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The EC consumer and business survey for June made pretty encouraging reading, but it remains too soon to conclude that the euro-zone is on the cusp of an economic recovery. … Euro-zone EC Survey …
27th June 2013
May’s monetary data revealed that bank credit contracted again, reinforcing our belief that the ECB will be forced into further action by the end of the year. … Euro-zone Monetary Indicators Monitor (May …
In spite of Slovenia’s low public debt and small banks, the country is in a very precarious position given the scale of the rot in the banking sector. To avoid a bail-out, the Government will need to press ahead with an ambitious reform agenda and hope …
26th June 2013
While the withdrawal of the smallest party from the Greek coalition is certainly an unwelcome development, for now at least, the Government should be able to limp on. But if the Troika forces it to undertake further austerity measures, then voters may …
24th June 2013
June’s German Ifo survey echoed the slightly firmer tone of other recent indicators. But it certainly did not suggest that the euro-zone’s biggest economy is embarking on a spectacular recovery. … German Ifo Survey …
Labour cost data released last week provided further evidence that the competitiveness gap between the euro-zone periphery and core may be narrowing. While labour costs were little unchanged or lower than a year earlier in the periphery, German labour …
We doubt that the new growth measures adopted by the Italian government will have much effect on the economy and still expect the 2013 budget deficit to be well above target. Based on this and Italy’s weak economic fundamentals, we expect concerns about …
20th June 2013
The Norges Bank left interest rates unchanged today as concerns about financial stability once again outweighed the need to weaken the currency and boost inflation. But the Bank once again pushed back its hiking cycle, reinforcing our belief that a rate …
June’s euro-zone PMI survey continued the upward trend of recent months, but still suggests that the euro-zone economy contracted for a seventh quarter running in Q2. … Euro-zone Flash PMIs …
A further rise in global bond yields could push borrowing costs for some euro-zone governments back towards danger levels and underline the limitations of the ECB’s OMT programme. … Could a global bond sell-off reignite the euro-zone …
19th June 2013
We doubt that the recent bout of political uncertainty, coupled with concerns over the Government’s ability to meet the privatisation targets set by the Troika, poses a serious near-term threat to Greece’s bail-out. But we still think that the long-term …
18th June 2013
The rise in the headline ZEW index in June reinforced other data in pointing to an acceleration in the German economy. But while expectations picked up, the ‘current situation’ component fell again. … German ZEW Survey …
As the euro-zone periphery struggles to pay off its external debt, core countries like the Netherlands are still running record current account surpluses. But the Netherlands seems unlikely to reduce its large surplus any time soon, underlining how …
17th June 2013
The commencement last week of the German Constitutional Court hearing into the legality of the European Central Bank’s Outright Monetary Transactions (OMTs) programme has re-stoked the debate over the ECB’s remit and the appropriate breadth of its …
Most peripheral euro-zone economies have made impressive progress in narrowing their current account deficits. But so far this is only a correction in flows; theses economies have made little or no headway in paying down their stock of external debt. As …
12th June 2013
The solid rise in euro-zone industrial production in April suggests that the sector will expand in Q2. But industry is unlikely to spearhead a wider economic recovery. … Euro-zone Industrial Production …
Italian GDP figures for Q1 confirmed that the economy remained in a broad-based recession and April’s fall in industrial production pointed to another contraction in Q2. Thankfully, French industrial data for April were more encouraging. … French & …
10th June 2013
While the IMF conceded last week that mistakes were made in Greece’s 2010 bail-out programme, it suggested that earlier debt restructuring was the way forward rather than bigger bail-outs. Meanwhile, the EC and ECB still seem convinced that austerity is …
Increases in German industrial production and exports in April have boosted the chances that the very modest recovery seen in Q1 might gain pace in Q2. … German Industrial Production & Trade …
7th June 2013
After leaving interest rates on hold, the ECB left the door open to more policy support, suggesting that more LTROs, negative deposit rates, forward policy guidance and stimulation for Asset-Backed Securities (ABS) markets were all possible. However, the …
6th June 2013
Some of the euro-zone business surveys have had a slightly stronger tone over the last couple of months. Nonetheless, at current levels, they remain consistent with a further contraction in activity in the single currency area. Meanwhile, the details of …
5th June 2013
Today’s convergence report by the EC, which gave the green light to Latvia to join the euro-zone in 2014, is likely to lead to further suggestions that Latvia serves as a role model of “internal devaluation” for the euro-zone periphery. However, it is …
The breakdown of Q1 GDP and more timely news on retail sales and the PMI provided little obvious support for the ECB’s view that the euro-zone economy is set to embark on a decent recovery later in the year. … Euro-zone GDP (Q1), Final PMI & Retail …
Although euro-zone businesses and consumers are becoming less pessimistic and policymakers are softening their stance on austerity, there is still little sign that the region is on the cusp of an economic recovery. Given this, and the fact that inflation …
3rd June 2013
April’s rise in unemployment and the fact inflation remained well below target in May will add to the pressure on the ECB to provide more policy support. … Euro-zone Flash CPI (May 13) & Unemployment (Apr. …
31st May 2013
The Danish economy rebounded in Q1 after its very weak finish to last year, but we doubt that the recovery will last long. … Danish GDP …
The Danish economy rebounded in Q1 after its very weak finish to last year, but we doubt that the recovery will last long. … Danish GDP (Q1 …
After cutting interest rates last month and hinting that more support might be to come, we suspect that the ECB will disappoint markets at its forthcoming policy meeting and press conference. President Draghi is likely to say again that further interest …
30th May 2013
The EC consumer and business survey for May suggests that the euro-zone recession may be easing. But an economic recovery still appears to be some way off. … Euro-zone EC Survey (May …
Swiss GDP data for Q1 confirmed that the economy continued to perform well. But the still high level of the franc does appear to be damaging exports and we suspect that growth will slow significantly in the coming quarters. … Swiss GDP (Q1 …
Over the past five years, Sweden and Norway have performed remarkably well by the standards of the developed world, but their recoveries may be starting to run out of steam. Nonetheless, both economies should outperform most of their peers and maintain …
29th May 2013
While positive on the surface, the acceleration in money supply growth conceals several worrying dynamics, not least another fall in lending to firms. … Euro-zone Monetary Indicators Monitor …
We think that Q1’s healthy rise in Swedish GDP is not quite as encouraging as it initially seems. But while we expect GDP growth to slow over the remainder of 2013, Sweden will continue to perform better than most of its neighbours. … Swedish GDP …
We think that Q1’s healthy rise in Swedish GDP is not quite as encouraging as it initially seems. But while we expect GDP growth to slow over the remainder of 2013, Sweden will continue to perform better than most of its neighbours. … Swedish GDP (Q1 …
Five years since they were implemented, Iceland still relies on ‘temporary’ capital controls to support its currency. And they are likely to remain in place for some time yet despite the new Government’s calls for them to be abolished quickly. That said, …
28th May 2013
Recent fiscal data suggest that Greece has continued to make good fiscal progress, but the other southern euro-zone economies are not faring quite as well. … Euro-zone Fiscal Monitor …
The continued falls in commercial banks’ deposits at the ECB are in part a reflection of an improvement in conditions in the banking sector. But further falls could see liquidity falling to levels which have previously prompted inter-bank interest rates …
27th May 2013
May’s renewed rise in the German Ifo survey and the increase in the GfK consumer confidence indicator for June added to signs that the economy is recovering. But we expect the recovery to be modest. … German Ifo (May), Consumer Conf. (Jun) & Final GDP …
24th May 2013
May’s euro-zone PMI survey adds to the recent run of slightly more encouraging news from the region, but there is little sign that the region is about to emerge from recession. … Euro-zone Flash PMIs …
23rd May 2013
At face value, the ongoing improvement in the euro-zone’s current account position, which has been to a large part down to developments in the peripheral economies, is a sign that the structural reform process is reaping results. But we are not convinced. …
22nd May 2013
We doubt that the recent equity market rally, combined with the ongoing downward trend in CPI inflation, will prompt a sustained recovery in euro-zone household spending. Indeed, in the periphery, further sharp falls in consumer spending seem inevitable. …
21st May 2013
The news that some wealthy French households were taxed over 100% of their income last year has added to criticism of President François Hollande’s policies. But the bigger point is that rising unemployment and continued austerity are hitting average …
20th May 2013
The improvement in market sentiment towards the euro-zone has not been matched by a material change in the troubled countries’ economic and fiscal outlooks. As such, the crisis is not over. … Is the euro-zone crisis really …
The euro-zone’s Q1 GDP release made very grim reading. At least continued economic weakness will keep the pressure on the region’s policymakers to do more. But fiscal leniency has so far been very limited. And the latest comments from German Finance …
This Update addresses the question of whether monetary policy is now too loose for Germany and, if so, what can be done about it? While there are various policies that could be adopted at the national level to prevent overheating, we do not consider this …
16th May 2013
While March’s euro-zone trade data are certainly encouraging, we remain sceptical that the sector can single-handedly drag the euro-zone and, in particular, the peripheral economies out of recession. … Euro-zone Trade (Mar.) & Final CPI …
