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Euro-zone consumer price inflation remained in negative territory in May for the second consecutive month and the eighth month overall in the last 18. Fading negative energy effects mean that inflation will turn positive in June and could rise close to …
2nd June 2016
The ECB is in wait and see mode while it assesses the effects of its latest policy measures, but President Draghi left the door wide open to further policy action. We continue to believe that the central bank’s work is not yet done . … ECB holds fire …
There was some good news last month for public finances in the euro-zone’s periphery as Moody’s upgraded Ireland’s sovereign debt and the EC decided to be lenient with Portugal and Spain after both missed their 2015 deficit targets, and Italy, by granting …
We disagree with recent suggestions that negative central bank policy rates encourage households to increase their savings, thereby reducing demand and weighing on inflation. In fact, the opposite seems to be true in the euro-zone. We suspect that …
1st June 2016
A Brexit and its after-effects could prompt the European Central Bank (ECB) to undertake further unconventional policy action, including measures to support the euro-zone’s financial sector, FX intervention and even some form of helicopter money. … How …
Iceland’s central bank kept its interest rates unchanged for the fifth consecutive meeting. But with price pressures set to pick up in the second half of the year, further tightening will be needed. … Iceland holds rates but tightening cycle not yet …
In order to cut Spanish unemployment significantly, the parties that gain power after voters return to the polls in June will need to focus on retraining the workforce. But even if schemes were implemented quickly, it would take many years for the …
31st May 2016
The European Commission’s measure of economic sentiment in Italy suggests that the recovery might have gained some pace in Q2. However, April’s increase in unemployment and other, more reliable, surveys suggest that growth is more likely to have slowed. …
The latest figures on euro-zone inflation and unemployment maintained the picture of subdued price pressures across the region. … Euro-zone Flash CPI (May) & Unemployment …
April’s euro-zone monetary data suggest that economic growth remains fairly slow. While the full effects of the ECB’s expanded stimulus measures will not yet have been felt, we doubt that they will boost money and lending growth significantly. … …
The pick-up in Danish GDP growth in Q1 is welcome news after weakness in the second half of 2015. But sluggish euro-zone growth will also weigh on Danish prospects, and survey measures paint a weak picture of the near-term outlook. … Danish GDP …
The pick-up in Danish GDP growth in Q1 is welcome news after weakness in the second half of 2015. But sluggish euro-zone growth will also weigh on Danish prospects, and survey measures paint a weak picture of the near-term outlook. … Danish GDP (Q1 …
The German economy got off to a strong start to the year. The healthy 0.7% expansion of GDP in Q1 was driven primarily by a pick-up in investment but also increases in public and private consumption. This was encouraging, given criticisms of tight fiscal …
27th May 2016
The European Central Bank (ECB) is likely to maintain a dovish tone at its forthcoming policy meeting on 2nd June, forecasting below target inflation and holding open the door to further policy loosening later in the year. However, it is also likely to …
26th May 2016
The likely disbursement of the next tranche of Greece’s third bailout may have reduced the risk of a summer flare-up of the country’s debt crisis. But with the creditors’ pledges on debt relief extremely vague and the fiscal targets still unrealistic, …
25th May 2016
May’s rise in the German Ifo suggests that the economy has continued to grow at pretty healthy rates, but the fast quarterly pace seen in Q1 will not be sustained. … German Ifo Survey …
With the recovery in the euro-zone economy set to slow and the peripheral countries still facing a Herculean task to address their fiscal problems, there is a danger that Europe’s debt crisis will reignite in the coming months. … Is Europe heading back …
24th May 2016
The election of pro-immigration and -EU Alexander Van der Bellen as Austria’s next president keeps the far-right Freedom Party (FPÖ) out of office for now. But the FPÖ remain the top party in general election polling and the close result …
The second German GDP release for Q1 confirmed that stronger domestic spending drove a sharp pick-up in overall activity. But May’s fall in German ZEW investor sentiment supports our view that growth will slow as the year goes on. … German ZEW Survey …
The euro-zone Composite PMI edged down in May despite rises in Germany and France, suggesting that growth in the rest of the euro-zone lost momentum. And with new export orders falling to a 16-month low, the survey implies that weak global growth will …
23rd May 2016
The rise in Swedish inflation will prove short-lived if inflation expectations stay below 2%. In order to boost such expectations, the Riksbank must ensure that the krona does not appreciate strongly. … Swedish inflation outlook dependent on krona …
21st May 2016
On the face of it, last week’s decisions by the European Commission to allow Italy greater flexibility in its budget, and not to fine Spain and Portugal for their large deficits, suggest that it has gone soft on the EU’s fiscal rules. But austerity has …
20th May 2016
Despite the recent falls in consumer confidence, there are a number of reasons to be positive about the outlook for household spending in the Netherlands over the coming years. Nevertheless, worries about pension funding and general elections due in early …
18th May 2016
This week’s French protests over a watered down labour market law highlight just how hard it will be to reform the economy. This suggests that France’s economic weakness will be prolonged , particularly if the European Commission responds with more …
17th May 2016
While the euro-zone trade surplus widened in March, this reflected a drop in the value of imports rather than export strength. Subdued global demand growth and the recent appreciation of the euro point to further weakness in exports to come. … Euro-zone …
Like much of the rest of the euro-zone, Italy’s economy got off to a decent start to the year. However,the outlook for growth remains weak and the risks to the recovery are mounting. Eventually, theycould call Italy’s future in the currency union into …
16th May 2016
Despite the downward revision to Q1 euro-zone GDP, the 0.5% quarterly gain still got the year off to a solid start. But there are good reasons to expect growth to be slower in Q2 and beyond. And the bigger picture is that the euro-zone economy remains …
13th May 2016
While Q1’s 0.5% quarterly gain in euro-zone GDP provides a reasonably solid start to the year, there are good reasons to expect growth to slow in Q2 and beyond. … Euro-zone GDP (Q1 …
March’s contraction means that industry looks likely to have accounted for about 0.2%-points of the euro-zone’s 0.6% q/q GDP growth rate in Q1. But the underlying trend in output is weak, and surveys suggest that growth will be subdued in Q2. … …
12th May 2016
The Norges Bank left its key policy rate unchanged today, but with the economy weak and inflation set to fall this year, we think that further loosening is on the way. … Norges Bank policy unchanged, but rate cut on the …
The compromises reached by Greece and its creditors this week should allow the first bailout review to finally be completed and have prompted a favourable market response. But the first discussions about debt relief offer little hope of a solution to …
11th May 2016
Iceland’s central bank kept its interest rates unchanged for the fourth consecutive meeting. But with price pressures set to pick up in the second half of the year, further tightening will be needed. … Iceland holds rates but further tightening will be …
Despite March’s sharp fall in German industrial production, the sector appears to have contributed strongly to GDP growth in Q1. However, evidence from the business surveys suggests that underlying growth in the sector remains weak. … German Industrial …
10th May 2016
The formation of a new Irish government has removed some short-term political uncertainty. And the outlook for the economy over the coming years is fairly bright. That said, the government can do little to shelter Ireland’s very open economy from …
9th May 2016
Last week’s EC Spring forecasts presented a pretty uninspiring picture of the euro-zone economy’s prospects. Despite the unprecedented degree of monetary policy support, growth is expected to slow this year and inflation to remain well below the ECB’s …
6th May 2016
Full year general government figures for 2015 show that most euro-zone countries’ fiscal positions improved last year, although Portugal and Spain still fell short of their targets. Meanwhile, timelier central government data show that Greece has made a …
5th May 2016
Euro-zone GDP rose by a healthy 0.6% in Q1, easily outpacing the expansions in the US and UK and following disappointingly slow growth in the second half of 2015. But the data look strong relative to survey measures of activity, such as the Composite …
March’s euro-zone retail sales data appear to confirm that strong consumer spending supported growth in Q1, but we doubt that this will be sustained . Indeed, April’s Composite PMI points to a slight slowdown in GDP growth in Q2. … Euro-zone Retail …
4th May 2016
Last week’s decision by DBRS to maintain its investment grade credit rating for Portugal has brought short-term relief. But with the economic recovery likely to slow this year and the public finances only improving gradually, concerns about debt …
3rd May 2016
The first round result of Austria’s presidential election is testament to how polarising the issue of immigration has become in European politics. However, a crackdown on immigration could deny Austria a much needed boost to growth. … Anti-immigration …
29th April 2016
Q1’s surprisingly strong gain in euro-zone GDP provided a solid start to the year. But we suspect that the figures overstate the economy’s underlying pace of expansion and there is a clear risk of a further slowdown ahead. Accordingly, we are not …
The euro-zone’s new earlier (“preliminary flash”) estimate of GDP confirmed the message from country data that the economy regained some pace in Q1 after the slowdown in H2 last year. But growth is likely to slow in Q2 and beyond. … Euro-zone Preliminary …
Political uncertainty and slowing growth imply that Spain’s budget deficit targets are too optimistic. As such, Spain looks set to breach the EU’s 3% deficit limit for at least two more years. And , in contrast to European Commission expectations, the …
28th April 2016
April’s fall in German consumer price inflation back to negative territory and the continued weakness of the core rate will further raise the pressure on the ECB to do more to hit its inflation target. … German Flash CPI …
April’s rise in euro-zone business and consumer confidence does not change the bigger picture that growth in the euro-zone appears to be slowing. … EC Business & Consumer Survey …
March’s euro-zone monetary data suggest that economic growth remains fairly slow . While the ECB has since expanded its stimulus measures, we doubt that this will boost money and lending growth significantly. … Euro-zone Monetary Indicators Monitor …
27th April 2016
