Europe Economics Focus ECB will persist with QE and negative rates for years We expect the ECB to interpret a period of above-target inflation as “transient” even if it lasts for well over a year. Although it will end its emergency PEPP programme next March, the Bank will step... 15th November 2021 · 25 mins read
Nordic & Swiss Economics Focus Fossil-like Norway won’t go the way of the dinosaurs The UN’s annual climate change conference, COP26, will not have any discernible impact on Norway’s intention to keep pumping oil and gas over the coming decades. The irony is that Norway’s success in... 10th November 2021 · 13 mins read
Nordic & Swiss Economics Focus Riksbank to take a chance on “QT” next year Housing market valuations in Sweden are even more stretched than on past occasions when the Riksbank has “leant against the wind” – that is, set policy tighter than needed to contain consumer price... 1st September 2021 · 17 mins read
Europe Economics Focus Getting a handle on euro-zone wage data Euro-zone wage data are published only quarterly, and with a long lag, and have been distorted by pandemic-related effects. So it will be another six months before we get a clearer idea of the... 31st August 2021 · 14 mins read
Europe Economics Inflation won’t surge in the euro-zone like in the US We think that euro-zone headline inflation will rise further than most expect in the second half of this year. But rather than reaching the levels of around 5% seen in the US, it is likely to top out... 27th July 2021 · 12 mins read
Europe Economics Focus Labour market recovery won’t spark wage spiral We estimate that the spare capacity in the euro-zone’s labour market has increased by around four million people, or 2.5% of the labour force, since the start of the pandemic. This is likely to... 9th June 2021 · 20 mins read
Europe Economics Focus Inflation in euro-zone to remain lower than in US Price pressures are building in the US and we think they will be longer-lasting than the Fed expects, but it is a very different story in the euro-zone. A weaker economic recovery and a flat Phillips... 20th May 2021 · 17 mins read
Europe Economics Focus ECB climate rhetoric to run ahead of action The ECB will make a big splash about climate change when it concludes its monetary strategy review this autumn. In practice, it is likely to make progress in addressing climate-related risks in the... 18th May 2021 · 14 mins read
Europe Economics Focus Pandemic has improved Italy’s debt dynamics The COVID-19 crisis has led to something of a paradox: Italy’s public debt ratio has risen, but the probability of default has fallen. That’s largely because BTP yields are likely to stay far lower... 11th February 2021 · 15 mins read
Europe Economics Focus Spain set for short-term gains, but long-term pain Spain’s economy had been set for a bright 2021 as the vaccine offered hope of a bumper summer tourism season. But the poor start to the rollout means that is now looking less likely. Moreover, the... 10th February 2021 · 21 mins read
Europe Economics Focus The outlook for E-Z peripheral spreads after COVID-19 We think that the spreads of “peripheral” government bonds in the euro-zone are likely to fall next year to levels not seen since before the region’s sovereign debt crisis and that they will stay low... 4th December 2020 · 20 mins read
Europe Economics Focus Risk of inflation lower in the euro-zone than elsewhere If it is sustained for long enough, the policy stimulus being implemented in the euro-zone could eventually cause inflation to take off. However, we think it is more likely that policy is normalised... 17th September 2020 · 18 mins read
Europe Economics Focus Key lessons from Sweden’s Covid response Sweden’s unique response to the pandemic means that it has acted as a control experiment for economists and epidemiologists alike. We suspect that its economy would have shrunk by an additional 3-4%... 12th August 2020 · 18 mins read
Europe Economics Focus Euro-zone unemployment will only peak in mid-2021 Euro-zone unemployment now seems likely to peak at a lower rate and about a year later than we had previously forecast, mainly due to the widespread use of short-time working schemes. But the partial... 9th July 2020 · 21 mins read
Global Economics Focus Lasting blow to supply capacity is not inevitable It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government... 29th June 2020 · 28 mins read
Europe Economics Focus Has the euro-zone done enough to avoid a debt crisis? The EU’s moves towards an unprecedented joint fiscal stimulus and the ECB’s commitment to buy unlimited amounts of government debt have greatly reduced the risk of a euro-zone debt crisis in the... 15th June 2020 · 23 mins read