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The near-stagnation of the euro-zone economy in the third quarter underlines the fragility of the recovery and the growing dangers of a damaging bout of deflation in the region. … Euro-zone GDP …
14th November 2013
September's fall in euro-zone industrial production indicates that the sector will have dragged on GDP growth in Q3 as a whole. … Euro-zone Industrial Production (Sep …
13th November 2013
Denmark is finally dragging itself out of its long slump. Households have started to deleverage, exporters have become more competitive and banks are now stronger. But given that these adjustments have further to run, the Danish economy will still lag its …
12th November 2013
Last week’s cut in ECB interest rates has helped to relieve some of the near-term upward pressure on the euro. But the central bank will have to work harder to stop the strong currency from snuffing out the fragile recovery and pushing the region towards …
The downgrade of France’s sovereign credit rating last week highlighted the country’s fiscal problems. Although a French debt crisis is still a fairly distant prospect, France’s weak fiscal position will weigh on its recovery and undermine its …
11th November 2013
Spain still faces major economic challenges, but we think that prospects there are brighter than in Italy where the medium-term outlook for the public finances remains pretty dire. Accordingly, we would not be surprised if Spanish government bond yields …
The ECB’s unexpected interest rate cut last week was certainly a pleasant surprise and suggests that it is not writing off the potential threat of deflation. But there was little in the press conference to suggest that this marks the start of a more …
While the ECB’s largely unexpected decision to cut interest rates was welcome, the central bank cannot address the deep-seated problems still facing the currency union. … Rate cut welcome, but not a …
7th November 2013
September’s German industrial production figures suggest that the country’s supposed growth engine may have slowed somewhat, if not stalled. … German Industrial Production …
The fall in euro-zone CPI inflation to a four year low of 0.7% has raised the prospect of a bout of outright deflation in the euro-zone economy. While cost pressures are not as weak as they were when the currency union last saw falling prices in 2009, …
6th November 2013
October’s fall in the euro-zone composite PMI to 51.9 suggests that the recovery continued at the start of Q4, but at a sluggish pace. Furthermore, September’s retail sales data highlight that consumers cannot be relied upon to drive growth. … Euro-zone …
Norway’s long housing boom is losing steam. Although a collapse in prices is unlikely, the slowdown in the housing market suggests that the economy will weaken more than the consensus expects. … Norway's housing boom is …
5th November 2013
Norway’s long housing boom is losing steam. Although a collapse in prices is unlikely, the slowdown in the housing market suggests that the economy will weaken more than the consensus expects. … Norway’s housing boom is …
There are some good reasons why the ECB should be worried about the prospect of a bout of consumer price deflation in the euro-zone. But it is not clear that it has the firepower to prevent it. … Should the ECB fear …
4th November 2013
The ECB’s Bank Lending Survey (BLS), published last week, suggested that credit constraints might soon start to ease in the euro-zone. But this improvement is only tentative; the fragility of the region’s banks will weigh on the economy for some time yet. …
With the economic recovery still pretty fragile, the euro climbing higher and inflation falling sharply, President Draghi may adopt a slightly softer stance at the ECB’s interest rate press conference on 7th November. But there appears to be little chance …
31st October 2013
The latest euro-zone inflation and unemployment figures provide another clear signal that the recovery is still very fragile and will increase pressure on the ECB to take further action to support the economy. … Euro-zone Flash CPI (Oct.) & Unemployment …
Contrary to expectations, French President François Hollande may fulfil his promise to reduce unemployment by the end of the year. But he will do so by relying on temporary initiatives rather than tackling the considerable structural problems of the …
October’s rise in the EC’s euro-zone Economic Sentiment Indicator (ESI) suggests that the region’s modest recovery continued in the early stages of Q4. … Euro-zone EC Survey, German Unemp. (Oct.) & Spa. GDP …
30th October 2013
Belgian GDP rose for the second straight quarter in Q3, suggesting that euro-zone GDP recorded another moderate expansion too. … Belgian GDP …
Although Cyprus has already begun to gradually relax its capital controls, restrictions on deposits leaving the country remain in place. With a fragile banking sector and an economy deep in recession, it seems unlikely that Cyprus will be able to lift …
On balance, the smaller peripheral economies in the euro-zone are still making inroads into their budget deficits, but there are some signs that Italy and Spain are faring a bit less well. … Euro-zone Fiscal Monitor …
29th October 2013
Although the Bank of Spain’s Q3 GDP estimate suggested that Spain may have exited its two-year recession, the fall in the euro-zone composite PMI in October highlighted that the region’s economic recovery remains fragile. For now at least, then, we see …
28th October 2013
September’s euro-zone monetary data perhaps offered tentative signs that the fall in bank lending is easing, but a decent pick-up in credit remains a distant prospect. … Euro-zone Monetary Indicators Monitor …
25th October 2013
The fall in German Ifo business sentiment in October provided another timely reminder that the euro-zone recovery remains fragile. … German Ifo Survey (Oct …
Despite falling in October, the euro-zone PMIs suggest that the region’s modest expansion continued at the start of Q4. … Euro-zone Flash PMIs …
24th October 2013
As expected, both the Swedish Riksbank and Norway’s Norges Bank both held their policy rates unchanged today. Given our below-consensus outlook for both economies, we do not expect either to hike rates until 2015. … Swedish and Norwegian rates on hold …
As expected, both the Swedish Riksbank and Norway’s Norges Bank both held their policy ratesunchanged today. Given our below-consensus outlook for both economies, we do not expect eitherto hike rates until 2015. … Swedish and Norwegian rates on hold until …
The rise in euro-zone consumer confidence in October adds to signs that the euro-zone recovery is gradually improving. However, we think that a strong and sustained recovery in consumer spending is still some way off. … Euro-zone Flash Consumer …
23rd October 2013
Q3’s GDP estimate from the Bank of Spain suggests that the economy has finally emerged from its two year long recession. But we doubt that the economy will generate a strong enough recovery to bring the unemployment rate and public debt down significantly …
The recent pick-up in the euro-zone economy stands in marked contrast to the accelerating contraction in bank credit. Given the importance of banks to the region, a “creditless recovery” will not be strong enough for the euro-zone to grow out of its debt …
21st October 2013
Given the recent run of positive economic news from the euro-zone, it is perhaps no surprise that the spread between Italian and German government bond yields has narrowed. But we remain concerned about the outlook for Italy and think that the recent fall …
Euro-zone policymakers took another step along the path towards banking union last week, while the resolution of the US shutdown debacle appeared to remove an external threat to the region’s fragile economic recovery. But one legacy of the episode has …
While the struggle to form a new German Government looks set to continue for another month, this does not mean that major change is afoot. Angela Merkel might make some concessions on a national minimum wage in order to form a grand coalition with the …
17th October 2013
We think that the continued strength of the franc will weigh heavily on Switzerland’s exports for some time yet. But fears of overheating in the property market seem overdone, implying that a brighter outlook for domestic spending should ensure a steady …
Euro-zone Finance Ministers made little progress on Banking Union at their summit this week. If next year’s stress tests find large holes in bank balance sheets, there is still no clear mechanism to fill them. … What will happen after next year's bank …
Ireland’s 2014 Budget presented an apparently conducive backdrop for the country’s exit from its euro-zone support programme later this year. But Ireland’s post bail-out prosperity is not yet assured. … Budget keeps Ireland on track for bail-out …
15th October 2013
Despite the euro-zone economy’s recent recovery, likely constraints on future rates of economic growth and limits to further austerity mean that more of the region’s economies could yet choose, or be forced, to turn to default as a way out of their debt …
The continued rise in ZEW investor sentiment in October suggests that the German economy is so far weathering the storm of political turmoil elsewhere. … German ZEW Survey …
Despite a rise in production in August, the euro-zone industrial sector is unlikely to have provided much of a boost to the wider economy in Q3. … Euro-zone Industrial Production (Aug …
14th October 2013
The US federal government shutdown is unlikely to have major direct effects on the European economy and financial markets provided that it is resolved fairly quickly. Nonetheless, the episode has served as a timely reminder that euro-zone policymakers …
Speculation has risen in recent weeks that Slovenia will be forced into some form of euro-zone bailout. But the country can still avoid asking for outside help in dealing with its banking crisis. … Slovenia can still save itself from a …
11th October 2013
The latest industrial figures heighten the risk that both the French and Italian economies contracted in Q3, confirming that the euro-zone’s recovery is strongly reliant on Germany. … French & Italian Ind. Production …
10th October 2013
Despite the sharp rise in production in August, the German industrial sector will provide the wider economy with a slightly smaller boost in Q3 than Q2. … German Industrial Production …
9th October 2013
The European economy has shown further signs of recovery, with the euro-zone finally emerging from recession in the second quarter and other parts of the continent also faring better. But growth in the peripheral countries of the currency union looks set …
8th October 2013
Evidence mounted last week that euro-zone unemployment has peaked. Particularly encouragingly, many of the peripheral economies have now enjoyed several months of falling unemployment. What’s more, employment growth in the region is likely to pick up over …
7th October 2013
President Draghi struck a cautiously optimistic tone about the euro-zone’s nascent recovery. But while he made it clear that the ECB stands ready to prevent excessive rises in market interest rates, there was little sign that further imminent action to …
2nd October 2013
The fall in euro-zone CPI inflation to 1.1% in September – its lowest rate since February 2010 – leaves it well below the ECB’s target of “below, but close to, 2%”. While falling energy inflation has played an important role, core inflation has also …
A contentious component of the Greek bail-out package has been its privatisation programme. This Update summarises some of the views expressed at a panel discussion in which Ben May was involved at the Euromoney “Greece Privatisation and Investment Forum” …
1st October 2013
