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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 …
29th March 2012
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 …
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.) …
