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While headline euro-zone inflation fell again in March, there were some signs of a rise in core price pressures. But these are likely to prove temporary. … Euro-zone Flash CPI (Mar. …
3rd April 2013
The recent news from Italy suggests that it could still be some time before a new government is in place. While there is little sign, for now at least, that this has damaged business and consumer sentiment, we expect Italy to remain deep in recession for …
2nd April 2013
The further rise in euro-zone unemployment in February, coupled with the low level of March’s manufacturing PMI, confirmed the underlying weakness of the economy. … Euro-zone Unemployment (Feb.) & Manufacturing PMI …
The relative calmness of the financial markets during the Cyprus episode and after the Italian election might be seen as an indication that the worst of the euro-zone crisis is now behind us. But it is the behaviour of bank deposits in Cyprus and …
1st April 2013
The crisis in Cyprus, together with the continued deterioration in indicators of euro-zone economic activity, should lead the ECB to strike a more supportive tone at this month’s press conference. But while an interest rate cut is possible, we suspect …
28th March 2013
The latest euro-zone monetary data showed more mixed developments in financial markets than in previous months. And there is still limited evidence of a pick-up in credit to the private sector. … Euro-zone Monetary Indicators Monitor (Feb. …
February’s German retail sales data suggest that spending rose in Q1. But sales are still falling compared to a year earlier and with March’s unemployment data confirming that the labour market recovery is fading, a strong consumer recovery seems too much …
Swiss GDP data for Q4 confirmed that, while growth is clearly slowing, the economy has continued to outperform most others in Europe. But we expect the economy to stagnate this year as problems in the euro-zone cause exports to fall. … Swiss GDP (Q4 …
Italy and Spain missed their 2012 deficit targets by a small margin and timelier data point to further likely slippage in the initial stages of this year. … Euro-zone Fiscal Monitor …
27th March 2013
Cyprus has shown that even the smallest members of the euro-zone can rock the single currency area. Slovenia is probably the next country most likely to be forced into a bailout programme, but Malta and Luxembourg are also vulnerable given the size of …
March’s fall in the euro-zone EC Economic Sentiment Indicator (ESI) provides a further sign that the euro-zone economy had started to lose momentum even before the recent escalation of the crisis in Cyprus. … Euro-zone EC Survey (Mar. …
While capital controls could be crucial to preventing the collapse of the Cypriot banking system in the coming weeks, their persistence or more widespread use would threaten to undermine the basic functioning of the currency union. … Capital controls: …
26th March 2013
While the Cypriot banking package has averted imminent disaster, the episode will have damaging effects on Cyprus’s economy and has raised new questions over the stability of the currency union. … Cyprus: Disaster averted, but with lasting …
25th March 2013
While the successful formulation of a new plan to avoid bankruptcy in Cyprus remains in the balance, it looks likely that some form of package will be put together in order to ensure the continued support of the ECB for the country’s banks and hence avoid …
March’s fall in the German Ifo business climate indicator is another sign that the recovery in the euro-zone seen over the past six months or so might already be running out of steam. … German Ifo Survey …
22nd March 2013
While Ireland impressively matched Germany’s economic expansion in 2012, the recent slowdown in the quarterly path of GDP is a reminder that the country still faces major challenges. … Ireland GDP …
21st March 2013
The fall in the composite euro-zone PMI in March suggests that even before the recent uncertainty surrounding Cyprus’ future, the euro-zone economy had begun to contract more sharply. … Euro-zone Flash PMIs …
The Cypriot Parliament’s overwhelming rejection of the proposed levy on bank deposits adds to the uncertainty surrounding the future of Cyprus and increases the risk of the country eventually exiting the single currency. … What next for …
20th March 2013
March’s small rise in the German ZEW index left it at a high level. But as fears for Italy and Cyprus hit sentiment in future, we doubt that Germany’s recovery will be as strong as the survey now suggests. Meanwhile, January’s rise in Italian industrial …
19th March 2013
The plan to impose losses on Cypriot bank depositors has potentially serious implications for financial stability in the euro-zone as a whole. Cyprus is arguably a special case, but given remaining risks elsewhere in the euro-zone, depositors might not be …
18th March 2013
Last week brought mixed news in the debate on growth versus austerity. On the one hand, EU leaders discussed and (to some extent) advocated growth policies at an EU summit. What’s more, the European Commission seemed likely to accept that France would …
The latest figures on consumer prices and labour costs in the euro-zone emphasised that the inflation outlook presents no obstacles to the provision of further policy support from the ECB. … Euro-zone Final CPI (Feb.) & Labour Costs …
15th March 2013
The opening of Parliament on Friday will do little to lift the political uncertainty in Italy. Accordingly, a prolonged period of policy deadlock looks likely to fuel concerns over the outlook for Italy’s economy and public finances. … Italian deadlock …
14th March 2013
The Norges Bank’s decision to leave the policy rate unchanged reflects the dilemma facing the Bank as a strong currency prevents it from hiking rates to stem a housing boom. These countervailing pressures are likely to keep policy on hold until late-2014 …
The Swiss National Bank pledged to maintain its extremely supportive policy stance today, keeping interest rates as close to zero as possible and defending its exchange rate ceiling. But even at the current level, the franc is much too high for exporters’ …
Reviving lending to small and medium-sized enterprises is crucial for the euro-zone’s prospects given the importance of these firms to the region, particularly in the periphery. Indeed, ECB President Mario Draghi has repeatedly singled out the need to …
13th March 2013
Despite concerns that austerity is not working in the euro-zone, most of the region’s peripheral economies managed to reduce their budget deficits in 2012. But fiscal progress has been slower than expected and the economic costs have been considerably …
January’s fall in euro-zone industrial production is a timely reminder that, despite the improvement in business and financial market sentiment, the region is likely to have remained in recession in Q1 … Euro-zone Industrial Production …
We are not fully convinced by the argument espoused by Mario Draghi that Italian fiscal policy is on “automatic pilot” and that the budget deficit will narrow regardless of who eventually takes power. … Is Italy really on …
12th March 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 …
The detailed Portuguese GDP release for Q4 confirmed that the economy is in a worryingly deep and broad-based recession. The lack of evidence that the downturn is easing, coupled with voters’ growing resistance to austerity, suggests that financial …
11th March 2013
On balance, the latest batch of hard economic data from the euro-zone’s three largest economies makes fairly grim reading and casts further doubt on the view that the region as whole has begun to grow again. … Italian GDP (Q4), French Ind. Prod. & German …
The ECB’s inaction despite predicting continued recession and below-target inflation suggests that the central bank is either out of policy ammunition or holding what little it has back for an even rainier day. But we think it still has some ammo and …
January’s German industrial production figures added to the evidence that the economy entered 2013 in a better state than it ended 2012. But for the time being at least, growth seems to be modest at best. … German Industrial Production …
8th March 2013
Q4’s Icelandic GDP data confirmed that the economy is slowly recovering from its financial crisis. But while Iceland looks set to continue to outperform the peripheral euro-zone economies this year, growth will be pretty sluggish. … Iceland GDP …
Q4’s Icelandic GDP data confirmed that the economy is slowly recovering from its financial crisis. But while Iceland looks set to continue to outperform the peripheral euro-zone economies this year, growth will be pretty sluggish. … Iceland GDP (Q4 …
While some members of the European Central Bank’s Governing Council voted for an interest rate cut today, the majority still seems unconvinced that this would do any good. What’s more, the Bank suggested that there was very little that it could do to …
7th March 2013
Ireland and Portugal’s relative success in achieving fiscal targets and regaining access to financial markets has raised hopes about the sustainability of their public finances, particularly after hints that the maturity of their bail-out loans could be …
February’s drop in euro-zone CPI inflation to 1.8% brought it back below the ECB’s 2% “ceiling” for the first time since November 2010. While much of the recent drop reflects slowing energy inflation, there are growing signs of an easing in core price …
6th March 2013
The breakdown of euro-zone GDP in the fourth quarter revealed an increasingly broad-based decline. Timelier indicators still point to another contraction in GDP in Q1 despite their recent improvement. … Euro-zone GDP (Q4 …
More than a week after the general election, the political situation in Italy remains as uncertain as ever. With potentially months of political and economic deadlock ahead, we continue to expect rising market pressure sooner or later to force Italy to …
5th March 2013
January’s rise in euro-zone retail sales and the fall in the composite PMI in February add to evidence that while the recession in the region is slowing, it is not over. … Euro-zone Retail Sales (Jan.) & Final PMI Survey …
Recent data from the Netherlands have added to evidence from France that the euro-zone’s economic problems go well beyond the region’s periphery. We expect the Dutch Government’s opposition to additional support for the periphery to harden as the economy …
The French economy is set to fall further behind others in the euro-zone as labour market rigidity holds back competitiveness and household spending is hit by fiscal austerity. This might cause France to push harder for more supportive policies for the …
4th March 2013
Having swum against the tide of increased optimism towards the euro-zone for some months, we are wary of the temptation to leap on last week’s events in Italy as a vindication of our position. After all, political turmoil is hardly novel in Italy nor, …
February’s fall in euro-zone CPI inflation and the further rise in unemployment in January raised the chances of further policy action by the ECB. … Euro-zone Flash CPI (Feb.) & Unemployment …
1st March 2013
Q4’s Swedish GDP numbers confirmed that the robust recovery has fizzled out. But Sweden should still perform far better than the euro-zone and most of its neighbours in 2013. … Swedish GDP (Q4 …
