Europe Economics Update When will the ECB cut rates? History suggests that in the absence of a major financial shock, European central banks usually leave interest rates at their peak for a year or more. That’s consistent with our view that the ECB is... 24th May 2023 · 4 mins read
Europe Economics Update Weak external demand to weigh on exports National GDP data released so far suggest that euro-zone exports rose in Q1. However we suspect they will be more subdued in the coming quarters as a result of weak global growth. 22nd May 2023 · 2 mins read
Europe Economics Update How much will ECB tightening affect GDP? Our best guess is that the impact of monetary policy tightening on euro-zone economic activity will be less than five percent of GDP, which is the lower end of a range estimated in an ECB Economic... 18th May 2023 · 4 mins read
Europe Economics Update EZ labour supply holding up relatively well The aggregate supply of labour in the euro-zone has recovered comparatively well from the pandemic, albeit with big differences between the major economies. But despite this, the labour market is very... 18th May 2023 · 4 mins read
Europe Economics Update Taking stock of the euro-zone’s exports After stalling at the end of last year export growth seems to have provided a boost to the euro-zone economy in the first quarter of 2023. However, we doubt that exports will be a major source of... 17th May 2023 · 4 mins read
Europe Economics Update Election clouds outlook for Greece Greece has arguably been the positive surprise in the euro-zone over the past few years and near-term prospects look good. However, the forthcoming election may usher in a coalition government which... 10th May 2023 · 3 mins read
Europe Economics Update Italian debt sustainability revisited Our central scenario is that Italy’s public debt-to-GDP ratio will decline gradually in the long-run. However, the government will need to maintain sizeable primary budget surpluses to make that... 5th May 2023 · 3 mins read
Europe Economics Update ECB slows the pace but the journey goes on The ECB’s decision to raise its deposit rate by 25bp to 3.25% was in line with market expectations. Meanwhile, President Lagarde’s repeated statement that the Bank is not pausing, and our view that... 4th May 2023 · 3 mins read
Nordic & Swiss Economics Update More Norges Bank rate hikes to come The Norges Bank raised its policy rate by 25bp today, to 3.25%, but unlike the Fed we think the tightening cycle in Norway has further to run. That said, we think that inflation will fall more quickly... 4th May 2023 · 3 mins read
Europe Economics Update Double jeopardy if you bank in Spain Over the past year, Spanish households have seen a bigger increase in their cost of borrowing than those of any other large euro-zone economy, but the increase in the interest paid on deposits has... 4th May 2023 · 3 mins read
Europe Economics Update Household spending squeeze to continue Policy tightening over the past year has pushed up euro-zone households’ interest costs substantially and is a key explanation for household consumption falling. With interest costs set to rise a lot... 3rd May 2023 · 3 mins read
Europe Economics Update Credit conditions continue to tighten March’s money and credit data, as well as the Bank Lending Survey carried out in March and April, show no clear signs that the recent troubles in the US and Swiss banking sectors have had an impact on... 2nd May 2023 · 3 mins read
Europe Economics Update Euro-zone wage growth to slow only gradually Wage growth in the euro-zone is likely to remain above the level compatible with 2% core inflation this year and only gradually return to a more sustainable level thereafter. 27th April 2023 · 4 mins read
Europe Economics Update Why has Spain’s economic recovery been weak? Spain’s underperformance since the pandemic can be explained in part by the incomplete recovery in its tourism sector and in part by the sharp fall in real household disposable incomes. That said, we... 26th April 2023 · 4 mins read
Nordic & Swiss Economics Update Riksbank shows the way with 50bp With the ECB poised to raise rates next Thursday, the Riksbank has got its retaliation in early, hiking its key rate by 50bp. The statement indicates that policymakers expect to raise rates by another... 26th April 2023 · 3 mins read
FX Markets Update Undervalued krone likely to rebound later this year The Norwegian krone has been the worst G10 performer against the US dollar by some way in recent months. Though lower energy prices and weakening risk sentiment have likely played a role, we suspect... 21st April 2023 · 4 mins read
