EU finally to release 750 bn in recovery spending. GDP likely to contract in Q4. ECB to increase its support
programmes. Fall in risk premiums reaches its limits. Risks return to the markets.
Key Points
End of 1st element of suspense: EU will finally be able to distribute 750 billion in Covid relief
End of 2nd element of suspense: Brexit will be effective with or without an agreement as of 31 December 2020
GDP rebound will likely be followed by a contraction in Q4
Expected GDP growth of +4.5% in 2021
ECB remains expansionary and reassuring
How far can risk premiums go down in the Eurozone?
Strength of the euro puts it back in the 1.20-1.30 fluctuation band