Europe Economics Update When would the Bundesbank need recapitalising? There are circumstances in which the Bundesbank’s losses over the next few years could require it to be recapitalised by the German government. However, we think these are unlikely to occur and the... 10th July 2023 · 5 mins read
Europe Economics Update Europe, China and EVs: lessons from the 1980s In the 1980s Europe responded to competition from Japanese auto producers with protectionist policies known as Voluntary Export Restraints (VERs). We think its response to competition from China in... 3rd July 2023 · 4 mins read
Global Economics Update Hawkish tone at Sintra forum, particularly in Europe Central bankers have struck a hawkish tone at the ECB’s forum in Sintra this week, suggesting that rates haven’t yet peaked and cuts are not on the cards for some time. But there were some interesting... 29th June 2023 · 4 mins read
Europe Economics Update Money and lending data suggest recession will drag on The effects of tighter monetary policy are very clear in the money and credit data, reinforcing our view that the euro-zone economy will underperform the ECB and consensus forecasts. 28th June 2023 · 2 mins read
Europe Economics Update Don’t lose sleep over Bundesbank losses The Bundesbank may make large losses in the coming years but these will be paper losses only, will have no impact on the government’s fiscal position, and are likely to fall over time. While the... 26th June 2023 · 4 mins read
FX Markets Update The fall and fall of the Swedish krona The rapid depreciation of the Swedish krona has pushed the currency down to its lowest ever level against the euro. Worse still, we do not think the krona is significantly below “fair value”, nor do... 22nd June 2023 · 4 mins read
Europe Economics Update Riksbank will ignore “Beyoncé theory” and raise rates Some observers have suggested that the strength of Swedish inflation in May reflected buoyant demand driven by Beyoncé’s Stockholm concerts but the Riksbank is more likely to view it as evidence that... 22nd June 2023 · 3 mins read
Europe Economics Update SNB hikes by 25bp and signals more to come The 25bp rate hike announced by the SNB this morning was smaller than the 50bp hike we had predicted. But the accompanying statement and upward revision to inflation forecasts for 2024 and 2025... 22nd June 2023 · 3 mins read
Europe Economics Update Norges Bank steps up the pace, more hikes to come Today’s 50bp rate hike by the Norges Bank, taking its policy rate to 3.75%, was accompanied by new hawkish guidance and projections. As a result, we have revised up our already above-consensus... 22nd June 2023 · 3 mins read
Europe Economics Update Inflation falling but SNB set to hike rates further Policymakers are likely to raise the policy rate by 50bp to 2% next Thursday, despite inflation falling sharply this year. And SNB Chairman Thomas Jordan’s view that Switzerland’s neutral interest... 15th June 2023 · 4 mins read
Europe Economics Update ECB hikes and signals more to come The ECB raised its deposit rate to 3.5% today and President Lagarde all but promised another hike next month. Our baseline forecast remains that interest rates will peak in July and stay there until... 15th June 2023 · 3 mins read
Europe Economics Update Norges Bank to hike and signal higher peak We think the Norges Bank will follow through on its plan to raise its policy rate by 25bp next week, to 3.50%, although there is an outside chance of a 50bp hike. Either way, we think it will push its... 15th June 2023 · 3 mins read
Europe Economics Update TLTRO redemptions to reduce banks’ liquidity More than €1trn of TLTROs will be redeemed over the next eighteen months, significantly reducing euro-zone banks’ liquidity and pushing up their funding costs as they adjust their balance sheets... 7th June 2023 · 5 mins read
Europe Economics Update Euro-zone construction set to weaken We think that the slump in demand for mortgages will more than offset the support from the high backlog of work and result in a sizeable contraction in euro-zone construction output in the coming... 30th May 2023 · 2 mins read
Europe Economics Update Bank lending to remain very weak April’s money and credit data suggest that the decline in bank deposits in recent months is due to rising interest rates rather than worries about the banks’ stability. Meanwhile, bank lending... 30th May 2023 · 2 mins read
Europe Economics Update Nordic labour markets remain tight The labour markets in Norway and Sweden remain very tight, in line with conditions in the euro-zone. This is likely to keep services inflation high over the coming months and encourage the Norges Bank... 26th May 2023 · 2 mins read
