Filtered by Subscriptions: Europe Economics Use setting Europe Economics
The mainland Norwegian economy picked-up strongly in Q1, suggesting that Q4’s slowdown was an outlier. But we still expect the economy to slow later in the year as the euro-zone crisis intensifies and households reduce their borrowing. … Norwegian GDP …
16th May 2013
The Q1 estimate of Greek GDP and the credit rating upgrade by Fitch suggests that the economy may finally be turning a corner. But we still think that the economic forecasts underpinning the rescue package are too optimistic, implying that doubts about …
15th May 2013
Q1’s flash euro-zone GDP estimate confirmed that while the euro-zone economy performed rather better in Q1 than Q4, it remained in recession. … Euro-zone GDP …
As a result of ultra-loose monetary policy in major economies, central banks in smaller countries such as Switzerland, Sweden, Norway and Denmark are struggling to deal with both rising private debt levels and strong currencies at the same time. This …
14th May 2013
May’s German ZEW survey and March’s euro-zone industrial production numbers made encouraging reading, but do not alter our view that the euro-zone remains in recession. … German ZEW Survey (May) & Euro-zone Industrial Prod. …
This Update summarises views expressed by Capital Economics’ Jennifer McKeown in a panel discussion at the Euromoney “Germany Conference” in Berlin on 24th and 25th April. … Germany's role in a solution to the euro-zone debt …
13th May 2013
March’s national industrial production figures suggest that the sector gained momentum over the course of Q1. But we suspect that the revival could soon fizzle out. After all, domestic growth prospects remain weak. And given the strength of the euro and …
The growing likelihood of a grand coalition government after September’s election suggests that Germany’s tough stance on the euro-zone periphery might soften somewhat. However, none of the main parties seems to be contemplating a fiscal boost at home … …
9th May 2013
The Norges Bank left interest rates unchanged today as concerns about rising household debt once again outweighed the need to weaken the currency and boost inflation. But our expectation for the euro-zone crisis to intensify, combined with the Bank’s …
8th May 2013
March’s German industrial production figures suggest that the sector has gained momentum over the quarter, but a sustained and robust recovery still seems unlikely. … German Industrial Production …
The ECB appears to have concluded that it can limit the adverse side-effects of imposing negative interest rates on commercial banks’ deposits. But even if this is the case, negative rates are not going to transform the economic outlook and potentially …
A recent ECB survey suggested that German households are much less wealthy than those in the eurozone’s south and periphery. There are several reasons why this is untrue. But unfavourable coverage in the German press could still increase resistance to …
7th May 2013
March’s French industrial production and trade data suggest that the economic situation is not quite as bad as the surveys might have you believe. Nonetheless, it seems very likely that France officially re-entered recession in Q1. … French Industrial …
The recent run of weak economic data prompted the ECB to cut its policy rate last week. But as inflation itself continues to fall, pressure on the ECB to loosen monetary policy further is likely to intensify. The Bank’s next move looks most likely to be …
6th May 2013
The ECB’s widely anticipated interest rate cut should provide troubled banks in the region’s periphery with some much-needed support. But it will not be enough to drag the euro-zone out of recession on its own and bolder plans to boost lending to SMEs …
2nd May 2013
Due to Norway’s much-lauded fiscal rules, the recent fall in oil prices will have little impact on the economy’s bright near-term outlook. Nonetheless, Norway’s growing dependence on hydrocarbons highlights an increasingly unsustainable long-term growth …
Deflationary pressures in the euro-zone economy are continuing to intensify. While April’s drop in CPI inflation to just 1.2% was partly down to energy and Easter timing effects, underlying price pressures are clearly fading in response to the ongoing …
1st May 2013
In 2012, most of the peripheral economies made decent inroads into their budget deficits. But the fiscal consolidation process is far from over. … Euro-zone Fiscal Monitor …
30th April 2013
April’s drop in euro-zone inflation and the further rise in unemployment in March have added to the pressure on the ECB to provide more policy support. … Euro-zone Flash CPI (Apr.) & Unemployment …
If the peripheral euro-zone economies regained competitiveness via outright deflation, their public and private sector debt levels would spiral higher as a share of GDP, prompting disaster. … Would deflation lead the periphery into a debt …
The formation of a grand coalition government in Italy is clearly a step forward, but we doubt that this marks a period of lasting political stability. In addition, despite calls from Prime Minister Letta for Europe to re-examine fiscal targets, a …
29th April 2013
April’s EC consumer and business survey supports other evidence that the euro-zone economy could contract again in Q2, marking the region’s longest ever recession. … Euro-zone EC Survey …
Hopes that euro-zone policymakers are set to sanction a reduction in the pace of fiscal tightening across the region rose further last week after EC President Jose Manuel Barroso suggested that the austerity-driven policy response to the region’s crisis …
The latest euro-zone monetary data showed little sign of an improvement in financial market conditions or a pick-up in provision of credit to the private sector. … Euro-zone Monetary Indicators Monitor (Mar. …
26th April 2013
Household spending in Denmark has barely recovered since its housing bubble burst in 2007 and there appears little respite ahead for households. With rising debt now fuelling housing booms in Sweden and Norway, Denmark offers a sobering insight into what …
25th April 2013
Having stated following its last meeting that it stood ready to act, it would be a big disappointment if the ECB did nothing at the forthcoming meeting on May 2nd. On balance, we think that an interest rate cut is marginally more likely than not, but it …
April’s fall in the German Ifo business climate indicator will add to concerns that the recovery there is starting to falter. … German Ifo Survey …
24th April 2013
April’s euro-zone PMI survey provided another clear sign that a sustained economic recovery in the region is still some way off. … Euro-zone Flash PMIs …
23rd April 2013
The re-election of President Napolitano suggests that Italy could soon have a new government in place. But an end to the political deadlock will not resolve Italy’s deep economic problems. … Italy’s problems are far from …
22nd April 2013
The news that the euro-zone budget deficit shrank again last year will be hailed as evidence by some that austerity is working. But the fact that most economies’ deficits have fallen by less than expected and that the consolidation has coincided with …
February’s record-breaking euro-zone trade surplus of €12bn suggests that the external sector provided the wider economy with a boost in Q1. But we doubt that the sector is about to kick start an economic recovery. After all, much of the increase in the …
We have previously warned that Belgium shares several characteristics with peripheral economies, such as high public debt, banking problems and falling competitiveness. But the economy also enjoys several strengths which, combined with easing banking …
18th April 2013
The Swedish Riksbank’s decision to leave interest rates unchanged at 1.0% was no surprise given the recent run of encouraging economic data. But while the chances of an imminent cut have perhaps receded, we still think that the Riksbank will probably …
17th April 2013
The Portuguese Government’s proposed new spending cuts should allow it to receive the next tranche of its bail-out loan and have its previous loans extended. But while this would provide some much-needed breathing space, we suspect that a second bail-out …
16th April 2013
April’s fall in the German ZEW index highlighted investors’ fears that the German recovery will falter amid continued concerns about the euro-zone’s periphery. … German ZEW Survey (Apr.) & Euro-zone Final CPI …
Recent events have underlined our view that the Slovenian government will struggle to finance itself this year despite the small size (relative to GDP) of its troubled banks and public debt. To avoid a bail-out, the government will need rapidly to put in …
15th April 2013
The drop in peripheral euro-zone bond yields following the Bank of Japan’s announcement that it is set to expand its quantitative easing programme dramatically has further relieved the near-term pressure on the ECB to implement its own Outright Monetary …
The small rise in euro-zone industrial production in February suggests that the sector will avoid another steep fall in output in Q1. But there is still no sign that the sector is about to spearhead an economic recovery. … Euro-zone Industrial Production …
12th April 2013
The dramatic increase in the size of the proposed rescue package for Cyprus both underlines the depth of the problems facing the country and poses further questions over the likely impact of future euro-zone bail-outs on both depositors and bondholders. …
11th April 2013
Recent events in Italy, Cyprus and Portugal have put a dent in hopes that the three-year crisis in the euro-zone is finally drawing to a close. Meanwhile, previous tentative signs that the broader economy might be recovering in response to the period of …
10th April 2013
Recent news from Greece has provided tentative signs that the economic situation there is improving. But we still think that the economy will remain in recession for longer than the Troika expects and that another debt restructuring will be needed to …
February’s German industrial production figures suggest that the economy’s engine of growth is still just about ticking over, but only very slowly. … German Industrial Production (Feb. …
8th April 2013
Despite ECB President Mario Draghi’s assurance last week that the Bank “stands ready to act”, he gave very little indication of what support it might offer. An imminent interest rate cut is possible, but we do not see it as a done deal and fear that it …
After leaving interest rates on hold today, ECB President Draghi acknowledged the downturn in the economic outlook and stated that the Bank stood ready to act in future. However, he provided little hope that policies considered to be within the Bank’s …
4th April 2013
Slovenia is indeed different from Cyprus, as its government has been at pains to point out, but the country may nonetheless struggle to overcome its banking crisis without outside help. That said, any Slovenian bail-out would be unlikely to shake the …
Recent activity indicators suggest that the euro-zone economy had started to lose some of its momentum even before the recent escalation of the crisis in Cyprus. Admittedly, most survey indicators are still stronger than they were a few months ago and …
3rd April 2013
