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Today’s German Ifo survey came in ahead of market expectations, although it posted only a small improvement compared with March. Predictions that the German economy will be strong enough to pull the wider euro-zone from its current difficulties could …
20th April 2012
With Nicolas Sarkozy and François Hollande set to emerge as frontrunners after the first round of the French presidential elections this Sunday, attention will turn more closely to what their policies mean for the economy. Differences in their plans are …
19th April 2012
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 2012
Today’s improvement in the ZEW economic sentiment survey is consistent with resilience being shown by the German economy. But it is unclear that this optimism can be maintained given the nature of the euro-zone’s fiscal problems. … German ZEW Survey …
Hopes that the crisis in the euro-zone had been solved by Greece’s debt restructuring and the ECB’s recent liquidity injections have faded. Despite some signs of resilience in Germany, the economic outlook for the peripheral economies and even some other …
16th April 2012
Markets last week seized on hints from the ECB that it may restart its bond purchase programme in an attempt to contain Spanish bond yields. But there are clear doubts over whether the ECB has the conviction or the ammunition to prevent yields from rising …
February’s euro-zone industrial production figures were boosted by temporary factors and do not alter the bleak outlook for the overall economy. … Euro-zone Industrial Production …
12th April 2012
Argentina’s experience after the collapse of the peso ten years ago supports the view that Greece, and perhaps other peripheral economies, would ultimately be better off leaving the euro-zone rather than struggling on with the current mix of austerity, …
10th April 2012
Any lingering hopes that the European Central Bank (ECB) had either already solved the euro-zone crises or would yet come riding to the rescue with much more decisive action were surely put to bed by last week’s post-interest rate announcement press …
9th April 2012
Germany’s February industrial production figures brought further signs that the former engine of the euro-zone economic recovery has gone sharply into reverse. … German Industrial Production …
5th April 2012
The European Central Bank (ECB) hinted today that it might not be prepared to provide much more policy support and hence kept the onus firmly on governments to address the euro-zone crisis. … ECB keeps the onus on …
4th April 2012
Recent news on the euro-zone economy has dampened hopes that that the ECB’s longer-term refinancing operations (LTROs) in December and February had largely solved the euro-zone’s economic and fiscal problems. Activity surveys like the Purchasing Managers’ …
3rd April 2012
February’s rise in euro-zone unemployment confirmed that the resilience of the German labour market is doing little to drag up the average. With high inflation and fiscal tightening adding to the pressure on households’ incomes, consumer spending looks …
2nd April 2012
The reported plans to increase the size of the euro-zone bail-out fund - hopefully to be agreed at today’s (Friday’s) Eurogroup meeting - provide some encouragement that the policymakers have recognised that the Greek rescue package and the ECB’s expanded …
March’s euro-zone CPI inflation data confirmed that stubbornly high inflation is adding to the squeeze on households’ purchasing power from rising unemployment and fiscal tightening. … Euro-zone Flash CPI & German Retail Sales …
30th March 2012
Recent news from Spain suggests that the Government may be falling further behind its fiscal targets, but the other troubled euro-zone governments have made a better start to the year. … Euro-zone Fiscal Monitor …
29th March 2012
March’s EC business and consumer survey echoed other indicators in suggesting that what “recovery” there was in the euro-zone economy has already ground to a halt. … Euro-zone EC Survey …
Following the apparent success of the ECB’s recent LTROs, the Governing Council meeting on April 4th is unlikely to produce any further significant policy measures. While acknowledging the ECB’s duty to support the euro-zone’s banks, President Mario …
28th March 2012
The latest monetary data have confirmed that the ECB’s generous lending is boosting the broad money supply and perhaps even stimulating government bond purchases. But, for now at least, lending to firms and households remains stagnant at best. … Euro-zone …
Three years after entering a depression, Iceland has staged an impressive turnaround, which, on the face of it, bodes well for the peripheral euro-zone economies that have suffered from similar problems. But a key factor behind the revival has been the …
27th March 2012
March’s rise in the German Ifo Business Climate Indicator suggested that the economy remains resilient. But the increase was the smallest for some time and other business surveys paint a less upbeat picture. … German Ifo Survey …
26th March 2012
Last week brought the strongest signs yet that the post-LTRO bout of optimism is starting to wear off. Hopes that the ECB’s operations would drive a pick-up in the euro-zone economy were dealt a blow by the release of March’s flash PMI surveys, while the …
The Irish GDP figures for Q4 revealed that the euro-zone’s fastest growing economy in the first half of 2011 fell back into recession in the second half. Ireland still remains in a better position than Greece and Portugal. But 2012 will be another tough …
22nd March 2012
March’s fall in the euro-zone composite PMI supports the view that the region may have fallen back into recession in Q1 and that divergences with the US are widening. … Euro-zone Flash PMIs …
The ECB’s latest liquidity operations appear to have averted, or at least delayed, a looming disaster in the euro-zone banking sector. But it would be wrong to think that they have solved the region’s deeper fiscal and economic problems, or secured the …
20th March 2012
Labour market data published last week confirmed that, in contrast to their counterparts in the US, euro-zone firms continued to lay off workers at the end of last year. Timelier indicators suggest that the divergence in labour market performance has …
19th March 2012
The Swiss National Bank pledged to maintain its extremely supportive policy stance today, keeping interest rates as close to zero as possible and defending a minimum exchange rate of CHF 1.20 per euro. But even at this level, the franc is much too high …
15th March 2012
January’s small rise in euro-zone industrial production does little to alter the picture of a sharp slowdown in the sector. … Euro-zone Industrial Production (Jan.) & HICP …
14th March 2012
The growing imbalances in the euro-zone’s TARGET2 payments system are another indication of the huge underlying problems still facing the currency union. … TARGET2 imbalances highlight euro-zone …
March’s rise in ZEW investor sentiment will add to hopes that the German economy is holding up surprisingly well as other parts of the euro-zone slide back into recession. … German ZEW Survey …
13th March 2012
The markets may currently be giving Italy the benefit of the doubt, but recent data have supported our gloomy view of the economic outlook. We think it may only be a matter of time before Italy is dragged back into the region’s debt crisis. … Italy …
12th March 2012
On the face of it, recent developments like the Greek debt restructuring deal and the ECB’s liquidity operations appear to have strongly undermined our view that a limited form of euro-zone break-up will commence this calendar year, most probably with the …
The successful Greek debt exchange should ensure that the second bail-out package is formally signed off before long, but it leaves Greek government debt still at an unsustainably high level. … Debt deal not the end of Greece’s …
9th March 2012
The ECB struck a downbeat tone at its policy meeting today. But having recently provided massive long-term loans to the banking sector, it is not prepared to offer more support before it has taken time to judge the impact of its actions. Instead, it put …
8th March 2012
January’s rise in German industrial production reduced the immediate risk of a recession, but did little to change the underlying picture of a very sharp slowdown in the sector. … German Industrial Production …
The prospect of stronger growth in the euro-zone economy has been dented by a slew of bad news on the consumer sector. Not only did household spending contract by 0.4% in the last quarter of 2011 - pushing the annual growth rate back into negative …
7th March 2012
The second euro-zone GDP release for Q4 revealed that the 0.3% decline was due to falls in household spending, investment and exports. While GDP might stabilise in Q1, we suspect that this broad-based weakness is a sign of things to come. … Euro-zone …
6th March 2012
A high participation rate in the Greek debt exchange would reduce the chances of an imminent disorderly default. But even if all bondholders take part, Greece’s public debt burden will remain unsustainably high. And if the deal unravels, it could have …
5th March 2012
Recent euro-zone price developments suggest that inflation will remain stubbornly high over the coming months and damage previous hopes that sharp falls in inflation would partly offset the negative effects on domestic spending from the fiscal squeeze. …
Having agreed to forego profits on its Greek government bonds and pumped billions more into the banking system over the past month, the ECB is unlikely to announce any major policy changes at its Governing Council Meeting on 8th March. President Draghi …
1st March 2012
The latest euro-zone data revealed an unpalatable combination of stubborn inflation and rising unemployment at the start of the year, suggesting that the recent improvement in sentiment towards the economy may not last for long. … Euro-zone Flash CPI & …
Q4’s Swedish GDP figures brought the strongest evidence yet that the problems in the euro-zone are taking their toll on Europe’s healthiest economies. We continue to think that the Riksbank will lower interest rates by more than its existing forecasts …
29th February 2012
The ECB’s second three-year loan operation will provide further vital support for the euro-zone’s beleaguered banking sector. But hopes that the funds will also solve the fiscal crisis and breathe life into the ailing euro-zone economy are likely to be …
For now at least, Portugal, Italy and Ireland all appear to be meeting their budget deficit targets. But the Spanish deficit narrowed by much less than expected in 2011 and further slippage appears likely this year. … Euro-zone Fiscal Monitor …
28th February 2012
February’s rise in German CPI inflation reflected a rise in energy inflation, which is unlikely to be sustained. But for now, relatively high inflation is one reason to expect consumer spending to remain subdued despite the resilience of the labour …
The recent rise in German consumer confidence looks very encouraging at face value. But with wage and employment growth already slowing, we doubt that it will be sustained. And in the meantime, fears over the impact of bail-outs on the German public …
February’s EC business and consumer survey echoed other indicators in pointing to a slight improvement in sentiment in the euro-zone. But there are few signs of the strong economic growth needed to address the fiscal crisis in the periphery. … Euro-zone …
