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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 …
The Danish economy unexpectedly contracted in Q2 as a result of a sharp fall inexports, suggesting that Denmark is feeling the effects of the slowdown in itsbiggest trading partner, the euro-zone. … Danish GDP …
The Danish economy unexpectedly contracted in Q2 as a result of a sharp fall in exports, suggesting that Denmark is feeling the effects of the slowdown in its biggest trading partner, the euro-zone. … Danish GDP (Q2 …
Although July’s euro-zone monetary data showed some further signs of improvement, the bigger picture is that lending is still contracting and the data suggest there is still a significant risk of deflation in the region. … Euro-zone Monetary Indicators …
28th August 2014
The ECB finally seems to be facing facts, withPresident Mario Draghi conceding at Jackson Holethat the economy is too weak and that inflationexpectations have dropped. We do not expect anyaction this month as the Bank clings to the hopethat measures …
August’s larger than expected fall in the EC Economic Sentiment Indicator (ESI)added to worrying evidence that the euro-zone recovery is struggling to gaintraction. … Euro-zone EC Survey …
The latest anti-austerity backlash from within the French Government, together with supportive comments from the ECB, offer hope that the euro-zone’s fiscal straightjacket could be loosened in future. But political turmoil in France bodes ill for the …
26th August 2014
President Draghi’s comments at Jackson Hole supported our long-held view that the ECB will take theplunge into full-blown quantitative easing, probably around the turn of the year. … ECB finally facing …
The latest falls in business confidence and the weakness of euro-zone exports seem to relate partly to the effects of the Ukraine crisis and could therefore be fairly short-lived. But there is a risk that these effects persist or even worsen if the crisis …
22nd August 2014
Q2’s sharp rise in Norwegian GDP made imminent policy action by the Norges Bank look very unlikely. But we still expect the Bank to cut interest rates next year as the krone strengthens further and the recovery slows. … Norwegian GDP …
21st August 2014
Q2’s sharp rise in Norwegian GDP made imminent policy action by the Norges Bank look very unlikely. But we still expect the Bank to cut interest rates next year as the krone strengthens further and the recovery slows. … Norwegian GDP (Q2 …
Iceland’s central bank kept its main interest rate unchanged at 6% at its meeting today but hintedstrongly that rates will need to rise soon. We continue to think that the Sedlabanki will raise thepolicy rate before the end of the year as the slack in the …
20th August 2014
Iceland’s central bank kept its main interest rate unchanged at 6% at its meeting today but hinted strongly that rates will need to rise soon. We continue to think that the Sedlabanki will raise the policy rate before the end of the year as the slack in …
Recent Norwegian economic data suggest that a September rate cut is less likely than we hadpreviously thought. But we still think the Norges Bank will cut its key policy rate, currently at 1.5%,by the end of the year with a further cut following early …
19th August 2014
Recent Norwegian economic data suggest that a September rate cut is less likely than we had previously thought. But we still think the Norges Bank will cut its key policy rate, currently at 1.5%, by the end of the year with a further cut following early …
The key remaining barrier to bolder ECB policy support seems to be the Governing Council’s viewthat long-term inflation expectations are “well-anchored”. We have doubts over the usefulness ofsuch measures and expect the Bank to implement quantitative …
18th August 2014
June’s euro-zone trade data provided yet further evidence that the external sectorremains too weak to make up for the region’s feeble domestic recovery. … Euro-zone Trade …
The euro-zone’s economic recovery came to a complete halt in the second quarter at what shouldhave been a very early stage. There were some temporary factors at play which suggest thatgrowth should resume in Q3 and beyond. But the recovery will be very …
The decline in German GDP in Q2 is not as alarming as it might appear given that it was causedpartly by temporary factors. But while the economy should return to growth in Q3 and beyond, itseems clear that the recovery has already passed its peak and …
14th August 2014
The stagnation of the euro-zone economy in the second quarter further underlinedthe need for the European Central Bank (ECB) to take bolder policy action to addressthe continued weakness of the economy and the associated risks of deflation. … Euro-zone …
June’s euro-zone industrial production data confirmed that industry’s recovery has faltered and suggested that the sector may have dragged on GDP growth in Q2. … Euro-zone Industrial Production …
13th August 2014
Greece’s Q2 GDP release suggests that the economy is slowly emerging from the abyss. But growth remains too weak for the country to reduce its huge public debt without significantly more outside help. … Greek GDP …
August’s drop in the ZEW Economic Sentiment Indicator was another worrying signfor the German economy, particularly as perceptions of current conditions are nowweakening along with expectations. … German ZEW Survey …
12th August 2014
While last week’s ECB Governing Council meeting offered few signs of imminent further policymeasures, one encouraging development was President Draghi’s willingness to talk down theeuro. But we think his words will need to be followed by actions before …
11th August 2014
Despite an improvement in June, French industrial data suggest that industry probablydragged on overall euro-zone growth in Q2. Meanwhile, Germany’s latest trade dataindicate that the external sector there remains subdued. … French Industrial Production & …
8th August 2014
The ECB gave no strong hints of imminent policy action this month as it waited to judge the effects ofpreviously announced measures and claimed that long-term inflation expectations were wellanchored.But President Draghi did sound rather more downbeat …
7th August 2014
June’s small rise in German industrial production was a huge disappointment, andsuggests that activity in what has been the euro-zone’s strongest economy stagnatedin Q2. This will add to pressure on the ECB to offer more policy support. … German & Spanish …
