Filtered by Subscriptions: Europe Economics Use setting Europe Economics
Angela Merkel’s Christian Democratic Union unveiled its manifesto this week, including plans income tax cuts and increased child benefits. But the proposed giveaways are small and the party, which seems likely to win September’s federal election, remains …
7th July 2017
May’s industrial production data for Germany, France and Spain show that output rose sharply across the board. This suggests that overall economic growth in the euro-zone accelerated further in Q2 from what was already a healthy pace. … German, French & …
The EU-Japan trade deal is unlikely to have a major impact on euro-zone GDP growth. In the context of US President Trump’s protectionist leanings and the UK’s impending exit from the EU, the deal is a powerful symbol of the Union’s pro-globalisation …
6th July 2017
The fall in Swiss inflation in June largely reflected lower energy prices. With core inflation holding close to zero, the SNB will stick to its ultra-loose policy stance over the next couple of years. … Swiss Consumer Prices …
While euro-zone headline CPI inflation fell to 1.3% in June, the core rate, which excludes the volatile food and energy components, rose from 0.9% to 1.1%. This left it above the 0.8% average recorded since the start of 2014, suggesting that underlying …
5th July 2017
The euro’s rise has not yet been sharp enough to cause a significant tightening of monetary conditions and we doubt that it will dissuade the ECB from tapering QE next year. But a further appreciation might cause the Bank to opt for a long taper or to …
May’s increase in euro-zone retail sales suggests that household spending growth picked up in Q2. And the final euro-zone Composite PMI for June implies that the wider economy also had a strong second quarter. … Euro-zone Retail Sales (May) & Final PMIs …
While both industrial and services output grew in May, both sectors are set to record weaker growth in Q2 than in Q1. But as the monthly data were a poor guide to GDP growth in Q1, we are inclined to believe the more positive message from the surveys. … …
By indicating that it no longer expects to cut interest rates, the Riksbank has taken a small step toward monetary policy normalisation. While the Bank indicated that it will continue to guard against a rapid appreciation of the krona, we expect its …
4th July 2017
Government bond yields in the Nordic and Swiss economies have risen recently, and for the most part we expect this to continue. Yields in Sweden are likely to rise the furthest, while those in Switzerland will only edge higher, and in Norway they may even …
3rd July 2017
While the euro-zone unemployment rate was unchanged in May, survey indicators point to strong employment gains ahead. Nevertheless, the high degree of slack in some countries suggests that it will be some time before wage growth and inflation pick up …
The Nordic and Swiss PMIs strengthened in June, pointing to faster manufacturing growth. The Swedish survey suggests that inflation will fall, probably reflecting energy effects. But we still expect strong economic growth to push core inflation up this …
The latest fiscal data revealed a mixed performance by the euro-zone’s peripheral countries, with Ireland faring particularly well. Meanwhile, Greece reached a deal with its creditors but, in the absence of debt relief, the economy will continue to …
30th June 2017
Bond yields across the Nordic and Swiss economies increased in June, in line with global market moves following major central bank speeches that prompted investors to bring forward their expectations for monetary policy normalisation. Meanwhile, equity …
The warning from France’s fiscal watchdog that the country’s budget deficit is set to exceed 3% of GDP this year and next puts pressure on Emmanuel Macron to find extra savings in order to avoid antagonising Brussels and Berlin. This will not be an easy …
ECB President Draghi’s speech earlier this week prompted investors to re-assess the outlook for monetary policy. They now seem to expect the Bank to raise interest rates around the middle of next year. However, nothing in his speech changes our view that …
June’s fall in euro-zone consumer price inflation reflected energy effects. But with core inflation only edging up, the ECB will proceed cautiously in normalising policy. … Euro-zone Flash CPI (Jun.), German & French Sales …
June’s rebound in the Swiss KOF Economic Barometer leaves it consistent with a pickup in annual GDP growth to around 2%. But with inflation still very low, we expect the SNB to keep the stance of monetary policy very loose. … Swiss KOF Economic Barometer …
June’s rise in German HICP inflation and a sharper fall in the Spanish rate suggest that euro-zone inflation probably edged down from May’s 1.4%. German core inflation is now rising, but underlying price pressures remain weak elsewhere in the euro-zone. … …
29th June 2017
June’s EC business and consumer surveys point to a sharp acceleration of euro-zone growth, which will increase speculation about ECB asset purchase tapering to come and add to upward pressure on the euro. But with inflation expectations still subdued, we …
We think that the euro’s latest rise against the US dollar was a justified reaction to Mario Draghi’s hints that QE will be tapered early next year, despite warnings from the ECB that the comments were over-interpreted. We still expect the euro to edge …
28th June 2017
The Norges Bank’s latest projections suggest that it is unwilling, or unable, to loosen policy by enough to hit its inflation target. This will weigh on economic growth over the coming years, and probably hinder the necessary medium-term rebalancing of …
May’s euro-zone money and credit data point to continued steady economic growth. But problems in Italian banks have seen lending there continue to contract. … Euro-zone Monetary Indicators Monitor …
Since the Riksbank last met in April, underlying inflation has been stronger than expected, international political risks have diminished and economic conditions in Sweden’s trading partners have improved. In light of these developments, next week we …
While the state aid granted to two regional Italian lenders over the weekend has reduced the risks to the Italian economy in the near term, it shows that the so-called “doom loop” between the banking sector and the public finances remains strong. And the …
27th June 2017
June’s German Ifo survey suggests that GDP growth will accelerate sharply in the months ahead. While growth is unlikely to match the pace implied by this survey, we see the German economy outperforming consensus expectations this year. … German Ifo Survey …
26th June 2017
As official negotiations about Britain’s exit from the European Union began this week, the remaining member states appeared to be in a robust position. The euro-zone economy, in particular, is still growing at a healthy pace and outperforming the UK. And …
23rd June 2017
Although the euro-zone Composite PMI fell in June, it still suggests that the economic recovery continued at a healthy pace in Q2. But the small falls in the survey’s forward-looking components suggest that growth might slow slightly in the second half of …
Portugal’s economy has outperformed Italy’s in recent years as easing austerity, progress with labour reforms and improvements in competitiveness have all borne fruit. We expect this to continue. … Will Portugal continue to outperform …
22nd June 2017
The Norges Bank revised up its forecast for interest rates this year, so a cut now looks unlikely. But while the Bank expects to raise its policy rate in 2019, we think that it will be unchanged until 2020. … Norway rate cut off the table, but a long way …
While we think that President Macron’s labour reform plans will be broadly successful, his target for France’s unemployment rate to fall to 7% by 2022 still seems overly ambitious. With his planned cuts to public spending partly dependent on lower …
21st June 2017
The Swedish Economic Tendency Indicator points to strong and broad-based growth, consistent with an acceleration in wage growth and a pick-up in underlying inflation. … Swedish Economic Tendency Survey …
Structural factors have pushed the German household saving rate higher in recent years. So we doubt that a fall in the saving rate will see consumer spending growth gain much pace in the months ahead. … Little scope for German spending boost from lower …
20th June 2017
Swedish employment growth seems set to slow but the unemployment rate should nevertheless drift lower this year after being unchanged in May. And with over one third of firms suffering from a shortage of labour, we expect wage growth to pick up. … Swedish …
The results of the French parliamentary elections revealing that Emmanuel Macron’s La République En Marche has achieved a huge majority bode well for the French economy and for EU relations. But he will still face significant public resistance to his …
19th June 2017
The latest national accounts data showed that quarterly GDP growth in most of the Nordic and Swiss economies picked up in Q1, led by Finland. The Finnish economy expanded by 1.2% q/q, followed by Denmark and mainland Norway with quarterly GDP growth of …
16th June 2017
The latest labour market data paint a positive picture of employment conditions in the euro-zone. Indeed, in Q1 the level of euro-zone employment finally surpassed its pre-crisis peak. What’s more, growth picked up – both quarterly and annual growth were …
The deal at yesterday’s Eurogroup meeting should see Greece receive the next tranche of its bailout soon, allowing it to meet July’s debt repayments with a little time and cash to spare. Debt relief has been put off again, but it must be addressed before …
The Norges Bank is likely to leave interest rates unchanged at its meeting in June, but we think that it will revise its rate forecast down. After all, while economic growth has strengthened since the Bank last produced forecasts, consumer price inflation …
15th June 2017
The euro-zone’s goods trade surplus narrowed a touch in April, but the outlook for exports is encouraging. We think that net trade will provide a small boost to GDP growth in 2017. … Euro-zone Trade …
The Swiss National Bank’s decision to leave interest rates on hold and pledge continued currency intervention if needed reflected the fact that inflation is still very low. With price pressures likely to remain subdued, we think that the SNB won’t start …
The UK election is unlikely to have major adverse near-term effects on the euro-zone as damage to UK demand from political uncertainty may be offset by looser fiscal policy. A softer Brexit could ultimately benefit the rest of the EU, but a big shift in …
14th June 2017
There is little sign that the Central Bank of Iceland (CBI) expects to reduce interest rates further after today’s cut, but we think there is scope for a further appreciation of the króna to weigh on imported goods and services prices. As such, we suspect …
Euro-zone industry began Q2 on a positive note with a healthy rise in production in April and surveys point to an acceleration to come. Meanwhile, the region’s labour market recovery continued, with annual employment growth picking up in Q1. … Euro-zone …
The collapse of Finland’s government will not throw the country’s economic reforms off track. We still expect the economy to grow by about 2% this year. And while the renewed political instability in the euro-zone might seem worrying, it will probably …
13th June 2017
June’s fall in the German ZEW investor sentiment index was a slight disappointment. But investors still expect economic conditions to improve over the next six months and the more reliable business surveys suggest that growth will gain pace. … German ZEW …
Underlying inflation was stronger than expected in May and domestic inflation should rise further from its 63-month high. As this will help to offset any disinflationary impact from a stronger krona due to tighter monetary policy, the Riksbank will become …
On the face of it, the Five Star Movement’s poor showing in recent local elections bodes well for pro-euro parties and Italy’s economy. However, the chance of an early election has fallen, so political uncertainty will linger. And it is far too soon to …
12th June 2017
Results of the first round of French parliamentary elections suggesting that Emmanuel Macron’s La République En Marche will achieve a huge majority bode well for the French economy and for EU relations. But he will still face significant public resistance …
April’s sharp fall in French industrial production was disappointing in the wake of yesterday’s poor trade data and dims hopes for a strong pick-up in GDP growth in Q2. But German data continue to be positive, with a decent rise in exports in April. … …
9th June 2017
