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The European economic recovery has weakened, with the euro-zone now at risk of recession and countries outside the region feeling the effects on their exports. While the euro-zone’s peripheral countries are making some encouraging fiscal and economic …
13th October 2014
Recent renewed calls for the German Government to take advantage of its fiscal room for manoeuvre in order to stimulate its economy have centred on the potentially beneficial effects on its weaker neighbours’ exports. But last week’s German industrial …
10th October 2014
August’s big drop in industrial production all but confirmed that German industry is back in recession and underlined the need for both the ECB and the German Government to give the euro-zone’s biggest economy much more policy support. … German …
7th October 2014
Don’t be fooled by the apparent normalisation of the euro-zone’s financial markets. Conditions in the currency union’s economy are still a very long way from normal. … Will the euro-zone ever escape …
6th October 2014
The ECB confirmed last week that it will start to buy assets outright later this month and that the purchases will not be sterilised. But technically, this probably still amounts to credit easing rather than quantitative easing. And the big picture is …
3rd October 2014
August’s increase in euro-zone retail sales provided a positive sign for consumer spending. But with September’s PMIs revised down in the final estimates, there is more evidence that the euro-zone economy as a whole struggled in Q3. … Euro-zone Retail …
The persistent weakness of euro-zone exports seems to have reflected the high level of the euro, tradelinks with Emerging Europe and cost and regulatory pressures on the region’s exporters. While theeuro’s depreciation should boost export growth somewhat …
President Mario Draghi hinted strongly that a deterioration in the inflation outlook in the coming months would result in the ECB taking bolder, unconventional policy action, leaving the door wide open for full-blown QE before the end of the year. … …
2nd October 2014
Smaller budget deficits were seen in most of the peripheral economies in August, but France’s fiscal position continued to deteriorate. … Euro-zone Fiscal Monitor …
The latest survey indicators seem to have confirmed that the euro-zone’s feeble recovery has already passed its peak. September’s fall in the composite PMI, for example, left it consistent with a modest quarterly expansion in euro-zone GDP of around 0.2% …
1st October 2014
September’s fall in euro-zone inflation to a whisker above zero and August’s weak labour market data will add to the pressure on the ECB to signal further policy support at its meeting this Thursday. … Euro-zone Flash CPI (Sep.) & Unemployment …
30th September 2014
September’s EC Business and Consumer Survey added to the evidence that the eurozoneeconomy struggled to pick up in Q3, after stagnating in Q2. … Euro-zone EC Survey …
29th September 2014
The continued depreciation of the euro exchange rate points to much-needed increases in export growth and imported inflation in the coming months. But this does not eliminate the risk of deflation and the ECB will remain under pressure to implement …
26th September 2014
The ECB now seems to be taking deflation risks more seriously, implementing surprise interest rate cuts in September and leaving the door wide open to quantitative easing. With the economy apparently weakening further since then and the limited uptake at …
25th September 2014
Finland’s dismal post-crisis economic performance is at odds with the ongoing recoveries of its Nordic neighbours. Although these countries share many characteristics, Finland’s economic decline has been caused by a combination of drivers that is specific …
Although August’s euro-zone monetary data showed further signs of improvement, lending is still contracting and, given the low uptake at the ECB’s first TLTRO last week, there is little sign that this will improve dramatically. … Euro-zone Monetary …
September’s Ifo survey brought further worrying signs that the recovery in the German economy is grinding to a halt and underlined the need for both monetary and fiscal policy to provide further support. … German Ifo Survey …
24th September 2014
The small fall in the euro-zone composite PMI in September added to worrying signs that the region’s economy barely expanded in Q3 after Q2’s stagnation. … Euro-zone Flash PMIs …
23rd September 2014
The low uptake at the first of the ECB’s Targeted Longer-Term Refinancing Operations (TLTROs) last week supported our view that the policy is unlikely to be successful at boosting bank lending. It also suggested that the ECB will struggle to expand its …
19th September 2014
Iceland’s economy contracted in Q2 for the third consecutive quarter, raising questions over the sustainability of the economic recovery. But there are still reasons to believe that its economy will continue to improve steadily. … Iceland GDP …
Iceland’s economy contracted in Q2 for the third consecutive quarter, raising questions over the sustainability of the economic recovery. But there are still reasons to believe that its economy will continue to improve steadily. … Iceland GDP (Q2 …
Ireland’s rapid growth in Q2 underlined its status as the euro-zone periphery’s poster boy but could prompt some concerns that it has entered another unsustainable boom. … Ireland GDP …
18th September 2014
With the first of the ECB’s Targeted Longer Term Refinancing Operations taking place this Thursday,this Update addresses some of the key questions regarding their aims and likely effects. While thepolicy may help some struggling banks, it is unlikely to …
17th September 2014
The agreement amongst European finance ministers over the weekend that Ireland can start early repayment of its IMF loan highlighted again the rapid improvement of market confidence in the peripheral economies that has taken place this year. … Early loan …
16th September 2014
September’s small fall in the German ZEW investor expectations index and thesharper decline in the current conditions index added to evidence that the recovery inthe euro-zone’s largest and strongest economy is petering out. … German ZEW Survey (Sep.) & …
Sweden’s general election yesterday resulted in defeat for the centre-right coalition Alliance Government after two terms in power but produced no overall majority for the centre-left opposition parties. While this will fuel political uncertainty in the …
15th September 2014
The French Government looks set to win a vote of confidence tomorrow, allowing it to pursue long-overdue business friendly reforms. But it could take many years for the reforms to bear fruit and ongoing political turmoil will weigh heavily on consumer and …
July’s euro-zone trade data showed that the region’s exporters continued to struggle,suggesting that the uncertain international environment was taking its toll andoffsetting the benefits of a weaker euro at that point. … Euro-zone Trade …
While signs of pragmatism have recently emerged in the ongoing fiscal debate in the euro-zone, we think there is currently little room for fiscal policy to play much of a role in tackling low growth and inflation. Instead, monetary policy needs to remain …
12th September 2014
July’s rebound in euro-zone industrial production provided hope that industry mayfare slightly better in Q3 than it did in Q2. But with survey data pointing to acontinued slowdown, the sector’s recovery is likely to be very sluggish at best. … Euro-zone …
The Cypriot parliament passed a controversial bill on 6th September, reducing the time it takes toforeclose non-performing business loans and mortgages. While the bill is likely to help banks ahead ofthe ECB’s forthcoming stress tests, it could have a …
10th September 2014
The ECB’s unexpected announcement last week that it would lower interest rates again forced the Danish central bank to reinstate a negative deposit rate to protect the Danish krone’s peg to the euro. But with the ECB likely to take the plunge into …
Unilateral adoption of the euro, which is the currency regime of Montenegro and a number of other countries, might seem to be a potential blueprint for other European countries outside the euro-zone, or for regions/countries seeking independence, such as …
9th September 2014
More favourable terms and conditions for loans to Italian firms point to a possible pick-up ininvestment and industrial production in the coming quarters. However, there is little evidence we willsee a pick-up in consumption. … Looser credit standards may …
8th September 2014
While last week’s cuts in interest rates and details of asset purchase programmes were a welcomesurprise, we still believe that the ECB will eventually have to stop tiptoeing around and take theplunge into a full programme of quantitative easing. … ECB …
5th September 2014
The breakdown of euro-zone Q2 GDP was a bit more encouraging than it might have been, but hardly presented a solid platform for stronger growth ahead. … Euro-zone GDP Breakdown (Q2) & German IP …
The additional policy measures announced by the European Central Bank (ECB) today are unlikely totransform the euro-zone’s economic outlook on their own and therefore look like another step alongthe path to the inevitable adoption of full-blown …
4th September 2014
Sweden’s central bank today left its main policy rate on hold at 0.25% and reiterated that interest rates would not start to rise until late 2015 as it continues its fight to stave off deflation. But we think that the date of the first rate hike will …
Sweden’s central bank today left its main policy rate on hold at 0.25% and reiterated that interestrates would not start to rise until late 2015 as it continues its fight to stave off deflation. But wethink that the date of the first rate hike will still …
August’s fall in euro-zone HICP inflation from 0.4% to 0.3% left it at its lowest rate sinceOctober 2009, when it was negative, and well beneath the ECB’s target of “below, but closeto, 2%”. What’s more, the economy stagnated in Q2 and survey data suggest …
3rd September 2014
July’s fall in euro-zone retail sales provides further signs of a weakening inconsumer spending and, with the final estimates of August’s PMIs revised down,there is more evidence that the region’s recovery may have passed its peak. … Euro-zone Retail …
Switzerland’s economy unexpectedly stagnated in Q2, suggesting that it is feeling theeffects of weakness in the euro-zone, its major trading partner. … Swiss GDP …
2nd September 2014
Fiscal positions strengthened across most of the peripheral economies in July, although we havegrowing concerns about Portugal’s ability to meet its target for this year. (Chart 1). … Euro-zone Fiscal Monitor …
Switzerland’s economy unexpectedly stagnated in Q2, suggesting that it is feeling the effects of weakness in the euro-zone, its major trading partner. … Swiss GDP (Q2 …
August’s flash euro-zone CPI inflation data underlined the absence of price pressures in the currency union and should encourage the ECB to offer stronger hints of additional policy support to come after its meeting next week. … Euro-zone Flash CPI …
29th August 2014
Events last week gave support to our long-held view that the ECB will have to take the plunge and launch a full-blown quantitative easing programme in the coming months. Survey data added to mounting evidence that the recovery has already peaked. And with …
