MORNING BID EUROPE-Slowing world economy takes toll

December 9, 2015

German imports fell sharply in October and exports also weakened, suggesting Europe’s largest economy is still struggling to shake off the impact of a slowdown in China and other emerging markets. Meanwhile Britain’s Chambers of Commerce is lowering its forecasts for UK economic growth over the next three years, with the slowing world economy again the root cause. That comes before the Bank of England’s latest rate-setting meeting on Thursday: no change seen for now, but BoE chief Mark Carney could use the publication of the meeting’s minutes to tweak expectations for when the hike could come (currently seen as much as a year or more away).

In the latest of the re-adjustments to European politics happening in the wake of the migrant crisis, Switzerland’s right-wing populist Swiss People’s Party (SVP) looks set to get a second seat on the seven-member cabinet when parliament elects government members on Wednesday. This can only harden the official Swiss line in the simmering stand-off with the EU over unilateral immigration curbs it wants to impose but which would violate agreements it has with the bloc. Switzerland has said it would be ready to suspend its pacts with the EU if talks to solve the stalemate fail, a threat which has given rise to yet another neologism: “Swexit”. Separately, the UK’s David Cameron is heading to Romania and Poland for talks with their governments: particularly with Warsaw, he needs to work out how they can possibly see eye-to-eye over his demands for limits to welfare benefits to EU migrants.

Another day, another source of tensions between Russia and the West. The Kremlin is furious that the International Monetary Fund is changing its rules on debt defaults in a move that would help Ukraine if it misses payments on a $3 billion debt to Russia. Ukraine is restructuring its debts to plug a $15 billion funding gap; Moscow argues its debt is an official bilateral loan that shouldn’t be included and has demanded a meeting of the IMF board to register its anger.

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