UKRAINE: Macron-Not The Time To Lift Russia Sanctions
Mar-27 13:46
Speaking at a press conference following a meeting of leaders and politicians from 31 countries allied to Ukraine, French President Emmanuel Macron says that "all countries agreed that it was not the time to lift sanctions against Russia", and that they will "continue to put pressure on Russia's shadow fleet [via sanctions]".
- Macron says the group has mandated its foreign ministers with the task of coming up with proposals on how a ceasefire could be monitored, giving a deadline of three weeks. These conclusions will then be shared with the US.
- Macron says a Franco-British delegation will be sent to work with Ukraine's military to plan for its future army. The countries also mandated France and the UK to lead the 'coalition of the willing's efforts and planning.
- On the controversial 'reassurance force', Macron says it "will not be a peacekeeping force, or on the contact line, but will compromise several member states in strategic areas". Says the force is still in its planning stage.
- As noted earlier (see 'UKRAINE: 'Coalition Of The Willing' Meets In Paris', 1123GMT), the prospect of NATO troops being on the ground in Ukraine in any capacity has been met with scepticism in the US and opposition in Russia. Indeed, Macron confirms there was not unanimity on the reassurance force, but that is not needed for some to go ahead with it.
- Macron rejects Russia's demand, saying it is not up to Moscow to decide whether there is a reassurance force in Ukraine.
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Historical bullets
EGB SYNDICATION: Record book size for a non-10 year Spanish syndication
Feb-25 13:45
The E93bln book for the Spain syndication is the record for a Spanish non-10-year transaction (surpassing the E83bln for the 30-year last year).
EGB SYNDICATION: Spain long 15-year Obli: Final terms
Feb-25 13:41
- Spread set earlier at 3.90% Jul-39 Obli (mid) + 9bps (Guidance was +11bps area)
- Size: E7bln (MNI expected E5-10bln)
- Books closed in excess of E93bln (inc. E7.5bln JLM interest)
- Maturity: 31 January 2041
- Coupon: Short first to 31 January 2026
- Settlement: 4 March-2025 (T+5)
- ISIN: ES0000012O75
- Bookrunners: BARCLAYS / CACIB (B&D/DM) / GSBE SE / HSBC / NOMURA / SG
- Timing: Books closed. Allocations and pricing to follow.
From market source
UK: Defence spending cost-neutral, but small fiscal stimulus
Feb-25 13:39
- Increase defence spending to 2.5% of GDP by 2027. Starmer said that equates to GBP13.4bln more every year on defence from 2027. Previously the target date assumed by the OBR (in its October EFO) was that this would be met by 2029-30 and the OBR noted that this would cost GBP17bln in the final year.
- He also said that when including intelligence spending, this would be 2.6% of GDP by 2027 (but gave no costings for this).
- The government has said "it'll be putting in place a new defence reform and efficiency plan" led by my the Chancellor and the Defence Secretary.
- Starmer says that this would be fully funded by reducing ODA (overseas development assistance i.e. aid) spending to 0.3% of GNI in 2027 (from 0.5%).
- Note that in October the OBR estimated that the cost to increase the ODA budget to 0.7% of GNI (from 0.5% of GNI) would be GBP6.7bln. As this will now be reduced to 0.3 % of GNI (i.e. 0.4ppt below the 0.7% end of parliament previous target), you do indeed get to the GBP13.4bln Starmer said would be spent on defence.
- So the numbers do seem to add up at first glance.
- However, despite the "commitment" to increase defence spending to 3% of GDP in the next parliament, there appears to be no increase in the final two years of this parliament beyond the 2.5% of GDP fully committed to today. And with the fiscal rules not currently looking that far into the future, this 3% spending commitment should not really impact any near-term spending decisions or the fiscal "headroom".
- Defence spending will likely be focused much more domestically than foreign aid (assuming the UK does not import too many foreign-built munitions, equipment etc). And hence despite net-net having little overall fiscal impact, this would be a marginal fiscal stimulus for the UK economy.
- Enough to change the outlook for monetary policy? Not hugely, and not in the very near-term at least.
