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With considerable uncertainties over when the joint IMF/euro-zone rescue package for Greece will be implemented, Greece is still dangling from a precipice. If Europe is to pull Greece back up it will have to make funds available swiftly and put a …
27th April 2010
The European economy has shown further signs of recovery in response to the continued improvement in global economic and trade conditions. But the fiscal crisis in the euro-zone’s peripheral economies is casting an ever darker shadow over the medium-term …
Last week’s euro-zone data will have added to hopes that the recovery resumed at the start of this year, following Q4’s stagnation. But concerns about the region’s medium-term prospects remain, with the latest public finances data revealing the borrowing …
26th April 2010
April’s increase in the euro-zone composite PMI provides further hope that the recovery is regaining momentum. But with few signs from the hard data that the region’s heavy reliance on external demand is waning, the outlook remains fragile. … Euro-zone …
22nd April 2010
Greece is in the midst of another hellish week and now faces no choice but to seek to formally activate the European rescue package. While this may help to ease the markets’ frazzled nerves, the latest upward revision to the 2009 budget deficit highlights …
April’s sharp rise in German ZEW investor sentiment provides some hope that the recovery has not ground to a complete halt after the economy’s poor start to the year. … German ZEW Survey …
20th April 2010
Worries are growing that the paralysis of European air travel, caused by the volcanic eruption in Iceland, could have a damaging impact on European recovery prospects. But while there is no doubt that it will hit certain sectors hard, the overall impact …
19th April 2010
Despite the firmer details provided on the Greek rescue package, markets have made it crystal clear that they have deep reservations about the bailout. Before even considering lending on more favourable terms, they want to see euro-zone cash in Greek …
On the face of it, March’s sharp rise in euro-zone CPI inflation may look a little alarming. But with a fundamental lack of inflationary pressure in the economy, deflation rather than a surge in inflation is still the greater danger. … Euro-zone CPI …
16th April 2010
Greek bond yields have continued to surge as doubts remain over whether the euro-zone will actually be able to provide financial support to Greece. But a growing worry is that the ongoing crisis prompts Greek households and firms to remove their money …
15th April 2010
The European Commission’s warnings about Portugal’s budget plans are a timely reminder that the euro-zone’s fiscal crisis extends well beyond Greece. … Portugal warnings underline broader fiscal …
14th April 2010
On the face of it, February’s euro-zone industrial production figures confirm that the sector continues to expand at a healthy pace. But there are several reasons why these figures should be treated with a degree of caution. … Euro-zone Industrial …
Opinions on the broader implications of the Greek rescue package for the future of the euro-zone not surprisingly differ widely. But the conditions that made the bail-out necessary will have a profound effect on the region’s economy over the coming years. …
Last week’s further blow-out in Greek bond yields suggests that any slim chances that Greece had of muddling through its crisis on its own have all but evaporated. Some form of rescue - or at least a much stronger promise of assistance - looks likely to …
12th April 2010
While President Trichet sought to reassure markets today that aid would be provided for Greece if necessary, his call for aggressive fiscal tightening there and elsewhere underlined the prospect of only a very modest economic recovery in the region as a …
8th April 2010
February’s data on German industrial production and euro-zone retail sales put a dent in hopes that, after stagnating in Q4 last year, the euro-zone economy will have expanded strongly again in Q1. … German Industrial Production & Euro-zone Retail Sales …
The news on the euro-zone continues to be dominated by the fiscal crisis in Greece, which has prompted Greek government bond yields and the cost of insuring against default using credit default swaps (CDS) to rise further. These developments are putting …
7th April 2010
The downward revision to Q4’s euro-zone GDP figures is a reminder of the economy’s fragility. Thankfully, March’s final PMI survey brought further evidence that the recovery resumed in Q1. But the coming fiscal squeeze might mean that any improvement will …
Increased domestic spending in Germany would not only assist the euro-zone’s troubled periphery but would also be in Germany’s own interests, helping to reduce unemployment. However, while there are many ways in which the Government could boost domestic …
March’s stronger than expected rise in CPI inflation, combined with the recent depreciation of the euro, may ignite fears that inflationary pressures in the euro-zone are beginning to build. But we continue to think that deflation, rather than a surge in …
5th April 2010
The ECB is unlikely to make any major decisions at its April meeting after taking a big step towards phasing out unconventional policy support in March. While the Bank will argue that measures to support the banking sector are now not needed as much as …
1st April 2010
March’s increase in euro-zone HICP inflation related mainly to energy effects and should be short-lived. Indeed, the further increase in euro-zone unemployment in February was another sign that underlying price pressures are non-existent. … Euro-zone …
31st March 2010
Yesterday’s announcement of a raft of measures aimed to lift the troubled Irish banking sector from its knees, was an important step towards ending the economic slump. But the economy faces other major headwinds too and it will probably remain locked in …
March’s EC business and consumer survey provides some encouragement that, for now, fiscal worries in the region are not weighing too heavily on overall sentiment towards the economy. But the surveys still point to a pretty sluggish recovery. … Euro-zone …
29th March 2010
The latest news on the euro-zone has been mixed. March’s business surveys brought hope that the recovery has not ground completely to a halt and the agreement of a Greek rescue package was a relief. But medium-term prospects have continued to deteriorate, …
Q4’s Irish GDP figures, showing the economy still mired in a deep recession, underline the prolonged and painful adjustments likely to be faced by the euro-zone’s fiscally challenged economies. … Ireland GDP …
25th March 2010
We have revised our forecasts for the euro-zone economy down in response to the escalating fiscal crisis and fading prospects of a consumer recovery. The changes strengthen our view that ECB interest rates are on hold for a prolonged period and that the …
February’s euro-zone money supply figures provided few signs that the ECB’s unlimited provisions of liquidity are prompting much of a pick-up in broad money and bank lending. … Euro-zone Monetary Indicators Monitor …
With the Norwegian economic recovery beginning to look a little more fragile, the Norges Bank has begun to strike a more cautious tone. Although the Bank is likely to raise interest rates again later this year, monetary policy will remain accommodative …
24th March 2010
March’s increases in the euro-zone PMI and German Ifo surveys bring some encouragement that the economic recovery in the region has not ground completely to a halt, but the outlook remains fragile. … Euro-zone Flash PMIs & German Ifo …
Worries about euro-zone fiscal plans have centred mainly on governments’ overly optimistic forecasts for real GDP growth. But weaker inflation could also pose a problem for the region’s public finances, adding to concerns that many governments will …
23rd March 2010
Developments of the past week have brought very little comfort for the euro-zone’s troubled periphery. There has been only limited progress on aid for Greece and the EC has reiterated the need for aggressive fiscal consolidation there and in Spain, …
22nd March 2010
While worries about Greece’s fiscal position have recently eased somewhat, the EC’s latest assessments underline the need for a prolonged bout of fiscal consolidation right across the euro-zone over the coming years. … Euro-zone fiscal squeeze far from …
17th March 2010
March’s fall in German ZEW investor sentiment confirms that confidence in the economic recovery remains fairly fragile. And with euro-zone CPI inflation still very subdued, the ECB is under no pressure to raise interest rates any time soon. … German ZEW …
16th March 2010
Recent more positive developments in Greece have led to some suggestions that the Greek crisis is finally over. But Greece still has a number of major challenges. … Is the Greek crisis really …
15th March 2010
For now, at least, Greece has persuaded the European Commission (EC) that it can meet its ambitious fiscal target for 2010. But the Greek crisis is far from over. Indeed, with the economy set to contract sharply this year, additional fiscal measures may …
12th March 2010
The latest euro-zone industrial production figures provide some hope that the recovery in the wider economy has not ground to a complete halt. … Euro-zone Industrial Production …
The second release relating to Portuguese GDP in Q4 last year revealed a downward revision to the quarterly change in output from the previously estimated zero to -0.2%. So after fairly robust growth in Q2 and Q3 (+0.5% and +0.6% respectively) last year, …
11th March 2010
Q4’s Italian GDP figures were pretty dreadful. With domestic demand still very fragil and a fundamental lack of competitiveness hampering the external sector, Italy looks set to stage a slow and unspectacular recovery in 2010 at best. … Italian GDP (Q4), …
10th March 2010
The latest German industrial production figures provide some hope that the economic recovery has not ground to a complete halt. … German Industrial Production …
8th March 2010
On the whole, last week’s news on the euro-zone economy was once again pretty disappointing. But the recent stabilisation in the unemployment rate is at least a little more encouraging. Unfortunately, this is unlikely to mark the beginning of the end of …
The ECB is withdrawing its unconventional policy support a bit more quickly than had been expected. But its gloomy take on the economic outlook and the prospect of aggressive fiscal tightening in Greece and elsewhere suggest that any tightening of …
4th March 2010
The second euro-zone GDP release for Q4 brings some hope that the slowdown in growth at the end of last year at least partly reflected temporary factors. But the recovery in the region remains fragile. … Euro-zone GDP …
Recent weeks have brought signs that the recovery in the euro-zone might have ground to a halt. Q4’s GDP release confirmed that the region expanded by just 0.1% on the quarter. (See Chart.) And recent business surveys, together with the bad weather, …
3rd March 2010
February’s final PMI survey suggests that the euro-zone economy is still expanding only slowly. And with retail sales falling again in January, the much-needed consumer recovery has yet to materialise. … Euro-zone Retail Sales (Jan.) & Final PMI …
The news that the Greek Government will tomorrow announce further measures to reduce its budget deficit raises hope that it will receive the firmer support from the rest of the euro-zone it requires to meet its short-term financing needs. But the Greek …
2nd March 2010
The Swiss economy is faring better than others in Europe, posting a 0.7% quarterly expansion in Q4. Such a strong pace is unlikely to be sustained, but we have revised up our forecast for GDP growth this year from 1.0% to 1.7%. … Swiss GDP …
January’s increase in euro-zone unemployment shows that households’ real incomes remain under strain despite very low inflation. At least February’s final Purchasing Managers’ Index points to a continued recovery in the manufacturing sector. … Euro-zone …
1st March 2010
Q4’s Swedish GDP figures revealed that the economy remains mired in recession, providing a warning to the Riksbank that monetary policy will need to remain very accommodative for the foreseeable future. … Swedish GDP …
