Europe Economics Update Historical experience highlights recession risks History suggests that the surge in energy prices over the past year means there is a good chance that the euro-zone will suffer a recession in 2022. It also suggests that it will be tricky for the ECB... 20th May 2022 · 4 mins read
Europe Economics Update End of negative rates is nigh! The account of the ECB’s April meeting shows that a lot of policymakers thought the criteria for rate hikes had already been met. Since then, the case for rate hikes has only strengthened. While not... 19th May 2022 · 3 mins read
Europe Economics Update Case for rate hikes much stronger than in 2011 The ECB’s rate hikes in 2011 were a mistake, not just because they exacerbated the widening in peripheral bond spreads. Underlying inflation was subdued and policymakers were too concerned with acting... 16th May 2022 · 4 mins read
Europe Economics Update Wage pressures intensify amid high inflation The current bout of high inflation is influencing wage negotiations in the euro-zone and stronger pay growth this year seems all but guaranteed, reinforcing the ECB’s resolve to normalise policy. But... 11th May 2022 · 3 mins read
Europe Economics Update Rising inflation expectations causing alarm Policymakers at the ECB are becoming more concerned about inflation expectations, with professional forecasters, financial investors, consumers and firms all anticipating that the pace of price... 10th May 2022 · 4 mins read
Europe Economics EUR/USD: The case for parity We think the euro will eventually weaken further, falling to parity against the US dollar, as the euro-zone economy falters, the terms of trade shock from higher energy prices feeds through, and the... 6th May 2022 · 5 mins read
Nordic & Swiss Economics Update Norges Bank to resume its tightening cycle in June As was widely expected, the Norges Bank left interest rates on hold at +0.75% today and all but confirmed that “the policy rate will […] be raised in June”. After June, we forecast two more rate hikes... 5th May 2022 · 3 mins read
Europe Economics Update ECB may need more than promises to contain spreads The prospect of tighter monetary policy in the euro-zone has raised the threat of a bigger sell-off in the region’s bond markets. If this happens, we think the ECB would ultimately intervene to... 4th May 2022 · 4 mins read
Europe Economics Update Europe’s supply problems still intense The timeliest surveys show that supply problems faced by euro-zone companies have eased a little this year, but remain intense. This will continue to weigh on production and keep inflation high. UK... 3rd May 2022 · 2 mins read
Europe Economics Update Gas price cap won’t solve Spain’s inflation problem The cap on the wholesale natural gas price for the Iberian market will result in a bigger fall in energy inflation in Spain than we had previously expected. It might also dampen underlying price... 28th April 2022 · 3 mins read
Nordic & Swiss Economics Update Riksbank completes “Operation Reverse Ferret” As we had expected, the Riksbank finally bowed to economic logic in its April meeting by raising the repo rate, to +0.25%, and announcing that it will begin to shrink its balance sheet this year... 28th April 2022 · 3 mins read
Europe Economics Russia weaponisation of natural gas poses economic risks Russia’s decision to suspend gas deliveries to Poland and Bulgaria from today because of a payments dispute will only strengthen the EU’s resolve to end its dependency on Russian gas, keeping gas... 27th April 2022 · 6 mins read
Europe Economics Update Three key calls on the euro-zone In our latest European Economic Outlook, we set out three non-consensus forecasts for the euro-zone. First, we think inflation will overshoot expectations this year. Second, the hit that this will... 25th April 2022 · 3 mins read
Europe Economics Update Macron 2.0: pension reform and cost of living in focus The re-election of French President Emmanuel Macron gives him five more years to improve France’s economic potential and its public finances, with pension reform and the green transition central to... 25th April 2022 · 3 mins read
Europe Economics Update President Le Pen: seismic shift or five-year blip? A win for Marine Le Pen would need to be followed by a strong showing for her party in June’s legislative elections if she is to implement most of her programme. A government of national unity or... 20th April 2022 · 6 mins read
Europe Economics Update ECB sticks to plan for now, but faster tightening likely Today’s ECB statement and press conference indicate that policymakers expect to end their net asset purchases early in Q3 and raise interest rates soon after that. With inflationary pressures still... 14th April 2022 · 3 mins read
