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The Greek GDP figures, which suggest that the economy may have expanded in Q2, confirm that Greece has benefitted from the recent period of relative calm and stability. But a strong and sustained expansion is still a long way off and another major debt …
12th August 2013
The national industrial production figures for June provided further evidence that euro-zone GDP might have expanded in Q2. Nonetheless, a closer look at the data suggests that the figures are perhaps not quite as encouraging as they seem. The improvement …
9th August 2013
June’s German industrial production data point to a healthy rise in GDP in Q2 and the sector could continue to build up steam in the near term. … German Industrial Production …
7th August 2013
Time is running short for President François Hollande to fulfil his vow to reverse the trend of rising French unemployment by the end of 2013. Despite the recent improvement in the business surveys and a raft of labour market reforms, we doubt very much …
6th August 2013
Q2’s flash GDP release suggested that Italy’s deep recession is gradually easing. But an imminent and sustained period of growth still looks too much to hope for. … Italian Flash GDP (Q2) & Industrial Production …
Ireland has been widely hailed as a “poster boy” for the euro-zone’s austerity driven crisis response. But the major challenges still facing the economy undermine the view that the country has forged an escape route for the other troubled peripheral …
5th August 2013
The Danish property market, at the heart of the country’s long slump, is on the mend. This suggests that the economy is finally turning a corner, but the recovery in both house prices and the wider economy is likely to be fairly anaemic in the next few …
July’s final PMI surveys improved the chances that the euro-zone is about to move out of recession. But the continued weakness of consumer activity adds to the doubts over the likely strength and sustainability of any impending recovery. … Euro-zone …
President Draghi failed to convincingly improve the ECB’s transparency last week. He added some detail to last month’s pledge that interest rates would “remain at present or lower levels for an extended period” by stating that markets’ expectations for a …
A slow but steady removal of monetary stimulus in the US over the next few years is likely to have important implications for a wide variety of financial market instruments. It should buoy the dollar, put gradual upward pressure on the yields of …
1st August 2013
Survey-based euro-zone activity indicators like the composite PMI have continued to strengthen in recent months, raising the prospect that the currency union’s economy may finally emerge from its near two-year recession in the third quarter. However, the …
31st July 2013
The latest news on euro-zone unemployment and inflation injected a slight note of caution after the recent run of better news from the region. … Euro-zone Flash CPI (Jul.) & Unemployment …
The latest figures on the public finances show that Italy and Portugal are struggling to reduce their budget deficits, but Ireland, Greece and Spain are faring rather better. … Euro-zone Fiscal Monitor …
30th July 2013
July’s EC survey added to evidence that the downturn in the euro-zone is easing, but it certainly did not point to a strong recovery. … Euro-zone EC Survey …
Credit growth slowed last month, a sign that the cash crunch delivered some of what policymakers were hoping for. But credit is still expanding more than twice as fast as economic output, which means that a further slowdown will be needed to bring credit …
The fall in Swedish GDP in Q2, which mainly reflected a sharp slowdown in household spending, supports our long-held view that the consensus expectation for a steady acceleration in economic growth over the next year or so is too optimistic. … Swedish GDP …
Last week’s euro-zone data revealed a further pick-up in some measures of real economic activity, with the composite PMI for July raising the prospect that the region’s two-year recession could come to an end in the third quarter. However, the continued …
29th July 2013
With indicators of economic activity improving slightly, the ECB is unlikely to cut interest rates this month. Meanwhile, divisions within the Governing Council might prevent it from clarifying last month’s pledge to keep rates low for “an extended …
25th July 2013
The further weakening in the key euro-zone monetary aggregates in June has further strengthened the case for additional policy stimulus from the ECB. … Euro-zone Monetary Indicators Monitor …
July’s small rise in the German Ifo added to evidence that the economy is gathering momentum, but the recovery is likely to be relatively modest. … German Ifo Survey …
The rise in the euro-zone PMI in July provides further evidence that the region may be exiting recession. But with credit conditions still tight and fiscal policy set to remain contractionary, a strong and sustained recovery remains unlikely. … …
24th July 2013
Initial estimates of Spanish GDP growth in Q2 suggest that the pace of contraction continued to moderate. Nonetheless, we still think that suggestions that Spain is on the cusp of an economic recovery are far too optimistic. … Spanish GDP (Q2 …
23rd July 2013
The formation of the single currency has prompted many of the euro-zone economies’ nominal economic variables, such as inflation, to become more similar. But real economic variables, such as the unemployment rate, have diverged, implying that true …
There is little sign that the Spanish housing downturn will come to an end any time soon. Not only does this spell bad news for households, it will also pile even more pressure on the troubled banks. … Spanish house prices still have much further to …
22nd July 2013
The lending capacity of the euro-zone’s bail-out funds is coming under strain again. €289bn of the ESM’s €500bn lending capacity has already been committed and developments in Portugal, Greece and Ireland last week suggested that all three might need more …
The ECB’s planned review of banks’ balance sheets is key to resuscitating the euro-zone’s struggling banking sector. Forthcoming stress tests are likely to be more credible than previous rounds, but filling the resulting capital shortfalls will put …
18th July 2013
Some central banks are beginning to make greater use of “forward guidance” to signal that interest rates will remain low for the foreseeable future. The evidence from Sweden, where the Riksbank has been publishing forecasts for the main policy interest …
Fitch’s downgrade of the EFSF has limited implications for the time being. But it will add to pressure on the euro-zone’s core countries who guarantee the various bail-out mechanisms to continue with their own controversial fiscal consolidation to keep …
16th July 2013
German investor sentiment weakened in July as disappointing hard data and troubles in Portugal reminded investors that the euro-zone crisis is far from over. And May’s sharp fall in euro-zone exports dented hopes of an export-led recovery in the bloc. … …
Some commentators have pointed to the recent run of encouraging Spanish unemployment figures as evidence that the green shoots of recovery may be emerging there. But we are far from convinced that the labour market is really on the mend. … Is the …
The risk of Portugal needing more financial support is growing. Even if a second bail-out can be agreed in the run-up to the German election, it is likely to involve private sector losses. And the ECB seems unlikely to step in with big enough bond …
15th July 2013
Last week’s German trade data revealed a sharp drop in exports, suggesting that the economy’s export engine is not performing particularly well. Much attention has focused on the deteriorating outlook for China, which has dented earlier hopes that German …
May’s euro-zone industrial production data show that the sector cannot be relied upon to generate a strong and sustained recovery. … Euro-zone Industrial Production (May …
12th July 2013
As the German economy struggles to grow, the Government will continue to resist the permanent transfers that the euro-zone’s periphery needs. But it will probably back further extensions to deficit targets and, despite resistance from the Bundesbank, more …
11th July 2013
We have long argued that the strength of the Norwegian krone would push the Norges Bank into further monetary easing. While the currency’s recent sell-off might ease pressure on the Bank somewhat, we still expect another rate cut by the end of the year. … …
10th July 2013
The European economy has shown tentative signs of improvement in recent months, with activity indicators in both Germany and some of the peripheral euro-zone countries regaining a firmer tone after weakening earlier in the year. But the recovery is built …
9th July 2013
May’s falls in German exports and industrial production add to evidence that the recovery in the euro-zone’s largest economy will be very modest. … German Industrial Production & Trade (May …
8th July 2013
The ECB joined the great forward policy guidance race last week. But when it comes to the broader provision of monetary policy support, it remains firmly at the back of the pack. … ECB still at the back of the …
The ECB’s unprecedented step in joining other central banks in providing forward guidance on future policy is a welcome one. But it won’t transform the outlook for the euro-zone economy. … The ECB joins the forward guidance …
4th July 2013
Burdened by the euro-zone’s most indebted households, the Netherlands is stuck in its third recession in five years. With pressure on households likely to intensify, the country’s AAA-rating will come under increasing threat and voters are likely to …
Euro-zone activity indicators have maintained a slightly firmer tone over the last month, providing tentative signs of an upturn in the region’s economy. Nonetheless, those indicators generally suggest that the currency union still posted a seventh …
3rd July 2013
The Swedish Riksbank left interest rates unchanged at 1.0% today and signalled that it still expects to begin raising rates in late 2014. However, we still think that the Bank’s economic forecasts are too optimistic and that the next interest rate move …
Although the peripheral economies remain mired in recession, some fiscal progress is being made, particularly in Greece. … Euro-zone Fiscal Monitor …
2nd July 2013
The latest euro-zone inflation and labour market figures brought a slight note of caution after the recent improvement in some of the region’s activity indicators. … Euro-zone Flash CPI (Jun.) & Unemployment …
1st July 2013
Recently, euro-zone policy makers have made commendable progress towards banking union. They have now agreed an ‘operational framework’ for the region’s bail-out fund, the ESM, to recapitalise banks and drawn up a new regime to ‘bail-in’ bank creditors. …
With the news that the US Fed is set to taper its QE programme hitting euro-zone financial markets, President Draghi should provide reassurance about ongoing ECB policy support at the forthcoming press conference. While we do not expect policy changes …
27th June 2013
