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ECB to unveil yet another anti-pandemic package

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The European Central Bank unveiled fresh stimulus measures on Thursday (10 December) to prop up the recession-hit currency bloc long enough for a coronavirus vaccine to be deployed and its devastated economy to start to heal, write and

With fresh support measures already promised, only the details of the package remain up in the air. But the bottom line is clear: borrowing costs will be kept close to zero for years so that governments and firms can spend their way out of the biggest recession in living memory.

The ECB’s challenge will be to balance a growing range of short-term risks against improving long term prospects, indicating that its move will be big but lack the “shock and awe” impact of previous crisis-fighting measures.

“With the positive news in terms of vaccine development, Europe is now starting to see the light at the end of the tunnel,” Oxford Economics said in a note. “However, the short-term outlook remains extremely challenging, with euro zone GDP likely to contract in the fourth quarter.”

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For now, the 19-country eurozone is facing a triple shock: a lingering second wave of the pandemic, the prospect of a hard Brexit and political stalemate over the European Union’s €750 billion ($908bn) recovery fund.

But all three are seen as temporary shocks, with the political strife likely to be resolved and the pandemic easing by the spring, leaving the ECB with the task of getting the bloc through a difficult winter.

Indeed, financial market had already started to price in a post-pandemic recovery, with global stocks hitting an all-time high earlier this week, spreads between eurozone government bond yields tightening and the euro scaling a 2-1/2 year high against the dollar at $1.2177.

The economy also recovered surprisingly quickly after the first wave of coronavirus lockdowns, suggesting more resilience than is built into economic models. Fresh projections could thus point to lower growth in 2021 but better prospects in 2022, leaving the overall growth path little changed.

In the weeks leading up to Thursday’s meeting, ECB President Christine Lagarde (pictured) has made clear that a bigger Pandemic Emergency Purchase Programme (PEPP) and more subsidised long-term loans for banks will form the backbone of policy measures, even if other moves are possible.

Economists polled by Reuters expect the 1.35 trillion euro PEPP to be expanded by at least 500 billion euros and its duration extended by six months to the end of 2022, with risks skewed towards a bigger and longer extension.

Board members Philip Lane and Isabel Schnabel have offered further hints, both arguing that the ECB’s job is to keep borrowing costs at their current levels for even longer, rather than to lower them any further.

Anaemic inflation will also justify the idea of low for longer and fresh ECB projections will show price growth well below the bank’s near 2% target even in 2023, the 11th straight year it would undershoot its objective.

“The ECB’s tools may be most effective at calming markets in crisis situations and keeping financial conditions very easy via a ‘low for very long’ stance,” JPMorgan economist Greg Fuzesi said. “But, when monetary policy is already doing a lot, it looks more constrained when trying to give the economy an extra kick to boost inflation closer to the target.”

Rate-setters have made clear, however, that it is up to governments to handle the pandemic and that the ECB’s job is merely to make funding cheap.

“Our first objective must be to ensure that these financing conditions remain very favourable for everyone for as long as necessary,” French central bank governor Francois Villeroy de Galhau said recently.

Those comments appear to rule out policy innovation and suggest the ECB will stick to tried and tested tools.

Among them is long-term liquidity for banks and the ECB is likely to schedule more tenders and possibly extend the period when its minus 1% lending rate applies.

The ECB could also look at giving banks a bigger exemption from its negative deposit rate and may even expand its more conventional Asset Purchase Programme but an interest rate cut is seen as very unlikely.

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Norway again postpones end to COVID lockdown

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A man wearing a protective mask carries shopping bags as he walks on the streets of Oslo following an outbreak of the coronavirus disease (COVID-19), in Oslo, Norway. NTB Scanpix/Hakon Mosvold Larsen via REUTERS

Norway postponed for a second time on Wednesday (28 July) a planned final step in the reopening of its economy from pandemic lockdown, due to the continued spread of the Delta variant of COVID-19, the government said, writes Terje Solsvik, Reuters.

"A new assessment will be made in mid-August," Health Minister Bent Hoeie told a news conference.

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Measures that will be kept in place to halt the spread of COVID-19 include bars and restaurants being limited to table service and limits of 20 people on gatherings in private homes.

The government in April launched a four-step plan to gradually remove most pandemic restrictions, and had completed the first three of those steps by mid-June.

On July 5, Prime Minister Erna Solberg said the fourth step could come in late July or early August at the earliest because of concerns about the Delta coronavirus variant. Read more.

About 80% of adults in Norway have received a first dose of a COVID-19 vaccine and 41% of adults are fully vaccinated, according to the Norwegian Institute of Public Health.

Thanks to an early lockdown in March 2020 and tight restrictions that followed, the nation of 5.4 million people has seen one of Europe's lowest rates of mortality from the virus. Some 800 Norwegians have died from COVID-19.

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EU signs deal with GSK for supply of potential COVID drug

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Company logo of pharmaceutical company GlaxoSmithKline is seen at their Stevenage facility, Britain October 26, 2020. REUTERS/Matthew Childs/File Photo

The European Union has signed a contract with GlaxoSmithKline (GSK.L) for the supply of up to 220,000 treatments of its investigational monoclonal antibody therapy sotrovimab against COVID-19, it said on Wednesday (28 July), write Francesco Guarascio with additional reporting by Jo Mason, Reuters.

The drug, which is developed together with U.S. firm Vir Biotechnology (VIR.O), can be used for the treatment of high-risk coronavirus patients with mild symptoms who do not require supplemental oxygen, according to the Commission.

The deal is a boost to GSK work on potential treatments for COVID-19 after the company played a limited role in the development of vaccines. Rather than making its own coronavirus shot, GSK has focused on supplying its booster to other developers and has partnered with Sanofi (SASY.PA) to develop a jab.

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GSK confirmed the deal in a statement on Wednesday, saying it represented "a crucial step forward for treating cases of COVID-19" in Europe.

The drug is currently being assessed by the European Medicines Agency (EMA) under a rolling review.

It has received emergency authorisation in the United States to treat mild-to-moderate COVID-19 patients who are at high risk of developing a severe infection.

The contract has been backed by 16 of the 27 EU states, which can buy the drug only after it is approved by EMA or by national drug regulators. The price agreed for potential purchases has not been disclosed. A spokesman for the Commission declined to comment on the matter.

Monoclonal antibodies mimic natural antibodies that the body generates to fight infection.

The deal with GSK follows a contract the EU signed in April with Swiss pharmaceutical giant Roche (ROG.S) to secure about 55,000 doses of a potential treatment based on a cocktail of monoclonal antibodies developed by Roche together with U.S. drugmaker Regeneron (REGN.O). Read more.

Apart from monoclonal treatments, the only other anti-COVID drug the EU has bought is Gilead's (GILD.O) remdesivir, an antiviral medicine. Last year, the EU reserved half a million courses after the drug obtained a conditional EU approval.

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Coronavirus disinformation: Online platforms take new actions and call for more players to join the Code of Practice

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The Commission has published the reports by Facebook, Twitter, TikTok, Microsoft and Google on measures taken in June to combat coronavirus disinformation. The current signatories and the Commission are also calling on new companies to join the Code of Practice on disinformation as it will help broaden its impact and make it more effective. Values and Transparency Vice President Věra Jourová said: “The COVID-19 disinformation monitoring programme has allowed to keep track of important actions put in place by online platforms. With new variants of the virus spreading and vaccinations continuing at full speed, it is crucial to deliver on the commitments. We look forward to the strengthening of the Code of Practice.”

Internal Market Commissioner Thierry Breton added: “The EU stood by its promise to deliver enough doses to safely vaccinate every EU citizen. All stakeholders now need to assume their responsibility to beat vaccine hesitancy spurred by disinformation. While we are strengthening the Code of Practice with platforms and signatories, we are calling for new signatories to join the fight against disinformation”. 

For example, TikTok's campaign supporting vaccination, with the Irish government, reached over one million views and over 20,000 likes. Google continued to work with public health authorities to show information about vaccination locations in Google Search and Maps, a feature available in France, Poland, Italy, Ireland, and Switzerland. On Twitter, users can now train automated systems to better identify violations of the platform's COVID-19 disinformation policy.

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Microsoft extended its partnership with NewsGuard, an Edge extension that warns about websites spreading disinformation. Facebook cooperated with international health authorities to increase public awareness of vaccine efficacy and safety and with Michigan State University (MSU) researchers to better detect and attribute deepfakes. These joint efforts need to continue in view of the persisting and complex challenges that online disinformation still presents. The Commission's COVID-19 disinformation monitoring programme has been extended until the end of 2021 and reports will now be published every two months. The next set of reports will be published in September. Following the recently published Guidance, the signatories have kicked off the process to strengthen the Code and launched a joint call for interest for potential new signatories.

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