be re-approved each six months, or else they expire. If this occurred, it would see Russia regain access to its frozen assets.
- At the ECOFIN, the Commission is set to present a list of options for financially assisting Ukraine. Given many EU member states face their own pressing fiscal situations, these are unlikely to prove as attractive as using the frozen Russian funds.
- Speculation that Norway (attending the ECOFIN as a guest) could guarantee the loans using its massive sovereign wealth fund is seen as largely fanciful. This raises the prospect that the IMF would be called on as lender of last resort for Kyiv. This is viewed as a sub-optimal outcome as the financial conditions imposed on Kyiv as par of any support package would likely prove more stringent than those from the EU.
US: Veterans Day Exchange Schedules
The observance of the Veterans Day holiday will mean that some U.S. markets are subjected to abbreviated trading hours and/or closures today.
