EU Economy Brief 49/2017

Numbers of the Week

  • Tighter global banking rules will require capital increases of 12.9% for European banks. According to an impact assessment, the finalised Basel III framework will require 12 European banks deemed global systemically important institutions (G-SIIs) to raise minimum required capital by 15.2%. The impact on medium-sized banks is expected to be more moderate. (European Banking Authority)
  • Volume of retail trade in the euro area decreased by -1.1% in October 2017, compared to September 2017. The corresponding EU-28 figure is -0.5%. Average monthly growth was 0.3% in both zones from January 2017 until September 2017. Among the larger states, France saw the biggest monthly decline (-1.5%); the largest increase was recorded in the UK (0.9%). (Eurostat)
  • Average level of public spending on pensions rose by 1.5 percentage points in the OECD from 2000 to 2013. According to the OECD, it will be challenging to combine financial sustainability with pension adequacy. Average pension payments in the EU were at 70.6% of pre-retirement earnings for men and 70.4% for women, ranging from 29% (UK) to 100.6% (Netherlands). (OECD)
  • 10-year Greek government yield fell below 5% for the first time since 2009 on Tuesday, remaining below 5% on Wednesday and Thursday. Increased demand follows Greece and its international lenders agreeing on a set of reforms to be implemented in return for the unlocking of the next tranche of bailout funding. (FT & Bloomberg)

Chart of the Week­

EU still far removed from Europe 2020 R&D spending target

  • In 2016, EU countries were almost 1 percentage point away from their 2020 R&D target, making it unlikely to achieve it. Most countries have to step up their R&D spending. Only Cyprus has already met its target, with Germany being only 0.1 pp away from its own.
  • Interstate differences suggest geographic pecking order. Core and Scandinavian countries spend more, southern and CEE countries less than the EU average. Exceptions are Luxembourg and the UK, falling into the latter camp, and Slovenia, spending almost the same as the Netherlands.
  • 9 countries were spending less in 2016 than in 2010, Estonia and Finland being the worst performers. The top 3 performers are Belgium, Greece, and Austria, each spending around 0.4 percentage points more in 2016 than in 2010.
  • Businesses in 2016 contributed most to R&D spending in all countries bar Cyprus, Latvia, and Lithuania, where the higher-education sector financed the biggest part. This state of affairs is identical to that of 2010 for all countries except Poland.

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