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September’s fall in the EC measure of business and consumer sentiment adds to evidence that the euro-zone economy is on the brink of recession. … Euro-zone EC Survey …
30th September 2011
Emerging details about the recent proposal to supersize the euro-zone’s bail-out fund suggest that, at best, the plan is simply to use existing funds more imaginatively. Note that even this proposal seems to have more support outside the euro-zone than …
29th September 2011
The news that Ireland expanded robustly in the first half of the year, might suggest that the Southern European economies may reap similar rewards if they stick with plans to cut their budget deficits and implement structural reforms. But we are far from …
28th September 2011
Despite renewed hopes that euro-zone policymakers will adopt radical measures to solve the region’s debt crisis, we expect stresses in the banking sector to remain, increasing the chances of the region suffering from another long recession. … Euro-zone …
Talk of radical new measures to bail out highly indebted euro-zone governments and shore up banks throughout the region suggests that policymakers might finally be considering the bold steps that would be required to save the euro. But the plans might not …
27th September 2011
September’s modest decline in the German Ifo is a relief after sharper falls in other survey indicators. But the continued decline in the Ifo’s expectations index suggests that the euro-zone’s locomotive will stall before long. … German Ifo Survey …
Despite some dire pronouncements from global policymakers last week, there remain few signs that their counterparts in Europe are preparing to pull out all the stops and secure the future of the single currency. This, coupled with last week’s weak …
Irish Q2 GDP figures revealed that the economy expanded strongly in the first half of 2011 and add to evidence that Ireland is in a much better position than Greece and Portugal. But given the weak outlook for the global economy, its problems are far from …
23rd September 2011
The fall in the euro-zone composite PMI below the theoretical 50 “no-change” barrier provides the strongest sign yet that the region is on the cusp of recession. … Euro-zone Flash PMIs …
September’s drop in the German ZEW index is another sign that the economy is suffering increasingly from slowing global demand growth and troubles in the eurozone’s periphery. … German ZEW Survey …
21st September 2011
Last week proved to be another rollercoaster week for Greece. We now think that the Government may end up defaulting within months or perhaps even weeks. With concerns about banks’ solvency likely to increase as problems in the highly indebted economies …
20th September 2011
The latest euro-zone CPI inflation data do nothing to alter our view that underlying price pressures are not as strong as the ECB fears and that official interest rates may fall around the turn of the year. … Euro-zone Final CPI (Aug.) & Employment …
16th September 2011
On the face of it, July’s healthy rise in euro-zone industrial production suggests that near-term growth prospects may not be quite as bad as the business surveys have recently suggested. Nonetheless, the economic outlook remains pretty grim. … Euro-zone …
15th September 2011
On the face of it, the recent fall in Greek sovereign CDS premia and press reports suggesting that Greece will receive the fourth tranche of loans from its bail-out package in March are encouraging signs that the Government may be getting its fiscal house …
14th September 2011
The debt crisis in the euro-zone has escalated rapidly over recent months and could now come to a head sooner than we had previously anticipated. This is likely to have severe near- to medium-term economic consequences and we now expect the euro-zone to …
More signs emerged last week that policymakers in the core economies are unwilling to soften the conditions attached to current or future bail-outs. For now, though, Greece looks set to bow to EC, ECB and IMF demands and implement additional fiscal policy …
13th September 2011
After leaving interest rates on hold at 1.5% today, the ECB struck a downbeat tone regarding the economic outlook and acknowledged that risks to price stability are no longer on the upside, supporting our view that its recent rate hikes will be reversed …
9th September 2011
The Greek and Portuguese GDP figures for Q2 add to evidence that the recessions there will be more drawn out than either Government expects, suggesting that both economies will struggle to meet their budget deficit reduction targets. … Greek and …
The Italian Government’s recent indecision over the form of its latest fiscal package underlines the view that it is unlikely to implement the tough and unpopular measures needed to get the public finances on a stable footing. We think that a disastrous …
Developments over the past month suggest that there is a distinct possibility that the eurozone could soon slip back into recession. In particular, the ECB composite PMI now points to outright falls in GDP. Meanwhile, a steep drop in the EC Economic …
8th September 2011
July’s surge in German industrial production will clearly ease fears of an imminent double-dip, but a renewed industrial slowdown seems inevitable before long. … German Industrial Production …
Today’s ruling by the German Constitutional Court that bail-outs already undertaken by EU authorities were not unlawful might come as a relief to highly indebted euro-zone governments. But its insistence that the German parliament must be more heavily …
In the near term, Greece may continue to receive EU/IMF support and grudgingly meet the terms of its bail-out, despite the ongoing problems surrounding the second rescue package. But it is virtually inevitable that a debt restructuring involving large …
Today’s decision by the Swiss National Bank to apply a limit of 1.20 per euro to the franc is a bold move which it has pledged to defend at all costs. But in the end, there may be limits to how many francs the Bank is prepared to “print”, implying that …
7th September 2011
The breakdown of euro-zone Q2 GDP added to evidence that the region is in the midst of a broad-based slowdown. With growth likely to remain subdued, even in the core, we still expect the euro-zone to expand by just 0.5% next year. … Euro-zone GDP …
6th September 2011
The latest data have provided considerable support to our long-held view that the euro-zone recovery would grind to a halt. For now, we continue to expect a long period of near economic stagnation, but a renewed recession is clearly a possibility. … Is …
The ECB is likely to soften its tone markedly at this month’s press conference amid signs of a significant deterioration in economic activity. With inflation risks probably no longer deemed to be on the upside, the chance of further interest rate hikes …
2nd September 2011
Most of the peripheral economies have continued to make progress in reducing their government borrowing. But over the past month, the euro-zone debt crisis has spread further to the core economies, forcing France and Italy to announce additional fiscal …
Swiss GDP data show that the economy held up relatively well in Q2, but exports have already begun to fall. As the Swiss National Bank struggles to prevent a renewed appreciation of the franc, the downturn in exports looks set to intensify dramatically, …
1st September 2011
The news that euro-zone core inflation remained very low in August while unemployment rose further in July should reduce any remaining inflation fears at the ECB, adding to expectations of possible future interest rate cuts. … Euro-zone Flash CPI & …
August’s weak EC business and consumer survey added to the evidence that the euro-zone recovery has gone into reverse, perhaps boosting expectations that the ECB’s recent interest rate hikes could also be reversed before long. … Euro-zone EC Survey …
31st August 2011
This week, the markets’ focus has fallen back on Greece. In addition to long-standing doubts over whether a sufficient number of private-sector creditors will sign up to the Greek debt exchange scheme, European policymakers are now squabbling over the …
30th August 2011
Recent signs of growing stresses in the euro-zone banking sector support our view that credit growth will remain subdued at best and that household spending and investment will grind to a virtual halt in the second half of the year. … Euro-zone Monetary …
27th August 2011
The final GDP figures from Spain confirmed that its recovery remained sluggish in Q2 and did nothing to alter our view that the economy may tip back into recession before too long. … Spanish GDP (Final, …
Belgium’s severe political deadlock seems to have done little harm so far. But the political crisis is still preventing crucial fiscal tightening from being implemented. The deadlock is also delaying reforms which are badly-needed to preserve …
25th August 2011
August’s drop in the Ifo measure of business confidence added to the growing evidence that the German economic recovery has faltered. … German Ifo Survey …
August’s first business and investor surveys suggest that activity in the euro-zone is stagnating at best. With Germany showing a particularly marked deterioration lately, the region’s strongest economies might be increasingly reluctant to bail out the …
24th August 2011
Q2’s GDP figures showed that the Norwegian economy expanded at a steady pace and added to evidence that it is less likely to suffer from a “double dip” than some of its European counterparts. Looking ahead though, we expect the Norges Bank to tread …
23rd August 2011
The dispute over the provision of collateral by Greece to some euro-zone economies in return for a second bail-out, coupled with the private sector’s reluctance to take part in a debt exchange, may not reignite the funding crisis in the near-term. But it …
Signs last week that European policymakers remain unwilling to take major steps towards fiscal union, coupled with very weak economic data and a renewed slump in equity prices, did nothing to alter our view that the debt crisis is set to intensify. … …
There have recently been signs that Ireland’s troubles may be starting to ease, but we still think that it faces a huge challenge to return its public finances to a stable footing. Accordingly, there remains a high chance that Ireland will eventually seek …
19th August 2011
Decisive steps towards greater fiscal integration across the euro-zone seem vital if the currency union is going to hold together in its current form. But recent comments from Angela Merkel and Nicolas Sarkozy suggest that policymakers are either …
18th August 2011
The Icelandic central bank’s surprise interest rate hike today was in stark contrast to the increasingly dovish tone of other central banks around the world. The move reflected a sharp increase in inflation related to the weakness of the krona. But as the …
Germany’s reluctance or political inability to implement stronger measures to support the euro-zone’s periphery suggests that its appetite for the project might be fading. While euro-zone membership has significant advantages for Germany, it might not be …
17th August 2011
Market pressure on Portugal has eased over the past weeks. But we remain sceptical that the ECB’s bond purchases and the agreement reached by euro-zone policymakers last month can be a lasting solution. And given Portugal’s fiscal outlook, we still think …
Q2’s euro-zone GDP figures revealed that the recovery has slowed dramatically. With even the previously healthy core economies now barely expanding, we maintain our far below consensus forecast that euro-zone GDP will rise by only 0.5% next year. … …
