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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 …
22nd July 2016
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
On the face of it, Germany seems more exposed than France to the effects of the UK leaving the EU. But in the time before the UK actually leaves the single market, France is more vulnerable than Germany to a downturn in sentiment arising from growing …
1st July 2016
May’s fall in euro-zone unemployment shows that the labour market is slowly recovering. But employment growth may already have peaked and there is still too much slack to generate any meaningful wage growth or inflationary pressure. … Euro-zone …
Recent market movements point to a downturn in euro-zone growth, particularly in the periphery. The ECB is likely to respond by loosening monetary policy, but it cannot solve all of the euro-zone’s ills. … Market moves could destabilise the euro-zone …
30th June 2016
June’s rise in euro-zone CPI inflation into positive territory might mark the start of an upward trend, but we see little hope of inflation hitting the ECB’s target over the medium term. … Euro-zone Flash CPI (Jun.) & German Retail Sales …
Italian opposition to the EU is strong and several forces could cause that hostility to grow. October’s constitutional reform referendum will provide voters with an opportunity to oust the prime minister, potentially leading to a general election in which …
29th June 2016
June’s increase in German inflation back into positive territory may well mark the start of an upward trend. 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. … German Flash CPI …
June’s fall in euro-zone business and consumer confidence suggests that the euro-zone economy was slowing even before the UK voted to leave the EU. … EC Business & Consumer Survey …
While the UK’s vote for Brexit will have only a small direct effect on euro-zone trade this year and next, the indirect effects on confidence and financial markets may be more serious. We have maintained our downbeat forecast of 1.2% GDP growth this …
27th June 2016
Despite unexpected gains for the right in Spain, an anti-austerity left-wing coalition may now be more likely than opinion polls had suggested. Either way, the new government will be a very fragile one. … Spain’s new government set to be a fragile …
May’s euro-zone monetary data suggest that economic growth remains fairly slow. While the ECB has since introduced new stimulus measures, including its latest TLTROs, we doubt that they will boost money and lending growth significantly. … Euro-zone …
The UK’s vote to leave the EU has been followed by calls for referendums in other countries. And , notably, euro-scepticism in some countries seems to be even stronger than in the UK. … Which country might be next to hold an EU …
24th June 2016
The UK’s surprise vote to leave the European Union has put more pressure on the European Central Bank to provide additional policy support. We now expect an acceleration in the pace of the ECB’s asset purchases and perhaps another small cut in interest …
June’s rise in the German Ifo measure of business confidence suggests that the economy continued to grow at pretty healthy rate in Q2. But given the financial market reaction to the UK’s vote to leave the EU, this seems unlikely to last. … German …
The UK’s vote to leave the European Union will have substantial negative effects on the European economy and raises serious doubts over the future of both the EU itself and the currency union. … UK’s vote to leave EU raises doubts over future of …
The ECB’s decision to reinstate a waiver allowing Greek banks to borrow from it at low interest rates will help to ease pressure on the banking sector. But it is very unlikely to generate a lending revival and it could still be some time before Greece …
23rd June 2016
June’s fall in the euro-zone Composite PMI to a 17-month low suggests that strong GDP growth in Q1 was not the start of a more pronounced economic recovery. Indeed, the PMI points to growth slowing sharply in Q2. … Euro-zone Flash PMIs …
The Norges Bank left its key policy rate unchanged today, but with the economy weak and inflation set to fall, we think that further loosening is on the way. … Norges Bank to cut interest rates in …
The Danish krone would probably face significant upward pressure in the event of a Brexit. But as the Danmarks Nationalbank has scope to loosen policy further, a Brexit is unlikely to break its euro peg. … Would Brexit break Denmark’s currency …
22nd June 2016
While the Swiss National Bank (SNB) has vowed to limit any impact on the franc if the UK votes to leave the EU tomorrow, we doubt that it has enough ammunition to prevent an appreciation. We think that the currency would rise towards parity with the euro …
If Spain’s upcoming election returns an anti-austerity coalition to power then there would probably be an immediate rise in government bond yields. But whatever the result, much-needed reforms are unlikely to be enacted, growth will slow and borrowing …
21st June 2016
Today’s ruling by the German constitutional court leaves the ECB free to implement its long-awaited OMT programme, if deemed necessary. And a possible trigger for OMTs – Brexit – might be just a few days away. We think the most likely ECB response to a …
June’s ZEW survey suggests that investor sentiment towards the German economy has not been hit by the risk of Brexit so far and points to steady annual GDP growth. … German ZEW …
Finland’s competitiveness pact probably won’t boost employment by as much as the Government hopes. But it is still a positive move that should help to lower labour costs and boost output. … Will Finland’s competitiveness pact boost the …
17th June 2016
European financial markets have finally woken up to the threat of a Brexit , with stock markets and core country bond yields declining. A UK vote to leave the EU on 23rd June would prompt greater market disruption and force the European Central Bank to …
