Europe Economics Update Euro-zone industry running out of steam The support to industrial production from the end of major supply chain disruption has run its course. And while the drop in gas prices over the past year could give a boost to some firms, output... 16th August 2023 · 4 mins read
Europe Economics Update Will euro-zone core inflation follow the US down? Core inflation has been falling for around a year in the US and we suspect that it won’t be long before it starts falling in the euro-zone too. However, while core goods inflation in the euro-zone is... 14th August 2023 · 4 mins read
Europe Economics Update Why has the EZ labour market remained so strong? We are unconvinced by Cristine Lagarde’s claim that the recent strength of employment in the euro-zone is due mainly to labour hoarding and shifts in the sectoral composition of employment. Instead... 10th August 2023 · 5 mins read
Europe Economics Update Norges Bank to hike and signal one more increase We think Norges Bank will go through with its plan to raise its policy rate by 25bp next week, to 4.0%, and follow that up with a final hike in September to 4.25%. 10th August 2023 · 3 mins read
FX Markets Update We expect SNB intervention to continue to buoy the franc The appreciation in the Swiss franc this year has been largely at odds with moves in many of the factors which typically drive the currency. We believe this is mostly due to intervention from the... 7th August 2023 · 3 mins read
Europe Economics Update Minor risk to inflation outlook from extreme weather Extreme weather phenomena in Europe as well as worldwide, including El Niño, could push up food and energy prices. But we think that these only pose a very small upside risk to our inflation forecasts... 4th August 2023 · 4 mins read
Europe Economics Update Euro-zone GDP not as good as it looks The 0.3% rise in euro-zone GDP in Q2 was largely due to a huge increase in Ireland’s GDP and the export of a cruise ship from France. Neither of these is a sustainable source of growth. With more of... 31st July 2023 · 2 mins read
Europe Economics Update Track record suggests EU will be slow to adopt AI Europe benefitted less than the US from information-communications technology between the mid-1990s and mid-2000s because most of the innovative tech firms were based in the US and structural factors... 28th July 2023 · 4 mins read
Europe Economics Update ECB definitely maybe close to the peak The ECB’s decision to raise rates by 25bp today and Christine Lagarde’s guidance that another hike was a “decisive maybe” will not have surprised anybody. On balance, we think the Bank will probably... 27th July 2023 · 3 mins read
Europe Economics Update Money and lending data point to recession Data released this week show that tighter monetary policy has led to a sharp slowdown in money and lending growth, consistent on past form with falling GDP. Together with the latest business surveys... 26th July 2023 · 3 mins read
Europe Economics Update Italy may only spend a quarter of EU Recovery Fund Italy has already accumulated so many delays in spending NextGenerationEU money that it will only be able to use a fraction of the funds and any boost to growth is likely to be much smaller than hoped... 24th July 2023 · 6 mins read
Europe Economics Update Additional headwind from tighter fiscal policy Lower energy prices and the reinstatement of the EU’s fiscal rules will contribute to lower budget deficits in the euro-zone next year. Together with tighter monetary policy, this will help to dampen... 19th July 2023 · 4 mins read
Europe Economics Update Euro-zone probably contracted again in Q2 The latest data suggest that the euro-zone remained in recession in Q2. We think that the economy will continue to contract in the second half of the year as the impact of tighter monetary policy... 19th July 2023 · 2 mins read
Europe Economics Update Switzerland’s inflation spectre slain Swiss inflation has fallen sharply this year to below 2% and we expect it to stay there for the foreseeable future. In contrast to the SNB’s view, we think second-round effects on wages will be quite... 18th July 2023 · 4 mins read
Europe Economics Update Election uncertainty in Spain The upcoming election in Spain may result in a change of government, but it is unlikely to change the country’s short-term economic fortunes. Low inflation and a rebound in tourism will help GDP... 11th July 2023 · 3 mins read
Europe Economics Update Construction boom in Italy fizzling out We think that the huge expansion of the Italian construction sector over the past two years has run its course, as the reduction in construction subsidies and tighter financial conditions will reduce... 11th July 2023 · 4 mins read
