Filtered by Subscriptions: Europe Economics Use setting Europe Economics
In the land of fire and ice, currency movements in 2016 resembled an erupting volcano rather than a creeping glacier. The appreciating króna put downward pressure on inflation, prompting the Central Bank of Iceland (CBI) to cut interest rates twice. While …
13th January 2017
The ECB will not announce any policy changes next week after last month’s pledge to buy at least €60bn of assets per month until the end of 2017. President Draghi is likely to restate the Governing Council’s commitment to the plan despite the recent sharp …
12th January 2017
November’s rise in euro-zone industrial production added to the evidence that GDP growth picked up in Q4. But while industrial growth might accelerate further in the near term, this is unlikely to prevent a broader economic slowdown in 2017. … Euro-zone …
Today’s minutes confirmed that only half of the Riksbank’s Executive Board supported the extension of its QE programme. And with inflation surpassing expectations in December, there is little cause for further monetary policy loosening – we expect the …
November’s data brought further signs of public finances improving in the euro-zone’s periphery. But the Greek bail-out deal is at risk of collapse, and the Italian banking sector remains in a parlous state. … Euro-zone Fiscal Monitor …
11th January 2017
In December, the Norges Bank’s favoured measure of inflation edged down to a 19- month low. We think that it will fall further, prompting the Bank to cut its key policy rate by 25 basis points in the second half of the year. … Norwegian Consumer Prices …
10th January 2017
Recent hard data for the euro-zone have generally been encouraging. Despite falling in November, the level of retail sales remains fairly high after a strong rise in October. And while industrial production edged down in October, timelier national data …
9th January 2017
November’s euro-zone unemployment data reaffirm our view that the labour market is experiencing only a gradual recovery. Indeed, the unemployment rate is still high, while survey indicators point to limited wage growth. … Euro-zone Unemployment …
November’s rise in German industrial production suggests that industry had a decent quarter in Q4. And with trade data also painting a positive picture of the economy, it seems likely that GDP growth picked up in the final quarter of the year. … German …
Marine Le Pen’s suggestion last week that France could leave the euro-zone, devalue and then peg the new currency to the euro to limit exchange rate volatility has been written off as a hopeless attempt to have her cake and eat it. We agree that it is …
6th January 2017
We expect euro-zone government bond spreads to reach multi-year highs in 2017, with the largest increases in Italy and France, due to rising doubts about their futures in the currency union. … Will euro-zone government bond spreads balloon in …
December’s rise in the European Commission’s euro-zone Economic Sentiment Indicator (ESI) left it at its highest level since March 2011, thus supporting the message from the PMIs that GDP growth accelerated in the final month of 2016. … EC Business & …
In December, Swiss headline inflation exited negative territory for the first time in two years, but core inflation remained below zero. So the latest data will do little to ease fears that the economy is experiencing a sustained bout of damaging …
5th January 2017
Following a host of central bank meetings last month, most of the Swiss and Nordic currencies fell against the US dollar. While there were few major changes for bond yields, equities in most countries recorded impressive gains. … Currencies depreciating …
4th January 2017
December’s rise in euro-zone inflation mainly reflected anticipated energy effects and will therefore not deter the ECB from its commitment to sustained policy loosening. … Euro-zone Flash CPI & Final PMIs …
While German inflation surged to a three-year high in December, the French rate barely increased. And with underlying price pressures still very subdued throughout the euro-zone, the ECB need not rethink its high level of policy support. … German & French …
3rd January 2017
December’s PMIs suggest that Swiss, Swedish and Danish manufacturers ended 2016 on a strong note, but their Norwegian counterparts are still lagging behind. … Manufacturing PMIs …
In 2016, weak inflation resulted in strong real disposable income growth for consumers, which in turn helped to support better-than-expected real GDP growth. The decent pace of growth, combined with worries about the strength of growth and political …
22nd December 2016
While the Riksbank extended QE today, a number of the Executive Board dissented, suggesting that today’s announcement marks the beginning of the end for policy loosening in Sweden. Indeed, despite its dovish rhetoric, we think that the Riksbank will be …
21st December 2016
There is little chance of March’s Dutch general election resulting in a referendum on EU membership. But the shift in political sentiment towards euroscepticism may derail EU policymaking in other ways. … Nexit is not next, but Dutch voters still pose …
20th December 2016
A huge rise in manufacturing confidence, to within touching distance of a record high, pushed the Swedish Economic Tendency Indicator higher still in December. This calls into question the Riksbank’s commitment to loosen policy further and supports our …
Recent national accounts data showed a marked divergence in quarterly economic growth in Q3, with the Swiss economy stagnating while the Icelandic economy expanded by an impressive 4.6% q/q. In the middle of the pack, Sweden, Denmark and Finland recorded …
December’s German Ifo survey suggests that the economy ended the year on a high note despite political upheaval elsewhere. … German Ifo Survey …
19th December 2016
The euro-zone’s trade surplus with the UK is likely to fall as a result of sterling’s depreciation. We think that this will reduce euro-zone GDP growth by about 0.1 percentage points per year in 2017 and 2018, but the effect could be up to 0.2 percentage …
16th December 2016
Rising euroscepticism and a packed election timetable next year mean that there is a significant risk that the euro-zone breaks up. Even in our central scenario in which the currency union holds together, growth will be held back by political uncertainty, …
The short-term outlook for euro-zone industry is positive. Surveys suggest that output growth will rise in the coming months and, if sustained, the recent decline of the euro should provide a boost for exporters throughout next year. But with slowing …
The Norges Bank’s decision to leave interest rates unchanged came despite a deterioration in the outlook for growth and inflation. While policymakers remain concerned about the impact of loose monetary policy on house price inflation, we suspect that they …
15th December 2016
The Swiss National Bank’s decision to leave interest rates on hold and pledge continued currency intervention was as expected. The Bank may have drawn some comfort from the franc’s recent decline against the US dollar. But the currency’s strength against …
December’s unchanged euro-zone Composite PMI implies that GDP growth picked up slightly in the fourth quarter. But the weakness of some of the hard data at the start of Q4 suggests that an acceleration of growth is not guaranteed. … Euro-zone Flash PMIs …
October’s fall in euro-zone industrial production contrasts with the brighter picture painted by the business surveys. While industrial growth might pick-up slightly in the near term, it is unlikely to prevent a broader economic slowdown in 2017. … …
14th December 2016
The Central Bank of Iceland’s (CBI’s) decision to cut interest rates before the next phase of capital account liberalisation came as a surprise. While the strong economy calls for policy tightening in the long term, a further sharp appreciation of the …
As inflation was a touch weaker in November than the Riksbank anticipated, monetary policy is set to be loosened further. While we expect the Riksbank to announce an extension of QE, the already-weak level of the krona suggests that it will hold back from …
13th December 2016
In October, signs of fiscal slippage eased somewhat in the euro zone’s periphery. But the Greek bailout deal remains at risk of collapse and the growing likelihood of a bail-out for Italian banks threatens to increase the public debt load there. … …
The Swiss National Bank will stress after its meeting on 15th December that it is prepared to act decisively to prevent any significant appreciation of the Swiss franc in the coming months. Indeed, the Bank has already increased its intervention in …
December’s ZEW survey suggested that investors were not too concerned about the effects of euro-zone political uncertainty on the German economy, although the index still points to a slowdown in GDP growth. … German ZEW Survey …
Italy’s new Prime Minister has two major challenges ahead of him – reforming the electoral system and managing the banking crisis – both of which could spell disaster for his party at the next election. … Has Italy’s new PM been handed a poisoned …
12th December 2016
While the ECB opted to extend its Asset Purchase Programme (APP) at a slower monthly pace than anticipated, there is no immediate end in sight in terms of its duration. Indeed, we think that the ECB will continue purchases far beyond 2017 and it will be …
9th December 2016
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting on 15th December. Indeed, in October, the Bank repeated its message that “the key policy rate would most likely remain at [0.50%] in the period ahead”. However, we think …
October’s French industrial production and German trade data, combined with soft data released earlier in the week, suggest that the euro-zone’s largest economies made a slower start to the fourth quarter than business surveys had implied. … French …
Little has changed since the Central Bank of Iceland (CBI) last met and so, like last month, policy will be unchanged next week. As political and exchange rate uncertainty fades next year, concerns that the CBI will continue to miss its inflation target …
8th December 2016
While the ECB announced today that it would slow the pace of its asset purchases from next April, it also committed to buying for longer than anticipated. What’s more, it expressed a clear bias towards increasing the degree of support in future if …
The euro-zone economy still seems to be weathering the effects of political upsets and uncertainty at home and abroad well. The PMI and EC survey indicators rose in November, consistent with an acceleration in GDP growth from Q3’s modest 0.3% q/q. …
The Nordic and Swiss economies generally recorded positive growth in Q3 and look set to do so again in Q4. But with growth in their main trading partner, the euro-zone, set to slow and a number of political risks on the horizon, there are challenges …
7th December 2016
Following Italy’s referendum last weekend, some form of government support for the country’s weakest banks looks likely. But looking ahead, if an early general election were to take place next year, this could cause more widespread damage to the banking …
October’s German industrial production and French trade data suggest that the euro-zone’s largest economies made a slower start to the fourth quarter than the business surveys had implied. … German Industrial Production & French Trade …
The Eurogroup made some progress yesterday, confirming limits on Greek loan interest rates and tweaks to maturities. But it remains strongly opposed to the debt forgiveness that Greece needs. And with the IMF still unwilling to participate in the bailout, …
6th December 2016
The final estimate of Q3 GDP confirmed that growth was driven mainly by household spending. But with consumers’ real income growth now slowing as energy inflation rises, spending growth, and thus GDP growth, is set to slow in 2017. … Euro-zone GDP …
While November’s fall in Swiss inflation was mainly due to energy effects, the weakness of core inflation will do little to ease fears that the economy may be experiencing a sustained bout of damaging deflation and keeps the onus on the Swiss National …
October’s rise in retail sales and November’s decent euro-zone PMIs are consistent with an acceleration of GDP growth in Q4. But with Italy’s “No” vote heightening political risks, the prospects for growth in 2017 are weaker. … Euro-zone Retail Sales …
5th December 2016
Swedish industrial and services output started Q4 on a fairly weak note, but forward-looking indicators also released this morning were more positive. As such, it still seems likely that Swedish GDP growth will pick up in Q4. … Swedish Industrial & …
