Ireland election amid border talks, carmakers report results
The FT's Daniel Garrahan previews some of the big stories to watch this week, including Ireland electing a president as Brexit talks over the Irish border rumble on, the earnings season for leading carmakers and an ECB meeting to discuss life after QE
Filmed by Rod Fitzgerald. Produced by Daniel Garrahan
Here are some of the big stories the Financial Times will be watching in the week ahead.
Ireland goes to the polls in a presidential election as Brexit negotiations over the Irish border rumble on. Earnings season for big carmakers is in full swing. We'll be watching results from Renault, Ford, PSA, and Daimler. And the ECB meets in Frankfurt to discuss QE.
First to Ireland, which goes to the polls in a presidential election on Friday. It's the first time in decades that the incumbent head of state faces a contest for a new term in the largely ceremonial office. Surveys suggest that President Michael D Higgins, a veteran of the opposition Labour party, is on course for a comprehensive victory. Irish premier Leo Varadkar supports Fianna Fáil's Mr Higgins. Mr Higgins's nearest rival, Shaun Gallagher, is one of three businessmen running as independents who were panellists on the Dragon's Den TV show. Sinn Féin's candidate is on 11 per cent in the latest polls.
But Ireland is focused on this election just as the UK is embroiled in Brexit negotiations, which have reached an impasse over the Irish border question.
Well, the issue of avoiding a hard border between Ireland and the rest of the UK after Brexit is still the major sticking point. Theresa May hoped last week to secure some sort of deal and move forward with the talks, but unfortunately, there's still deadlock. So much so, that Theresa May is actually suggesting extending the transition period. Those are the years in which we stay pretty much where we are in line to the EU, until we form some sort of formal post-Brexit agreement.
But it's not going to go down well with Conservative MPs, and we can expect to see them making their views very known. They're worried that any extension to the transition could see us paying in more to the EU for longer than they'd like us to. And we still don't know the shape of the final agreement and the trading relationship that we will have with the EU after Brexit and after that transition. The Irish issue is still fundamental. We don't know how it's going to be resolved, and we don't know when.
Now emissions regulation and trade disruption are expected to hit carmakers' profits when they report results over the next fortnight. A new European certification regime called WLTP has seen all brands forced to retest all models. That's led to a backlog of laboratories and some vehicles not on sale during September. The result was volatile trading, with a 23.5 per cent sales drop in Europe last month.
But there was a glut in August, as manufacturers flooded [INAUDIBLE] to shift vehicles that didn't comply with the rules. Renault, Ford, Daimler, and the Peugeot owner, PSA, will all report quarterly earnings this week.
The slowdown in the Chinese market in the US-China trade war is also likely to hit profits. Ford's already warned that metal tariffs have cost it $1bn in higher prices. Electric ambitions also likely to be in focus, after European Commission rules gave carmakers until 2030 to lower CO2 emissions by 35 per cent.
Shareholders will be wanting to see which car manufacturers have a handle on the unique set of challenges facing them during the last quarter. In Europe, new emissions regulations has meant that some of the manufacturers have not been able to sell all of their vehicles. During September, this has led to a massive fall in brands such as VW.
Another major issue facing the carmakers' shareholders will be wanting to see progress on is the US and global trade. Many of the carmakers use their US plants to export all over the world. Whether they'll have to change those plans after Donald Trump is a question that's still open.
And then there's the issue of China. It's the world's largest market. And for many of the manufacturers, it's their biggest source of profit. But the market has been slowing. Sales are falling after almost three decades of growth. And the companies will have to answer questions on how they're going to tackle that situation.
And finally, to Frankfurt, where the eurozone's monetary policy makers meet this Thursday. Discussions are set to begin on what will follow on from the end of their mass bond buying programme, known as quantitative easing. Policy makers will be paying close attention to the goings on in Rome in recent weeks. The spread between what it costs the Italian government and the German government to borrow hit its highest level in five years, as investors anticipate a budget standoff between Brussels and Rome.
But investors' concerns are unlikely to dissuade the ECB from its plans to call time on QE, with the bank set to stop expanding the 2.5tn euro programme at the end of the year. That's despite calls from some Italian lawmakers for policymakers to continue buying more of the country's debt.
Since the European Central Bank's last policy meeting six weeks ago, we've seen global market turmoil, we've seen a worsening of relations between Brussels and Rome, and we've also seen further signs that exports are being dented by the trade war between the US and China. None of that, however, is likely to mean that the European Central Bank changes tack.
It's bad news for the eurozone's economy, but Mario Draghi is still going to be intent on ending quantitative easing by the end of this year. What policymakers are likely to discuss in this meeting and in the December vote is how they can do more to flesh out the strategy for 2019.
And that's what the week ahead looks like from the Financial Times in London.