Covid-19 Business Update






July 21, 2020: Luxembourg budget deficit hits €2.6bn in first half, and other European and worldwide news








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Covid-19 Business Update
21st July 2020

Luxembourg
Pandemic is not an insurable risk: ACA’s Marc Hengen

Marc Hengen, managing director of Luxembourg’s Association of Insurance and Reinsurance Companies, says the loss of business earnings resulting from a pandemic cannot be insured against since it can affect many people at the same time and thus jeopardises the sector’s risk-sharing principle. However, he says the ACA is working with the government on devising mechanisms to protect companies from major health risks in the future.

Best source: L’essentiel (in French)

Unemployment rate stable at 7.0% in June

Luxembourg’s unemployment rate remained at 7.0% in June, unchanged from two previous months but 1.5 percentage points higher than in February, according to Statec. The number of people registered as seeking work with state employment bureau ADEM totalled 19,876 last month, a 32.2% increase from a year earlier. The number of non-resident unemployed was 44.5% higher at 3,551, while the increases were 51.9% for those under age 30, 35% for those in the 30-44 age bracket and 20.9% for those aged 45 or older. ADEM says that the unemployment rate reflects a lack of movement in the job market.

Best source: RTL 5 minutes
See also: RTL Today (in French)
See also: Luxembourg Times (subscription required)

Europe
EU leaders reach agreement on recovery fund and budget after marathon summit

After negotiations in Brussels stretching into a fifth day — the second-longest summit in EU history — EU leaders have reached agreement on the planned €750bn European recovery fund, which will consist of €390bn in grants and €360bn in loans to member states. The non-repayable element is less than the €500bn originally proposed by France and Germany but more than the limit initially sought by the so-called frugal four — the Netherlands, Austria, Denmark and Sweden — which will in turn receive increased rebates on their contributions to the EU’s €1.074trn budget for the next seven years. The agreement provides for mechanisms under which recovery fund payments can be halted temporarily if recipients are failing to adopt economic reforms, and has deferred a decision on a controversial proposal to make receipt of EU funds contingent on adherence to the rule of law. However, unresolved issues as the talks stretched into Monday evening included the incorporation of climate change targets into the recovery plan, a governance mechanism for disbursement of funds, and whether and how to link payments to respect for the rule of law.

Best source: Financial Times (subscription required)
See also: L’Echo (subscription required, in French)
See also: Les Echos (subscription required, in French)
See also: The Guardian

Eurozone current account surplus narrowed further in May

The eurozone’s current account narrowed from €14bn in April to €8bn in May, while the surplus for the previous 12 months was down from €318bn in May 2019 to €264bn, according to the European Central Bank. The decline was mainly driven by a fall in the surplus for services, from €99bn to €31bn, and of primary income, from €89bn to €69bn. Net acquisitions of foreign portfolio investment securities by eurozone residents climbed from €72bn in the 12 months to May 2019 to €468bn, while non-resident net acquisitions of eurozone portfolio investment securities rose from €132bn to €355bn.

Best source: Reuters

Pandemic unemployment payment claims in Ireland continue to fall

The number of people receiving receiving Ireland’s pandemic unemployment payment has fallen by 31,800 this week to 313,800, according to the country’s Department of Employment Affairs and Social Protection, down from a peak of 598,000 in early May. In the past two weeks, the number of people ending claims as they return to work has reached almost 100,000. The top three sectors in which employees are currently returning to work are hospitality and food services, wholesale and retail trade, construction and motor vehicle repair.

Best source: RTÉ News

Worldwide
Julius Bär reports 43% increase in first-half profit

Julius Bär has reported a 43% year-on-year increase in net profit during the first half to a record CHF491m, along with a 9% rise in operating profit to CHF1.85bn. Profitability was fuelled by a surge in trading activity related to the Covid-19 outbreak, which outweighed the impact of lower net interest income and higher net credit losses on financial assets. Net inflows amounted to CHF5bn, down from CHF6.2bn a year earlier, while assets under management declined by 5.7% to CHF401.8bn due to negative market performance as well as a stronger Swiss franc. CEO Philipp Rickenbacher says the private bank, which is cutting costs to boost margins, is well prepared for a challenging second half of the year.

Best source: Finews
See also: WealthBriefing (subscription required)
See also: L’Agefi (in French)

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