Europe Economics Update Jobless rate to erase seven years of gains We think the unemployment rate in the euro-zone will surge to about 12% by the end of June, giving up seven years’ worth of gains in a matter of months. Much of this may prove temporary if the economy... 24th March 2020 · 3 mins read
Europe Economics Update Germany opens the fiscal taps Germany’s supplementary budget for nearly 5% of GDP sets an example that other euro-zone countries are likely to follow. However, we suspect that the costs will end up being much higher even than this... 23rd March 2020 · 3 mins read
Europe Economics Update Virus cost will add to Italy’s debt problems The cost of the coronavirus crisis could push Italy’s public debt ratio up to 160% of GDP or more in 2020. This shouldn’t spark a crisis this year because the ECB will stand behind the bond market... 23rd March 2020 · 3 mins read
Global Markets Update What to make of the moves in commodity currencies The slump in the prices of commodities has hit hard the currencies of the countries whose fortunes depend heavily on them. But if we are right and commodity prices eventually recover as the... 23rd March 2020 · 2 mins read
Europe Economics Update ESM could be a game-changer While the ECB’s extra €750bn in bond purchases has reduced financial market stress, governments also need to deliver a large fiscal response without triggering a fresh sovereign debt crisis. In our... 20th March 2020 · 6 mins read
Nordic & Swiss Economics Update SNB does what it can with its little ammunition left While the Swiss National Bank left its key policy rate on hold at -0.75% this morning, it made all the right noises by making its exemptions to the banking sector from negative interest rates even... 19th March 2020 · 3 mins read
Europe Economics Update Additional €750bn of QE will not be ECB’s last move The ECB announced late yesterday evening a new €750bn programme of bond purchases which is intended to contain borrowing costs for southern economies. This gives it a lot more firepower which should... 19th March 2020 · 3 mins read
Europe Economics Update Fiscal costs of virus could easily top 10-15% of GDP The combination of the government responses to the coronavirus and the slump in economic activity will cause euro-zone budget balances to deteriorate by at least 10-15% of GDP this year. While this... 18th March 2020 · 6 mins read
Europe Economics Update Banking risks add to pressure on ECB to act quickly The economic slump in the euro-zone increasingly threatens to trigger a wider financial sector crisis. In order to head off the risks to the banking sector, the ECB will need to provide unequivocal... 18th March 2020 · 3 mins read
Europe Economics Update EZ facing more than 10% quarterly slump in GDP With the euro-zone economy set to contract by 10-15% q/q in Q2 as numerous businesses come to a standstill, governments will have no choice but to provide support to businesses and households on an... 17th March 2020 · 4 mins read
Europe Economics Update ECB will be forced into more drastic action Last week’s ECB decision gave it more ammunition to combat the fallout from the coronavirus, but it will not be enough. We now think the Bank will soon make an explicit commitment to keep sovereign... 16th March 2020 · 3 mins read
Europe Economics Update Border controls are creeping up the policy agenda While the widespread re-introduction of border controls in Europe does not seem likely at present, it is possible that more governments turn to them as part of a wider policy response against the... 13th March 2020 · 3 mins read
Europe Economics Update ECB response highlights EZ policy weakness The measures unveiled by the ECB today were as substantial as expected. But, along with Ms Lagarde’s comments, they underlined that the ECB has little firepower left, that there has been no... 12th March 2020 · 3 mins read
Europe Economics Update How big a risk is Covid-19 to euro-zone banks? The coronavirus poses a significant risk to euro-zone banks. Based on our current forecast for a 1% or so decline in GDP this year, loan losses would be manageable. But a much deeper recession may... 11th March 2020 · 4 mins read
Nordic & Swiss Economics Update How big a threat is COVID-19 to Swiss insurers? As it stands, we think that the direct impact of the coronavirus on the Swiss insurance industry is likely to be manageable. However, the indirect impact from lower-for-longer bond yields will only... 10th March 2020 · 4 mins read
Europe Economics Update Which EZ economies will the coronavirus hit hardest? The spread of the coronavirus to Europe means that it is household spending and tourism that are likely to be hardest hit in the coming months, rather supply chains and exports, which initially... 10th March 2020 · 2 mins read
