The introduction by Poland’s financial supervisory authority (KNF) of a long-term finance ratio for residential mortgages could provide a boost to Poland’s hibernating covered bond market. Green covered bonds could become the instrument of choice.

The German government is maximising the modest leeway it has under the so-called debt brake to inject public funds into the economy, but the measures are insufficient for addressing the country’s large and widening investment gap.

Egypt’s public finances remain vulnerable to external shocks given the government’s limited fiscal space though external support, increased foreign direct investment and progress on reforms are improving resilience.

This year will not set any records for investor-placed covered bonds. After moderate-to-strong activity for most of the year, issuance in June was the slowest in over 10 years. But we still believe our projected volume of EUR 170bn for 2024 is feasible.

There is less than six months to go until the property value in the updated Capital Requirements Regulation takes effect. This could have a notable impact on covered bonds as market values are directly linked to the amount of bonds that can be issued.

Interest-rate cuts boosting loan demand and improving net interest margins were supposed to drive French banks’ performance in the second half but political uncertainty has put investment decisions on hold while mortgage demand was already hesitant.

A hung parliament in France mitigates risk of significant fiscal slippage due to the policy agendas of the far right or radical left. Still, reform momentum will likely stall given the need for compromise by centrist parties and the political extremes.

The review and revision of EU supervisory practices to enhance their effectiveness is positive for the banking sector. While progress is being made to strengthen the regulatory framework, some banks may struggle or be unable to adapt to new requirements.

Despite expectations of a modest economic rebound in the euro area in the second half of 2024 aided by expected rate cuts and even more so in 2025, NPL formation will likely continue to rise moderately. We forecast euro-area GDP growth of 1.0% this year.

The Labour Party won a landslide victory in Thursday’s UK general elections but long-run challenges will endure, including dealing with rising debt and reviving the economy while hitting fiscal targets. But the results at a minimum ensure a clear mandate.