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The latest data on the euro-zone economy brought mixed news in the form of falling unemployment and rising inflation. … Euro-zone Flash CPI & Unemployment …
1st March 2011
Q4’s Swiss and Swedish GDP releases confirmed that some of the European economies outside the euro-zone are expanding at a healthy pace. But strong currencies will ensure that the external sectors there may struggle this year, prompting overall GDP growth …
News that Fine Gael and Labour are likely to form a coalition Government with a healthy majority will reduce political uncertainty in Ireland. But the new Government faces a major battle to improve the terms and conditions of its bail-out and a further …
28th February 2011
Healthy rises in the euro-zone business surveys in February add to evidence that the region as a whole and Germany in particular have made a strong start to the year. But while a bout of robust German growth would appear to be good news for the periphery, …
The further rise in German CPI inflation in February will do nothing to ease the ECB’s worries about building inflationary pressures. But we continue to think that the pickin German inflation is predominantly down to temporary factors and that inflation …
25th February 2011
The latest euro-zone money and credit data continue to suggest that underlying inflationary pressures remain subdued. But needless to say, the recent surge in the oil price, coupled with the fact that headline CPI inflation remains above 2%, suggests that …
The recent increase in Portuguese bond yields will increase the pressure on the Government to accept a bail-out. Nonetheless, the Government may resist requesting outside support for a little while yet. … Is a Portuguese bail-out just around the …
24th February 2011
The recent batch of reasonably upbeat economic data, coupled with further signs that price pressures may be building, will ensure that President Trichet continues to strike a hawkish tone at next week’s council meeting. But he is unlikely to go as far as …
February’s EC business and consumer survey adds to evidence that the euro-zone recovery has regained momentum in Q1 and that the ECB’s hawkish stance may harden at next week’s Governing Council meeting. … Euro-zone EC Survey …
There have recently been signs that Spain may be starting to persuade the markets that it is not in as dire a position as some of the other peripheral economies. While this provides some hope that the markets might not turn their sights on Spain if …
22nd February 2011
February’s euro-zone PMI and German Ifo surveys suggest that the euro-zone and German economies have started 2011 with a bang. Nonetheless, divergences between the core and peripheral euro-zone economies look set to remain. … Euro-zone Flash PMIs & German …
21st February 2011
On the face of it, the news that the euro-zone economy expanded by just 0.3% in Q4 was pretty disappointing. But note that bad weather in Germany might have reduced euro-zone quarterly GDP growth by 0.1 percentage points. This, coupled with the fact that …
The recent news that the Greek economy remains deep in recession will add to fears that the Government may struggle to meet its budget deficit goals and will do nothing to ease concerns about Greece’s economic and fiscal outlook. … Worsening economic …
17th February 2011
Q4’s GDP figures show that the Norwegian economy continued to expand at a steady pace. This, together with the fact that inflation is still a little below the Norges Bank’s target and the strong krone, suggests that the Bank will continue to tread …
16th February 2011
Today’s Q4 GDP figure suggests that the Belgian economy continued to expand at a modest pace. But growth is likely to slow in coming quarters and given the country’s ongoing political crisis and large public debt, concerns about Belgium’s economic and …
Spain’s final Q4 GDP release confirmed that the economy outperformed its southern European counterparts at the end of last year. But we still think that Spain is set for a pretty tough 2011. Indeed, the economy may fall back into recession later this …
As expected, the Swedish Riksbank responded to the economy’s ongoing robust revival by raising interest rates and revising up its interest rate forecast. Nonetheless, we still think that weaker than anticipated growth this year and the strong currency …
15th February 2011
The modest rise in euro-zone GDP growth in Q4 is likely to have been partly down to one-off weather-related factors, suggesting that the recovery may regain momentum at the start of this year. Nonetheless, the disappointing growth figures for the …
The renewed contraction in Portuguese GDP in Q4 last year underlines the fragility of the outlook for the economy. With political tensions rising and government bond yields uncomfortably high, Portugal still seems to be the next in line to be forced to …
14th February 2011
December’s small fall in euro-zone industrial production was probably down to the unusually severe winter weather and does little to alter the view that the sector remains the key driver behind the economic recovery in the region. … Euro-zone Industrial …
On the face of it, recent data suggest that the euro-zone is on track to expand at a pretty healthy pace in Q4. But we suspect that the disruption caused by the bad weather will mean that Q4’s growth figures may be rather disappointing. While there is …
After a month of respite, the surge in Portuguese ten year government bond yields to new euro-era highs has reignited fears that Portugal may still need outside support. Even if Portugal isn’t forced to accept a bail-out as part of the euro-zone’s crisis …
10th February 2011
Speculation is growing that the next Irish Government will attempt to restructure some of the nationalised banks’ senior debt. But such a move, while no doubt popular with taxpayers, would do little to improve the public finances. … Bank debt plans won’t …
9th February 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 …
December’s sharp fall in German industrial production is not as worrying as it seems. Although GDP growth in Q4 will not be as strong as we had previously anticipated, owing to bad weather, it still looks set to broadly match Q3’s healthy rise. … German …
8th February 2011
Peripheral euro-zone bond yields fell further last week in apparent anticipation of the so-called “Grand Bargain” of policy measures. But the markets’ optimism raises the danger that the package falls short of hopes of a “bazooka” to aim at the debt …
7th February 2011
The lack of a further step-up in the ECB’s anti-inflation rhetoric today supports our view that the Bank is unlikely to tighten policy in the near future. Nonetheless, its generally hawkish stance, and the effects of this on the euro exchange rate, …
3rd February 2011
Ireland’s next Government will push for better terms on its existing bail-out package, but it will enter discussions in a weak bargaining position. Even if it does gain major concessions there is a strong chance that weaker than anticipated growth will …
2nd February 2011
The further rise in euro-zone CPI inflation at the start of 2011 will have done little to ease the ECB’s fears that price pressures in the region are building. Nonetheless, inflation remains far lower than in mid-2008, the last time the ECB raised …
1st February 2011
Expectations are growing that euro-zone leaders will soon agree to a series of new measures - collectively labelled the “grand bargain” - to bolster the policies already in place to deal with the region’s debt crisis. But they are likely to come with …
The latest euro-zone data provide encouraging signs that the economic recovery is filtering through to the labour market and that the industrial sector is still expanding strongly. But large divergences between the core and periphery remain. … Euro-zone …
Last week’s successful first EFSF bond issue was hailed by some as a strong vote of confidence in the euro-zone. We are not so sure. The rise in Portuguese bond yields back up to the 7% danger level suggests that the facility may soon be needed again. …
31st January 2011
The latest euro-zone money and credit data continue to suggest that inflationary pressures in the region as a whole remain subdued, adding to evidence that the recent sharp rise in the headline CPI inflation will prove temporary. … Euro-zone Monetary …
28th January 2011
At February’s press conference, President Trichet looks set to maintain a fairly hawkish tone, adding to fears that the ECB might raise interest rates later this year and possibly placing further upward pressure on the euro. The ongoing problems in the …
27th January 2011
The further rise in German CPI inflation in January is likely to add to the ECB’s worries about building inflationary pressures. But the chances of inflation reaching the levels seen in mid 2008, when the ECB last hiked interest rates, remain low. … …
January’s EC business and consumer survey adds to evidence that the euro-zone economy has made a pretty good start to the year. But the recovery remains heavily reliant on the industrial and external sectors. … Euro-zone EC Survey …
The recent bail-out and banking support measures may have pulled Ireland back from the brink of imminent disaster. But the economy and the public finances remain in an extremely precarious position. Indeed, with Ireland at risk of a Japanese-style “lost …
26th January 2011
Most of the peripheral euro-zone economies appear to have made some inroads into their large budget deficits last year, with Spain taking the lead. … Euro-zone Fiscal Monitor …
25th January 2011
News that the Spanish Government will force the troubled banks to boost their capital ratios is an encouraging sign that it is trying to tackle the economy’s fundamental problems. But we doubt that the measures mark a turning point for Spain. … Spanish …
Ireland’s coming general election provides hope that months of political uncertainty may be about to end. But whatever the outcome, the economy and public finances will remain in a precarious state. … Ireland's political turmoil not as disastrous as it …
24th January 2011
January’s PMI surveys suggest that the euro-zone has made a pretty solid start to the year. But the upbeat data for the euro-zone as a whole continue to mask wide divergences between the region’s core and peripheral economies. … Euro-zone Flash PMIs …
European policymakers’ hopes of preventing the peripheral debt crisis from escalating further are continuing to focus heavily on the role of the European Financial Stability Facility (EFSF). Not only will the first bond issue to raise funds for the …
21st January 2011
Portugal has survived its first market tests of 2011 and resisted pressure to accept outside support. But with government bond yields still at very high levels, the Government’s struggle to go without assistance will continue. A renewed bout of political …
January’s Ifo index echoes the upbeat tone of most of the other short-term indicators on the German economy, including the ZEW survey released earlier this week. … German Ifo Survey …
The European economy has largely shrugged off the ongoing fiscal crisis in the euro-zone periphery and continued to expand at a healthy pace. But while the improvement in the global environment and the weaker euro bode well for exporters, the boost to …
20th January 2011
January’s healthy rise in the headline German ZEW index suggests that, for now at least, investor sentiment is continuing to be buoyed by the upbeat economic data and the weaker euro. … German ZEW …
18th January 2011
In adopting a more hawkish tone last week, when core euro-zone inflation is running at just 1.1%, the ECB has increased doubts over its ability to grasp the seriousness of the situation facing the euro-zone and its likely willingness to provide further …
17th January 2011
December’s final euro-zone CPI inflation figures should calm fears that underlying inflation pressures are building. But with headline CPI inflation likely to rise in early 2011, the ECB’s stance could turn more hawkish over the coming months. … Euro-zone …
14th January 2011
