BUDGETARY ISSUES TO THE FOREFRONT

Editorial This week was still difficult for emerging markets, both in terms of equities and currencies. Budgetary issues are resurfacing in their wake. In Argentina, the Macri government, faced with a fresh financial crisis since April, announced new restrictive economic measures aimed at reducing fiscal deficits future in order to obtain an early payment on the loan negotiated with the IMF in June. In the eurozone, budgetary issues are also in the headlines. Investors are already paying attention, as shown by the easing of the 10-year BTP/Bund spread underway since the start of the week at the same time as rumours were spreading about a 2019 Italian budget with a smaller deficit than initially feared. In contrast, things are getting tricky for the French government following INSEE’s methodological revisions, which will increase the French debt by almost 2 percentage points to 98.5% in 2017. This should, however, leave the timetable for the normalisation of the ECB’s quantitative easing programme unchanged. The next ECB meeting is scheduled for next Thursday.