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Last week’s disappointing data releases begged the question of whether the euro-zone recovery has ground completely to a halt. The second GDP release confirmed that the German economy stagnated in Q4, while the latest business and consumer surveys for the …
1st March 2010
The latest euro-zone, German and Spanish CPI figures highlight the continued lack of inflation pressure in the region. The ECB’s main worry should be the continued threat of deflation, rather than a surge in inflation. … Euro-zone CPI (Final Jan.), Ger. & …
26th February 2010
The ECB will announce the next step in its plan to phase out unconventional policy support this month. This might well be to increase the interest rate on its three-month loans to commercial banks. But its earlier generous provision of long-term loans …
25th February 2010
February’s EC consumer and business survey adds to the recent run of worrying evidence on the euro-zone’s prospects. Our forecast for the economy to expand by 1.5% this year will depend on a renewed pick-up in sentiment pretty soon. … Euro-zone EC Survey …
January’s euro-zone money supply and lending figures added to evidence that domestic demand remained very subdued at the start of this year. … Euro-zone Monetary Indicators Monitor …
The revelation that Greece used complex financial assets to improve the official figures on the public finances earlier this decade highlights the uncertainty surrounding the reliability of these numbers. But with signs that Europe is developing a rescue …
24th February 2010
Recent trade union deals point to a slowdown in German wage growth, which will come as a welcome relief to hard-pressed exporters. This supports our view that a robust export recovery will see Germany outperform the euro-zone average this year. But it …
The second German GDP release confirmed that the recovery ground to a halt in Q4, with exports still rising, but domestic spending very weak. Sadly, the latest fall in consumer confidence suggests that a consumer recovery remains a distant prospect. … …
The latest data add to the recent run of bad news. With German Ifo business sentiment falling in February and French consumer spending dropping in January, there is little hope that the euro-zone recovery will be renewed this quarter. … German Ifo Survey …
23rd February 2010
The latest news from the euro-zone external sector suggests that although exports are expanding strongly, the strong euro is taking its toll on the sector. The recent weakening of the euro is therefore encouraging. But it is unlikely to do much to change …
22nd February 2010
The euro-zone composite PMI was unchanged in February, adding to evidence that the economy probably expanded at a fairly lacklustre pace at the start of this year. … Euro-zone Flash PMIs …
19th February 2010
Q4’s disappointing GDP figures suggested that the Norwegian economy is still in a reasonably fragile state. Accordingly, the Norges Bank risks derailing the recovery if it raises interest rates too aggressively. … Norwegian GDP …
18th February 2010
Despite growing fairly solidly in the last two quarters, Belgium shares some worrying similarities with Greece and the other troubled Southern euro-zone economies. But its stronger trade position and lower levels of household debt should ensure that it …
17th February 2010
December’s healthy rise in euro-zone exports suggests that exporters are continuing to cope with the strong euro. But the cost has been a sharp squeeze in firms’ margins. This casts doubts on whether the recovery can be sustained. … E-Z Trade Balance …
February’s fall in German ZEW investor sentiment is more bad news. But it probably reflects the euro-zone’s fiscal problems more than specific concerns about Germany. We still see the economy leading the region’s recovery. … German ZEW Survey …
16th February 2010
The fact that last week’s European Commission “accord” on Greece appears to have placated the markets temporarily is clearly encouraging for Greece. But with the Greek recession intensifying in Q4 and both Germany and the ECB putting pressure on the …
15th February 2010
Last week’s EU “accord” on Greece was long on vague pledges of support, but notably short on detail. For now, the markets have given the EU the benefit of the doubt. But if more meat is not put on the bones at Monday’s euro-group meeting, the markets’ …
The news that the euro-zone recovery lost what little momentum it had in Q4 will add to markets’ fears about the region. GDP rose by just 0.1% on the quarter after Q3’s 0.4% gain. Q4’s outturn was weaker than markets had expected, but broadly in line with …
12th February 2010
Q4’s GDP figures confirmed that Spain is one of a dwindling group of economies still in recession. And with its economic imbalances still largely intact, a meaningful recovery remains a distant prospect. Accordingly, it will be difficult for the …
11th February 2010
Speculation that a bail-out of Greece may be imminent has moved the focus on to exactly what form a rescue package may take. The precise details of any bail-out might have important implications for the troubled economy, markets and the rest of Europe. …
9th February 2010
As worries about the public finances spread throughout the euro-zone, France is the latest to edge on to the radar screens. Given a relatively low stock of debt and healthy economic outlook, its situation looks far better than that of Greece, Spain or …
8th February 2010
Last week, the noose around the Greek Government’s neck loosened slightly. But markets are still baying for blood – Portugal and Spain are their new targets. Neither Portugal nor Spain have quite the credibility problems of Greece, but both face …
The ECB is set to announce further plans to phase out unconventional policy support after its meeting next month. But with the Bank’s call for fiscal consolidation highlighting the downward pressure on future growth and inflation, official interest rates …
4th February 2010
The limited economic data so far released for January suggest that the new year has got off to a pretty sluggish start. The euro-zone composite Purchasing Managers’ Index fell for the first time in 11 months and suggests that GDP growth has yet to gather …
3rd February 2010
The European Commission’s endorsement of the Greek Government’s plan to get its public finances under control is unlikely to relieve market concerns over Greece’s position altogether. … EC’s endorsement won’t fully relieve Greek …
December’s euro-zone retail sales figures suggested that total consumer spending fell in Q4, adding to signs that the overall recovery lost pace. What’s more, January’s final PMI survey pointed to only a modest rise in activity at the start of this year. …
Fears that the further rise in Greek bond yields over the last week has stretched the public finances to breaking point may be a little over-done. Nonetheless, Greece still faces an enormous challenge if it is to meet its financing requirements and step …
2nd February 2010
France is one of few economies that seem to be experiencing a consumer revival. Sadly, fiscal tightening will prevent the recovery from gaining much momentum. But a fairly healthy household sector should still lead growth to outpace that in much of the …
1st February 2010
A raft of data on the euro-zone consumer sector last week left the outlook still rather uncertain. The bad news was that unemployment rose further in December and wage growth looks set to drop. But the EC’s consumer confidence index points to a marked …
January’s flash euro-zone consumer prices figures further highlighted the distinct lack of inflation pressure in the region and offered hope that euro-zone consumers will escape the squeeze on spending power facing their US and UK counterparts. … …
29th January 2010
December’s euro-zone money supply figures and January’s ECB Bank Lending Survey suggest that credit conditions in the region remain very tight, despite the ECB’s unlimited provision of liquidity to banks. … Euro-zone Monetary Indicators Monitor …
January’s improvement in the EC euro-zone consumer and business survey was somewhat reassuring after the weaker tone of some of the recent other surveys. But we will need to see a sharper rise in sentiment in the coming months to be convinced that the …
28th January 2010
The ECB meeting on February 4th is likely to be uneventful, with interest rates on hold and no significant change to existing plans to gradually phase out unconventional support for the banking sector. The Bank will return to a system of auctioning off …
The recent blow-out in Greek Government bond spreads seems to over-do the depth of its fiscal problems compared to those of other crisis economies like Ireland. But Greece has clearly lost the markets’ confidence and may now have to work much harder than …
January’s fall in German consumer price inflation confirmed that households’ real incomes are being squeezed by much less than those elsewhere by rising prices. And inflation looks set to remain very subdued for the foreseeable future. … German Consumer …
27th January 2010
The markets and credit rating agencies had been looking to yesterday’s budget for confirmation that the Portuguese Government is prepared to follow other fiscally strained euro-zone economies in introducing tough measures to improve its public finances. …
January’s sharper than expected increase in German Ifo business sentiment came as a relief after the deterioration in some other surveys lately. The rise in the composite Business Climate Index, from 94.7 to 95.8, left it at an 18-month high and in line …
26th January 2010
Hints from the German Government that promised income tax cuts could be put off until at least next year make a convincing consumer revival seem even less likely. But we still expect a relatively strong pick-up in exports to mean that Germany leads the …
25th January 2010
The recent sharp rise in CPI inflation in both the US and the UK has caused concern that interest rate hikes might not be far off. But euro-zone inflation has been far more subdued, challenging the conventional wisdom that prices in the region are …
Europe’s economies have continued to benefit from the improvement in the global environment, but there are still major uncertainties over the likely strength and sustainability of the upturn in the region. Domestic economic conditions have generally …
21st January 2010
January’s small fall in the euro-zone composite Purchasing Managers’ Index (PMI) supports the message from Tuesday’s ZEW survey that the recovery might be losing momentum. … Euro-zone Flash PMIs …
January’s fall in German ZEW investor sentiment confirmed that confidence in the recovery remains fragile. We still see the German economy expanding by a pretty healthy 2.0% this year, but the downside risks appear to be increasing. … German ZEW …
19th January 2010
Recent developments support our view that the euro will come under renewed downward pressure in the coming months. With concerns about Greece mounting, economic prospects deteriorating compared to the US and ECB interest rates set to remain on hold, we …
18th January 2010
The latest Spanish housing market data suggest that the residential property downturn continued to ease in the latter part of 2009. Nonetheless, we think that house prices still have much further to fall. This, coupled with high household indebtedness and …
15th January 2010
November’s fall in euro-zone exports could signal that the strong euro is beginning to take its toll on exporters. Nonetheless, in Q4 at least, the external sector is likely to have continued to support the wider economy. … Euro-zone Trade Bal. (Nov.) & …
There were no surprises from the ECB today as it waits to judge the impact of previously announced plans to phase out its emergency lending to banks. But the Bank’s cautious tone on the economic outlook supports our view that official interest rates will …
14th January 2010
November’s strong gain in euro-zone industrial production suggested that the sector is still coping fairly well with the euro’s strength. But industrial activity still looks unlikely to boost the economy as strongly in Q4 as it did in Q3. … Euro-zone …
December’s rise in euro-zone CPI inflation, from 0.5% to 0.9%, left it at a ten-month high. But the increase was due to a further rise in energy inflation, which should soon begin to moderate. Meanwhile, the pressure on underlying or core inflation …
12th January 2010
Recent suggestions that Portugal may be “the next Greece” overlook the fact that Portugal’s economic and fiscal position is fundamentally healthier. Still, this month’s budget may need to reveal decisive deficit-reducing measures to appease the markets …
The Swiss National Bank’s assurance that it will intervene to prevent the franc from appreciating too much further is encouraging. But intervention now might not be as successful as in the recent past and a further appreciation of the franc remains a key …
11th January 2010
