Economy of the European Union

From this page you can access thematically grouped Analytical Articles published in the Economic Bulletin from 1999, ordered by date of dissemination within each year.

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  • 25/11/2019
    A crisis early warning model for euro area countries (340 KB) Jose González Mínguez and Carmen Martínez Carrascal

    The article summarises the findings obtained in the estimation of an economic crisis early warning model for the euro area countries. These findings show that monitoring five variables that may indicate the emergence of macro-financial imbalances – current account balance, unit labour costs relative to the rest of the euro area, household indebtedness, corporate indebtedness and sovereign risk premium – helps facilitate the early detection of downturns in the euro area countries. As expected, the model points to a widespread euro area-wide increase in the probability of a decline in activity towards the middle of the last decade, just before the start of the Great Recession. Compared with the core euro area economies, the increase in crisis probability was much more pronounced in the periphery countries, driven by a worsening of the current account balance, growing private sector indebtedness and deteriorating competitiveness. In several of these economies, the probability of downturn predicted by the model heightened in 2011-2012, coinciding with the successive sovereign debt crisis episodes. Since then the probabilities of downturn have moderated substantially and are now low in most countries, albeit in some cases still above those observed at the turn of the century.

  • 10/10/2019
    Leveraged loans: definition and market development (437 KB) Carlos González Pedraz

    Over the past decade, the volume of leveraged loans has grown to reach its highest level since the end of the crisis. Growth has been more contained in Spain, which accounted for 5% of the total volume of such lending in Europe in the period 2016-2018.
    The terms and conditions of leveraged loans have become less restrictive and a large proportion is distributed among institutional investors worldwide, in the form of collateralised loan obligations (CLOs). This originate-to-distribute model poses potential risks for the financial system. In the event of a cyclical downturn the losses in this market could be significant, in particular, owing to the relaxation of investor protections. In addition, given the importance of these loans as a source of corporate financing, a rise in defaults would have adverse effects on the real economy.

  • 11/07/2019
    Financial position of euro area households in 2018 (371 KB) Ana del Río and José Antonio Cuenca

    Drawing on the accounts for the institutional sectors, this article describes how euro area households’ income, savings, borrowing and financial wealth evolved in 2018. The improvement in the labour market and the more dynamic wage performance continued to boost household income and this, together with the increase in asset (especially housing) values, and against a backdrop of very low interest rates, sustained household expenditure. The saving rate rose slightly in the euro area overall, although with considerable differences between countries. Households’ demand for finance continued to grow at a moderate pace, resulting in a slight dip in their debt-to-income ratio.

  • 18/06/2019
    Characterisation of self-employment in Spain from a European perspective (639 KB) Pilar García Perea and Concepción Román

    In Spain, self-employment currently accounts for 16% of those employed, a proportion slightly higher than the EU average. Compared with the prevailing structure among employees, it is males, the over-50s, those with a low level of educational attainment and those employed in traditional sectors such as agriculture, wholesale and retail trade, transport and accommodation who are over-represented in this group. Relative to self-employed workers in the EU, self-employment in Spain accounts for a smaller proportion of the total in the liberal professions in services, generally associated with a higher level of skill. In Spain, the incidence of self-employment economically dependent on a single client is relatively moderate compared with other European countries; but the high incidence of the self-employed who choose to work as such out of necessity, given the lack of alternatives, is notable. Lastly, in all euro area countries, households with a self-employed family head are seen to be wealthier than those with a wage-earning family head, and Spain is in an intermediate position.

  • 09/05/2019
    The latest protectionist trade trends and their impact on the European Union (682 KB) Francesca Viani

    In an attempt to rebalance trade with China, the United States administration decided in early 2018 to introduce a series of protectionist measures affecting certain imports in particular. This gave rise to an escalation of US-China trade tensions. The new tariffs have affected a significant percentage of Chinese exports to the United States, but their impact on EU trade has only been marginal to date. The indirect effects on European economies through the global value chains have also been limited. However, possible tariff barriers on the automotive sector could raise the affected trade flows substantially.
    Simulations made with econometric models confirm that the tariff measures adopted to date would have relatively moderate direct effects on global economic activity and on EU countries. That said, the simulations also warn that a decrease in business confidence and an unfavourable reaction by international financial markets could amplify such adverse effects. Additionally, possible future auto sector tariffs could have a significant impact on European economies in an industry already facing important challenges associated with the structural and technological transformation process currently under way.

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