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Economic prospects for the Nordic and Swiss economies are fairly bright. Although Switzerland had a disappointing start to the year in terms of GDP growth, the surveys are universally positive about the coming quarters, suggesting that the recent weakness …
25th October 2017
October’s rise in German Ifo business sentiment to a new record high underscores the positive outlook for the euro-zone’s largest economy, supporting our above-consensus view on German GDP growth. … German Ifo …
Politics are in focus yet again, with the German and Austrian elections revealing reduced support for mainstream parties and the push for Catalan independence creating much uncertainty. But business and consumer confidence have been encouragingly …
24th October 2017
Despite declining in October, the euro-zone Composite PMI suggests that the economic recovery continued at a healthy pace at the start of Q4. But growth is being driven mainly by the core economies. And with the survey indicating that inflationary …
Madrid’s plan to impose direct rule in Catalonia is likely to be met by protests, which would cause shortterm disruption. The risk of a more serious economic deterioration is growing, but as things stand this is unlikely. In Italy, Lombardy and Veneto …
20th October 2017
The ECB has now laid some very firm groundwork to announce after its meeting on 26th October that it will taper its asset purchases from January. Unlike most forecasters, we expect the Bank to set out a full roadmap to taper down to zero by next …
19th October 2017
The Riksbank is unlikely to shift its policy stance until it sees firmer signals of the outlook for policy in the euro-zone. So despite above-target inflation in Sweden, we do not expect the Riksbank to announce any changes to its policies or forward …
The recent slowdown in the housing market suggests that there is scope for monetary policy to be looser over the coming years than the Norges Bank currently anticipates. That said, we don’t expect any changes in policy, or the Bank’s forward guidance, at …
October’s rise in German ZEW investor sentiment suggests that neither the stronger euro nor ECB QE tapering are expected to have significant adverse implications for the German economy. … German ZEW Survey …
17th October 2017
The widening of the euro-zone’s trade surplus in August adds to the evidence that the region’s economy performed well in Q3. And the outlook for exports is bright. … Euro-zone Trade …
16th October 2017
The inflation data for September suggest that underlying price pressures remained subdued in most of the Nordic and Swiss countries, apart from Sweden. … Inflation pressures weak apart from in …
13th October 2017
The Austrian general election taking place this Sunday is likely to result in a far-right, populist party entering government. While this probably won’t have significant domestic economic ramifications, at the European level it is likely to result in …
August’s sharp rise in euro-zone industrial production suggests that the sector had a strong Q3, contributing to the continued healthy economic recovery. … Euro-zone Industrial Production …
12th October 2017
Inflation remained above the Riksbank’s target in September and, with the economy performing strongly, domestic price pressures will continue to build. We therefore expect the Riksbank to start signalling soon that interest rates will rise in the first …
While Catalonia’s president avoided inflaming tensions with Madrid further in his speech yesterday, as long as the situation drags on there is likely to be some hit to business sentiment. Ultimately, though, we suspect that the economic effects will be …
11th October 2017
The unexpected softness of French industrial production in August suggests that industry weighed on France’s GDP growth in the third quarter and contrasted with the robust Italian data. Meanwhile, there was no sign that the strong euro was hurting German …
10th October 2017
While Norwegian inflation picked up in September, domestic price pressures remain subdued and inflation is unlikely to meet the Norges Bank’s target any time soon. We therefore think that interest rate hikes in Norway are a very long way off. … Norwegian …
August’s surge in German industrial production was in line with the positive message from business surveys and puts the economy on course for a strong Q3. … German Industrial …
9th October 2017
The Catalan Government could achieve independence without Spain’s consent if a critical mass of people and firms were on board. This would be negative for the rest of Spain. Spain’s government’s debt-to-GDP ratio would jump and the budget deficit would …
6th October 2017
The latest indicators have given mixed signals about the euro-zone economy in Q3. Somewhat ironically, the “hard” data available so far have been rather soft. Industrial production rose by just 0.1% on the month in July. And retail sales fell in both July …
5th October 2017
The Swiss National Bank will surely welcome the likely announcement later this month by the European Central Bank that it will wind up its asset purchase programme next year. This will probably help the Swiss franc depreciate a bit further, supporting the …
The rise in Swiss headline inflation in September will be welcomed by the Swiss National Bank, but subdued price pressures mean we expect the SNB to keep rates on hold until 2020. Elsewhere, Swedish August production data appear to suggest that the …
Despite the increased likelihood of looser fiscal policy next year following the collapse of the government last month, the Central Bank of Iceland (CBI) today opted to cut interest rates. We suspect that the CBI has now reached the end of its loosening …
4th October 2017
August’s euro-zone retail sales data suggest that consumer spending growth slowed in Q3. But September’s Composite PMI implies that overall GDP growth remained fairly strong. … Euro-zone Retail Sales (Aug.) & Final PMIs …
After Catalonia’s vote, it seems unlikely that other Spanish regions will soon push for independence. But in Italy, later this month two regions are set to hold referendums aimed at achieving greater autonomy. And in Belgium, the largest party in the …
3rd October 2017
August’s labour market data won’t deter the ECB from announcing later this month that it will taper its asset purchases next year. But the only gradual recovery in the labour market suggests that the Bank will wait a long time before tightening policy …
2nd October 2017
Despite the “yes” vote in yesterday’s independence referendum in Catalonia, there appears to be little chance that the region will secede from Spain in the coming months. We think the most likely outcome is that a compromise will be reached that grants …
September’s Swiss and Swedish manufacturing PMIs both rose to high levels. But while fairly strong growth is unlikely to push inflation up in Switzerland, price pressures are mounting in Sweden. … Manufacturing PMIs …
Bond yields across the Nordic and Swiss economies rose in September, largely in line with global trends as investors brought forward their expectations for monetary policy normalisation by the US Fed and the ECB. Meanwhile, the unexpected collapse of the …
29th September 2017
Among the wide range of proposals for the EU put forward by French President Emmanuel Macron this week was the introduction of a euro-zone finance minister and a euro-zone budget. In principle, we think that this would be a good idea. Indeed, we have long …
September’s weaker-than-expected euro-zone inflation data won’t stop the ECB from announcing in October its plan to taper its asset purchases next year. But the data suggest that the Bank will proceed cautiously when it comes to normalising monetary …
September’s rebound in the Swiss KOF Economic Barometer leaves it consistent with a pick-up in annual GDP growth to around 2%. But the KOF has overstated growth recently and, in any case, inflation looks set to remain not far above zero, so we doubt that …
Recent fiscal data suggest that most of the euro-zone’s peripheral countries are continuing to improve their budgetary positions. But Italy’s budget deficit has widened and its Government plans to ease up on its austerity, which is unlikely to be received …
28th September 2017
September’s flash inflation data for Germany and Spain suggest that euro-zone inflation was probably unchanged from August’s 1.5%. And the likely falls in core inflation in both Germany and Spain underscore the softness of underlying price pressures in …
The rise in the EC’s measure of euro-zone economic sentiment in September suggests that the eurozone’s economic recovery will continue at a decent pace. Along with the pick-up in consumer inflation expectations, this supports the case for the ECB to …
We no longer expect the Central Bank of Iceland (CBI) to cut interest rates again this year. The Government’s collapse and prospect of a left-wing coalition taking power have increased the chance of a expansion. And if sustained the króna’s recent …
27th September 2017
Euro-zone money and lending growth remained fairly strong in August, though the data suggest that economic growth is unlikely to gather much more pace. Meanwhile, recent developments in Italy’s and Portugal’s banking sectors provide some grounds for …
In September a sharp rise in manufacturing sentiment drove the Swedish Economic Tendency Indicator to its highest since 2011. With the growth outlook strong and inflation expectations rebounding, we still think that the Riksbank will raise its policy rate …
September’s fall in German Ifo business sentiment still leaves it pointing to very strong GDP growth. While Germany looks set for lengthy coalition negotiations following yesterdays’ federal election, we don’t expect political uncertainty to materially …
25th September 2017
The German election looks set to yield a coalition of Angela Merkel’s CDU/CSU, the FDP and the Green Party. This will mean slightly lower taxes than under the alternative of another grand coalition, which should boost growth over the next year or two. But …
In light of the disappointing performance of the Swiss economy in the first half of the year, we have revised down our 2017 GDP forecast substantially. We still expect the economic recovery to gain pace in 2018 and 2019, partly reflecting the depreciation …
22nd September 2017
The German election taking place on Sunday is not expected to have a significant impact on the economy. But the composition of the next coalition – which is likely to be either another grand coalition between the CDU and the SPD, or a tie-up between the …
September’s rise in the euro-zone Composite PMI suggests that the recovery has regained momentum after a brief summer lull. While this will embolden policymakers, as inflation is set to rise only gradually we still think that markets are overestimating …
The Norges Bank today raised its interest rate forecast, implying that it will begin tightening monetary policy mid-way through 2019. By contrast, we think that it will wait until 2020. … Interest rate hikes in Norway a very long way …
21st September 2017
Today’s Riksbank minutes suggest that at least two of the six Board members would support an extension of the Riksbank’s QE programme beyond the current December end date. But given our forecast for inflation to remain above the Riksbank’s target between …
Despite little prospect of a pick-up in public investment in Germany following Sunday’s federal election, conditions are ripe for sharp rises in both general business investment and construction investment. … German investment set for strong …
20th September 2017
September’s larger-than-expected rise in German investor sentiment may partly reflect reduced fears about the strength of the euro and suggests that the economy will continue to perform well. Indeed, we forecast German GDP to grow by a healthy 2.3% this …
19th September 2017
Portugal’s economic recovery is strengthening, while it has also made progress with recapitalising its banks and strengthening its fiscal position. This is reflected in the decline in government bond yields this year. While the ECB’s taper in 2018 is a …
We think that corporate bond yields will rise only gradually as the ECB tapers its asset purchases next year. After all, the economy looks set to continue performing well. And the Bank is likely to keep enough flexibility in the programme to increase …
18th September 2017
European Commission President Jean-Claude Juncker this week gave his support to the creation of a European Monetary Fund and a euro-zone “budget line”. Eventually, these would result in slightly quicker and more coherent decision-making in providing …
15th September 2017
