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Swedish inflation unexpectedly reached a fresh four-year high in July. But inflation is still below the Riksbank’s target and it is too soon to rule out further policy action. … Swedish Consumer Prices (Jul. …
11th August 2016
Inflation in Norway has been much stronger than the central bank forecast in June, so an interest rate cut in September looks unlikely. But we still expect inflation to fall sharply over the next 12 months. So policy loosening should come back on the …
10th August 2016
Despite June’s rise in German industrial production, output in the sector fell in Q2 compared to Q1. Industrial growth should pick up a little in the months ahead, but it is likely to remain subdued by Germany’s past impressive standards. … German …
8th August 2016
The Bank of England’s policy action last week added to the pressure on the ECB to do more. At the moment, the ECB’s self-imposed restrictions would prevent a large expansion of its asset purchase programme. But those limitations can be amended, so should …
5th August 2016
The UK’s Brexit vote does not appear to have had a marked adverse impact on the euro-zone economy so far as the main survey indicators rose slightly in July. But Q2 GDP data confirmed that economic activity was already slowing before the referendum: GDP …
4th August 2016
The early signs are that while the euro-zone economy has been largely unharmed by the UK’s vote for Brexit, the Irish economy, which has particularly strong trade links with the UK, has taken a hit. That said, it is far too early to suggest that the vote …
With no sign of a government, a third Spanish election is possible. Even if one is avoided, Catalonia’s bid for independence means that political uncertainty will continue to darken Spain’s prospects. … No sign of an end to political uncertainty in …
3rd August 2016
Public finances improved across the region in Q1, and timelier central government data suggest that the peripheral countries continued to perform well in Q2. Meanwhile, Portugal and Spain avoided fines for breaking fiscal rules, but even adjusted targets …
June’s stagnation of euro-zone retail sales suggest that consumer spending ended Q2 on a weak note. And despite a small upward revision from the flash release, July’s Composite PMI points to subdued economic growth at the start of Q3. … Euro-zone Retail …
Sweden’s weak Q2 GDP growth rate is at odds with both the monthly economic data and the positive tone of recent surveys. As such, we suspect a decent rebound is on the cards for Q3. … Swedish fundamentals stronger than Q2 GDP data …
2nd August 2016
While France’s stagnation in the second quarter was partly down to temporary factors, we doubt that there will be a strong rebound in Q3. Indeed, we think that the underlying pace of growth has now slowed to not far above zero and fear that the situation …
1st August 2016
The latest EU bank stress tests confirm that, on the whole, the region’s banks are in a much healthier position than a few years ago. However, there are still significant problems in some countries’ banking sectors, most notably Italy’s. These issues will …
We think that the slowdown in euro-zone GDP growth in Q2 is a sign of things to come. While the UK’s vote to leave the EU won’t be a major drag on the euro-zone, we expect growth to slow further as the boosts from lower oil prices and the weaker euro …
29th July 2016
The “preliminary flash” estimate of euro-zone GDP confirmed the message from national data that the economy slowed in Q2. We think that this slowdown in growth is a sign of things to come. … Euro-zone Preliminary Flash GDP (Q2) & Flash CPI …
The first estimate of Sweden’s GDP in Q2 was much weaker than expected, and the release also revealed a downward revision to growth in what was an already-soft Q1. … Swedish GDP (Q2, 1st …
Italian banks are in trouble and there are no quick fixes for their problems. We think that policymakers will provide support to lenders this year, but this is unlikely to resolve banks’ underlying issue of low profitability in the context of Italy’s weak …
28th July 2016
July’s rise in German inflation further into positive territory is likely to be followed by continued increases in the coming months. But even in Germany, we do not think that inflation is on track to reach the ECB’s near-2% target on a sustained basis. … …
July’s rise in the euro-zone Economic Sentiment Indicator suggests that businesses and consumers have so far largely shrugged off the negative economic implications of the UK’s Brexit vote. … EC Business & Consumer Survey …
Recent news about Greece, including a planned return to bond issuance in 2017, may suggest that it is finally heading out of the woods. But we have been here before and with the debt burden still huge and the recession dragging on, the economy’s future in …
June’s data suggest that euro-zone money and credit growth are still too weak to provide much support to the economy. While the full effects of ECB stimulus introduced in June are yet to be felt, we think that credit growth will remain weak. … Euro-zone …
27th July 2016
The first estimate of Sweden’s GDP in Q2 was much weaker than expected, and the release also revealed a downward revision to growth in what was an already-soft Q1. … Swedish GDP (Q2 16, 1st …
A weaker outlook for the external sector on the back of the UK’s Brexit vote will hit Belgium’s open economy harder than most. And with consumers looking poorly placed to take up the slack, the economy will struggle to grow by much more than 1% this year …
26th July 2016
July’s Ifo survey supported the message from the PMI that German economic activity has not yet suffered from the UK’s Brexit vote. But the dip in businesses’ expectations may suggest that a slowdown is to come. … German Ifo Survey …
25th July 2016
Last week’s euro-zone and country level data releases started to lift some of the heavy fog on the initial impact of the UK’s vote to leave the EU on the currency union’s economy. The early signs are somewhat mixed, but provide some reassurance. … Early …
22nd July 2016
July’s slight fall in the euro-zone Composite PMI suggests that the real economy has generally shrugged off the financial market volatility that followed the UK’s Brexit vote, but remains sluggish. … Euro-zone Flash PMIs …
After leaving policy on hold today, the ECB also stopped short of promising imminent policy easing. But President Draghi reiterated that the Bank is ready to act and we believe that it will up the pace of asset purchases and possibly cut interest rates at …
21st July 2016
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Riksbank finds positives despite Brexit …
19th July 2016
July’s German ZEW Survey, which was conducted over the past two weeks, suggests that investors are more worried about the effects of Brexit on the German economy than the financial market response has so far implied. … German ZEW Survey (Jul.) & E-Z Bank …
The ECB is set to loosen policy in the coming months. But there is a limit to how much more monetary policy alone can do for growth. In the wake of the UK’s Brexit vote, Mario Draghi’s calls for fiscal support are thus set to grow. Unfortunately, …
15th July 2016
May’s euro-zone goods trade data suggest that net exports will have cushioned the likely slowdown in GDP growth in Q2. Further ahead, we expect the trade surplus to narrow further this year, as slower growth in foreign demand weighs on exports. … …
The UK’s vote to leave the EU has weakened the outlook for the European Economy. Admittedly, the financial market reaction has been muted and we think that the UK will ultimately fare well outside the EU. But there will be a near-term hit to UK demand, …
14th July 2016
The European Central Bank (ECB) may refrain from loosening policy this month following the Bank of England’s inaction. But the Brexit vote has increased what were already significant downside risks to the euro-zone economy and the inflation outlook …
With the exception of the automobile and agricultural industries, WTO tariffs are low enough to imply that even if no trade deal is reached, Brexit will do little direct damage to euro-zone exporters. And given the benefits for both sides, it seems likely …
May’s fall in euro-zone industrial production reversed almost all of April’s strong gain and suggests that industry will probably detract from euro-zone GDP growth in Q2. … Euro-zone Industrial Production …
13th July 2016
Looking through the massive distortions in the Irish GDP data, today’s Q1 release suggests that the economy has continued to perform well. … Ireland GDP …
Swedish inflation hit a four-year high in June, but it is still low. So although domestic price pressures are rising, the Riksbank may still have to take further policy action. … Swedish Consumer Prices …
12th July 2016
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Swedish Consumer Prices (June …
The Dutch economy is more vulnerable than most to a downturn in the UK. In turn, the negative labour market impact could boost support for eurosceptic parties ahead of next year’s elections. … The Netherlands will be hit harder than most by …
11th July 2016
There is no easy solution to the euro-zone’s banking problems, but the risks of doing nothing are too large for policymakers to simply sit on their hands. We think that policymakers will find a way to support the banks. And the forthcoming ECB stress test …
8th July 2016
May’s decline in French industrial production only partly reversed April’s gain but combined with falls elsewhere leaves euro-zone industry looking weak. And Germany’s trade balance fell from its previous record high due to a drop in exports. … French …
May’s sharp fall in German industrial production adds to the evidence that GDPgrowth in the region’s largest economy slowed sharply in Q2. And the recoverylooks likely to ease further in the second half of the year. … German Industrial Production …
7th July 2016
June’s survey data confirmed that GDP growth in Q2 is very unlikely to have matched Q1’s 0.6% quarterly expansion, with both the EC Survey and the PMI appearing consistent with around a 0.3% rise. Industrial production and retail sales data have supported …
6th July 2016
Sweden’s Riksbank has pushed back its expectations for a rate rise. Although the negative impact of previous falls in energy prices on inflation is fading and domestic inflationary pressures are picking up, the Riksbank might still need to intervene in …
May’s euro-zone retail sales data point to a slowdown in consumer spending growth, and thus GDP growth, in Q2. And despite a small upward revision from the flash release, June’s Composite PMI also suggests that growth will slow. … Euro-zone Retail Sales …
5th July 2016
While German exporters are particularly vulnerable to weaker demand from the UK following the Brexit vote, the economy is also well-placed to benefit from any relocation of financial services or foreign direct investment and less at risk of a drop in …
Portugal and Greece seem have made some good headway towards repairing their public finances so far this year, in contrast with Italy and Spain which are both struggling to make any improvement. Meanwhile, periphery bond markets are so far weathering …
4th July 2016
