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The latest monetary data have revealed that the ECB’s generous lending is boosting the broad money supply. However, lending to firms and consumers remains very weak and the bank lending survey suggests that a recovery is unlikely in the near term. … …
27th February 2012
After forcing yet more austerity on Greece in return for the new rescue package agreed last week, some European leaders finally appeared to adopt a more positive focus, by presenting “A Plan for Growth for Europe”. But the proposed reforms, aimed at freer …
Greece’s bail-out reduces the risk of an imminent default, but a closer look at the economic and fiscal projections that the package is based on adds to evidence that the deal is a fudge. The only way a further default and Greek euro-zone exit can be …
24th February 2012
The detailed German GDP release for Q4 revealed that the 0.2% quarterly contraction reflected falls in both exports and consumer spending. While survey data point to a slight improvement in Q1, we doubt that this will be sustained. … German GDP …
February’s rise in the German Ifo index adds to evidence that the economy might avoid falling into recession in Q1, but this still looks set to be a tough year. … German Ifo Survey …
23rd February 2012
February’s fall in the euro-zone PMI puts a bit of a dent in hopes that Q4’s economic contraction will prove to be a one off. … Euro-zone Flash PMIs …
22nd February 2012
The new rescue deal for Greece should buy the euro-zone a bit of time. But we think that the package is based on unrealistic economic assumptions and will be no more successful than the first deal. Accordingly, Greece or the troika may still decide to …
21st February 2012
Recent economic indicators from Spain suggest that it is currently faring rather better than the other troubled southern euro-zone economies. But Spain’s economic fundamentals look grim. We expect the recession there to be much longer and more damaging …
20th February 2012
Q4’s GDP figures revealed that France was one of the few euro-zone economies to expand at the end of last year. But prospects for French exports are marred by fairly weak competitiveness and a reliance on trade within the euro-zone while the previous …
The Swedish Riksbank indicated that it expects its latest 25 basis point interest rate cut to be the last in the cycle. But we expect the adverse knock-on effects from an intensification of the euro-zone debt crisis to prompt the Bank to reduce interest …
16th February 2012
The direct economic and financial ramifications of a disorderly Greek default may not be very much worse than those of the planned “voluntary” debt restructuring. But the broader implications for the euro-zone crisis and future of the single currency …
Portugal has made some progress in reining in its huge budget deficit, but it appears inevitable that it will need another rescue package. While there is a good chance that any new deal will not be contingent on some form of debt restructuring, we think …
15th February 2012
The provisional Q4 euro-zone GDP figures confirmed that the economy contracted at the end of last year, albeit by a bit less than had been feared. The 0.3% quarterly fall was slightly better than the consensus forecast of -0.4%, but the first decline in …
While some of the euro-zone activity indicators have nudged up this month, money and credit growth have weakened further. The annual growth rate of the broad money supply fell to an 11-month low of 1.6% in December. Admittedly, the ECB’s generous …
14th February 2012
This report is only available as a PDF. Click to download. … Euro-zone Industrial Production (Dec.), & German ZEW (Feb.) …
The immense difficulties in finalising a second rescue package and debt restructuring for Greece have pushed the country right to the brink once more. Even if the policymakers manage again to step back from disaster, the prospect of further such episodes …
13th February 2012
The ECB today approved further measures to address the danger of a credit crunch in the euro-zone. However, it continues to resist taking more direct action to tackle the region’s fiscal crisis. … ECB focuses on credit crunch …
9th February 2012
Greek policymakers may soon agree on a new austerity and structural reform programme, reducing the chances of a disorderly default in March. Nonetheless, any deal is unlikely to prevent Greece’s economic and fiscal problems from worsening. … Austerity …
7th February 2012
December’s drop in German industrial production was a serious blow to hopes that the economy might be recovering. The 2.9% monthly fall was far weaker than the consensus forecast of no change and came as a particular disappointment after yesterday’s data …
While the news on the euro-zone economy has improved a bit in the last month or two, 2012 could still turn out to be crunch year for the currency union. Fiscal progress in the peripheral economies has continued to be hindered by a lack of growth and a …
6th February 2012
While European leaders have now agreed to the fiscal compact proposed last year, its terms have been diluted significantly. Meanwhile, their economies have continued to diverge. Most worryingly, while the latest German economic indicators have shown more …
While the European Central Bank (ECB) is likely to keep interest rates unchanged again at its February policy meeting, President Draghi will no doubt use the following press conference to stress the effectiveness of its latest banking support measures. …
3rd February 2012
The latest euro-zone economic data do nothing to alter our view that the region is set for another tough year, even if policymakers implement further measures to help bring the debt crisis to an end. … E-Z CPI, Final Manu. PMI & ECB Bank Lending Survey …
1st February 2012
The latest fiscal data suggest that most of the southern European economies are still struggling to make further major inroads into their budget deficits. With growth likely to weaken further in the coming months, the task looks set to become even harder. …
31st January 2012
December’s euro-zone unemployment figures revealed a further increase that will add to the downward pressure on consumer spending in the coming months. … Euro-zone Unemployment …
January’s improvement in the EC’s euro-zone business and consumer surveys is something of a relief, but the headline index still points to a renewed recession. … Euro-zone EC Survey (Jan.) & Spanish GDP …
30th January 2012
Worries about the Greek debt deal were offset last week by greater optimism towards Germany. Not only were there further signs of a pick-up in the economy, but Angela Merkel hinted that she would be prepared to sanction a bigger bail-out fund. But even if …
Recent monetary data have revealed that the ECB’s generous lending has helped to reduce strains in interbank markets to some extent. However, money and credit growth have weakened further. … Euro-zone Monetary Indicators Monitor …
27th January 2012
January’s rise in the German Ifo index suggests that the economy is holding up relatively well, but activity is nowhere near strong enough to provide a meaningful boost to the euro-zone’s periphery. … German Ifo Survey …
25th January 2012
January’s increase in the euro-zone composite PMI is certainly an encouraging sign, but the survey still suggests that the region is in recession. … Euro-zone Flash PMIs …
24th January 2012
The Greek government appears to be close to agreeing a deal with bond-holders which should both reduce its debt burden and ensure that it gets its second bail-out in time to finance the redemption of some €14bn of bonds towards the end of March. … Greek …
23rd January 2012
Media reports suggest that Greece may be on the brink of agreeing a debt restructuring deal with private sector creditors. But while this might reduce the chance of a near-term disorderly default, concerns about Greece’s solvency will remain. … Debt …
19th January 2012
January’s sharp monthly rise in the German ZEW index is certainly an encouraging sign, but the index still points to tough times ahead. … German ZEW Survey (Jan.) & Euro-zone Final CPI …
17th January 2012
Last week’s news on the euro-zone continued the slightly more positive tone of late. Germany and France reiterated their commitment to a new fiscal compact, Spanish and Italian bond auctions were successful, and the euro fell to an 18 month low. But while …
16th January 2012
The ECB today maintained both the level of official interest rates and its opposition to calls for it to take more decisive action to tackle the euro-zone’s debt crisis. … ECB stands firm on bond …
12th January 2012
November’s euro-zone industrial production data provided further evidence that the economy as a whole may have fallen back into recession in Q4. … Euro-zone Industrial Production …
Some of the euro-zone’s survey indicators have ticked up in the past month. However, they almost unanimously warn of a renewed recession in the region, with the composite PMI, for example, pointing to quarterly falls in euro-zone GDP of nearly 1%. What’s …
11th January 2012
Merkel and Sarkozy’s pledge to accelerate their contributions to the euro-zone’s bail-out fund following today’s summit was vaguely encouraging. But far more striking was their lukewarm support for Greece and concession that keeping the euro-zone together …
9th January 2012
November’s fall in German industrial production confirmed that the recovery in what had been the strongest sector of the euro-zone’s strongest economy has gone into reverse. … German Industrial Production & Trade …
A new year may have begun, but it has not provided the euro-zone with a fresh start. The latest economic data confirm that the economy remains in a precarious position and the euro has continued to weaken. What’s more, the euro could start to fall more …
December’s fall in the EC survey of euro-zone economic sentiment, together with November’s drop in retail sales and the still high rate of unemployment, confirms that the euro-zone economy is in a very bad state. … Euro-zone EC Survey (Dec.), Unemployment …
6th January 2012
After two consecutive cuts in interest rates, the European Central Bank (ECB) looks set to hold fire at its first policy meeting of 2012 on January 12th. And while further interest rate cuts are still possible in later months, President Draghi is likely …
The latest fiscal data add to evidence that the ongoing austerity programmes in Southern Europe have failed to narrow these economies’ budget deficits as quickly as expected. … Euro-zone Fiscal Monitor …
4th January 2012
The latest euro-zone inflation and PMI business activity data do nothing to alter our view that the euro-zone is set for another very tough year in 2012. … Euro-zone Flash CPI & Final PMI …
Recent monetary data have revealed that money and credit growth remain very subdued. The ECB’s latest efforts to improve commercial banks’ liquidity seem unlikely to have a meaningful impact on lending to the wider economy. … Euro-zone Monetary Indicators …
3rd January 2012
With the euro-zone debt crisis ending the year much deeper and broader than it started it, it seems unlikely that the next 12 months will see a repeat of the (just about) “muddling through” process seen in 2011. Rather, 2012 looks like being the crunch …
22nd December 2011
The recent rise in some of the German business surveys has prompted optimistic media reports about Germany saving the euro-zone, acting as Santa, being a twinkling Christmas star in the euro-zone gloom etc. We are sorry to say that, whichever way we look …
21st December 2011
Italy’s Q3 GDP figures add to evidence that the economy has probably already re-entered recession, despite the fact that the fiscal squeeze there has barely started. With the economy set to contract further in 2012, the recent drop in Italian bond yields …
The Swedish Riksbank’s decision to reduce interest rates is a timely reminder that even the strongest performing European economies are not immune from the effects of the euro-zone debt crisis. We expect further rate cuts next year as the euro-zone’s woes …
20th December 2011
