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October’s drop in German ZEW investor sentiment highlighted understandable concerns that the euro-zone’s growth engine might soon stall. … German ZEW …
19th October 2010
There are early signs of a revival in euro-zone housing markets. Even in the periphery, the housing market seems to have passed its worst, which on the face of it, may provide some relief to consumers. But there are good reasons why the housing market is …
The latest speech by Governing Council member Axel Weber has highlighted the growing divergence between the ECB and more pro-active central banks elsewhere. We hope that the Bank might yet take bolder supportive action as the economy weakens. For now, …
18th October 2010
August’s euro-zone trade figures suggest that the region is coping with slowing global demand pretty well for now. But with the euro appearing increasingly likely to be a major loser in any global currency war, the export recovery may soon falter. … …
15th October 2010
The European economy has recently performed relatively well despite continued fears about public debt in parts of the region. But as global demand slows, the export recovery will falter, with the euro-zone particularly at risk from the strength of the …
13th October 2010
The French strike will probably have a smaller immediate effect on economic activity than the press might have you believe. However, it is the clearest sign yet that the euro-zone’s second largest economy will fail to meet its deficit reduction goals. … …
August’s healthy rise in euro-zone industrial production will help to ease concerns that the recovery in the sector is grinding to a halt. … Euro-zone Industrial Production …
Recent news from Italy suggests that the industrial recovery is going from strength to strength. Nonetheless, we doubt that this marks the start of an Italian renaissance. Indeed, there are several reasons why industrial growth may slow sharply in the …
11th October 2010
The euro’s rise to a nine-month high against the US dollar last week suggests that the euro-zone has lost what may turn out to be the opening skirmishes of a global currency war. If the euro remained at its current level, it would be consistent with a …
The ECB maintained a fairly dovish tone today, pledging continued support for commercial banks and possibly more peripheral government bond purchases. But there was little to suggest that the Bank will take the bolder steps that we think will be required …
7th October 2010
The latest German industrial and French trade data suggest that, despite ongoing fears about the region’s periphery, the immediate risk of a “double dip” recession in the euro-zone as a whole is small. … German Industrial Production & French Trade …
The euro-zone’s economic prospects appear to have taken a turn for the worse amidst continued worries over the periphery and signs that the recovery in the core economies is starting to lose momentum. Surveys such as the PMI point to a sharp slowdown in …
6th October 2010
The latest composite PMI business survey figures have added to evidence that the Spanish economy may have re-entered recession. This supports our view that Spain is set for a prolonged period of stagnation at best and could yet prove be the biggest threat …
5th October 2010
The fact that the Greek Government has announced that it expects to reduce its budget deficit by more than the IMF and EC have demanded in 2010 and 2011 is an indication of the great strides that it has made towards getting its public finances on an even …
4th October 2010
The Irish Government deserves some credit for coming clean last week on the “horrendous” costs of its banking support measures, although its openness may have been dictated as much by public accounting rules as by a desire to be transparent. … Ireland: …
Euro-zone unemployment figures for August showed further signs of improvement in labour market conditions in some core economies but unemployment continued to rise in the peripheral economies. … Euro-zone Unemployment …
1st October 2010
The euro-zone economy as a whole might be faring better than others for now, but strains in the region’s periphery have continued to mount. The ECB will provide reassurance after its forthcoming meeting that it will continue to support these economies …
30th September 2010
The Irish Government’s announcement on the costs of rescuing its banks appears to have provided the markets with some reassurance for now. But with the banking sector still fragile and the economy deep in recession and deflation, Ireland’s position …
Recent developments in France and Portugal confirm that both are struggling to implement measures to ensure a sustained reduction in public borrowing. But market pressures will force Portugal to act aggressively before long and even France won’t be able …
September’s rise in euro-zone CPI inflation probably reflected energy and food effects, while underlying price pressures remain very weak. … Euro-zone Flash CPI & German Unemployment …
If the world is about to engage in a currency war, the euro-zone’s arsenal looks poorly stocked. … Will the euro-zone be the biggest loser in a currency …
29th September 2010
September’s improvement in the EC business and consumer survey comes as a relief after recent weaker news on the euro-zone. But the survey still points to much slower growth in Q3 than in Q2. … Euro-zone EC Survey …
Proposed EC sanctions for euro-zone countries with high public debt, large current account deficits or housing market bubbles are being sold as a key step towards rebalancing and hence strengthening the region. But in the near term, they will only add to …
28th September 2010
The recent run of disappointing news from Ireland means that public debt is looking increasingly likely to reach Greek proportions, suggesting that the Irish Government may eventually be left with little choice but to restructure its debts. … Is Ireland …
September’s rise in German HICP inflation appears to have reflected temporary energy and food effects. Core inflation remains extremely subdued and we still see the headline rate coming close to zero next year as energy inflation falls. … German Flash CPI …
The further rise in euro-zone annual broad money and credit growth is certainly an encouraging sign. But given the very low starting point and the fact that many peripheral banks are still struggling to gain finance, the ECB will continue to remove its …
27th September 2010
Last week was another rollercoaster ride for the euro-zone’s periphery. Disappointing Irish and Portuguese data provided a timely reminder of the task that both governments face to put their public finances back on an even keel. And the rise in the euro …
September’s small rise in the German Ifo brings hope that the euro-zone’s largest economy is faring very well for now. But with export growth already slowing, we expect the index to follow the PMI down before long. … German Ifo Survey …
24th September 2010
September’s plunge in the euro-zone PMI is the strongest sign yet that the eurozone recovery is rapidly losing momentum and that parts of the region may already have fallen back into recession. … Euro-zone Flash PMIs …
23rd September 2010
Ireland’s disappointing GDP figures for Q2 support our view that the economy is a long way from staging a sustained recovery and will do nothing to ease markets’ fears about the health of the Irish public finances. … Ireland GDP …
Despite the markets growing more pessimistic about the prospects for Ireland and Portugal, bond yields in Spain have remained relatively stable, suggesting that concerns about its public finances have begun to ebb. But while we think Spain should be able …
22nd September 2010
Last week’s data brought further evidence of persistent weakness in euro-zone labour markets, with employment stagnating in Q2 and annual wage growth slowing. Admittedly, while pay cuts continued in much of the periphery, there were some signs of rising …
20th September 2010
Fears that domestic price pressures might prompt the Swiss National Bank to tighten monetary policy proved unfounded today as it left its interest rate target at 0.25%. The Bank’s tone was gloomier than expected and its low inflation forecast supports our …
16th September 2010
July’s fall in euro-zone exports is another sign that GDP growth will weaken in Q3 after Q2’s strong expansion. And with exports set to slow further in the months ahead, a consumer revival would be needed to ensure a continued recovery. … Euro-zone Trade …
The recent pick-up in ECB bond purchases has been very small when compared to earlier acquisitions or to the size of the euro-zone economy. Meanwhile, its lending to commercial banks in the region as a whole has continued to ease. Nonetheless, both …
September’s slump in German ZEW investor sentiment was a worrying sign that the recovery is already faltering. Admittedly, it is a less reliable indicator of German GDP than business surveys like the PMI. But it has been a reasonable predictor of turning …
15th September 2010
The drop in German ZEW economic sentiment in September and July’s stagnation in euro-zone industrial production confirm that the euro-zone recovery is slowing again after Q2’s strong expansion. … German ZEW (Sep.), EZ Ind. Prod'n (Jul.) & Labour Costs …
14th September 2010
The recent slide in the euro and rise in peripheral bond yields appears to reflect renewed concerns about the health of the region’s banks. These concerns may only subside once the peripheral economies have embarked on a sustained recovery, unemployment …
13th September 2010
Q2’s Italian GDP figures confirmed that Italy continued to expand at a pretty healthy pace last quarter. But we think that the recovery may already have run its course and that there is a strong chance Italy falls back in recession in the second half of …
10th September 2010
Recent developments are not easing the concerns that we have previously raised over Belgium being the Greece of the North. While the Belgian economy is growing healthily, the current political crisis has reached a new high and risks to the fiscal outlook …
8th September 2010
With Greece likely to receive its second tranche of loans from the euro-zone and IMF next week, the Government will be able to meet its financing needs for the next few months. But Q2’s dreadful GDP figures confirm that Greece’s problems are far from …
The latest German industrial and trade data add to evidence that the recoveries in these sectors are beginning to lose momentum. Nonetheless, Germany looks set to remain the euro-zone’s main engine of growth. … German Industrial Production & Trade & …
Last week, the IMF published a note outlining why it believes that a government default in the advanced world is “unnecessary, undesirable and unlikely”. While the note makes several valid points, we think that the IMF is being too sanguine. Indeed, in …
6th September 2010
The Swedish Riksbank’s decision to raise interest rates for a second meeting running reflects concerns that domestic imbalances may be building. Further hikes seem likely in the near term, but the pace of monetary tightening should ease next year as the …
2nd September 2010
While the ECB struck a slightly more upbeat tone towards the economy at today’s press conference, it nonetheless maintained its support for the region’s banking sector and remains a long way from implementing any form of conventional policy tightening. … …
The second release relating to Q2 euro-zone GDP gives a fairly encouraging picture, but does not alter our view that the recovery will soon falter. … Euro-zone GDP …
Q2’s GDP release confirmed that the Swiss economy is still performing very well. However, the breakdown of growth cast doubts over whether the recent pace of expansion can be maintained over the coming quarters. … Swiss GDP …
Q2’s 1.0% quarterly rise in euro-zone GDP confirmed that the region as a whole performed well by international standards last quarter. But Q2’s growth surge was largely down to a huge 2.2% quarterly gain in Germany. Growth in the periphery was …
1st September 2010
August’s small fall in euro-zone CPI inflation confirmed that price pressures in the region are very subdued. And although unemployment has continued to edge down, this is unlikely to prompt any meaningful pick-up in wage growth. … Euro-zone Flash CPI …
31st August 2010
