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February’s EC consumer and business survey supported the message from other survey indicators that the euro-zone’s economy is slowing. … EC Business & Consumer Survey …
26th February 2016
The latest deal between two Spanish political parties does not guarantee the formation of a government and new elections may take place before long. While the economy has weathered the uncertainty well so far, there are early signs of a hit to confidence …
25th February 2016
January’s euro-zone monetary data added to the evidence that economic growth in the currency union is slowing, putting further pressure on the ECB to loosen monetary policy significantly at its meeting in March. … Euro-zone Monetary Indicators Monitor …
The Norwegian economy looks much weaker than the Norges Bank had anticipated at its last meeting in December. With the outlook for GDP and inflation having deteriorated, we think that the Bank will cut its policy rate by at least 50 basis points this …
24th February 2016
Euro-zone consumers have spent a lot of their savings from falling oil prices on clothing and, to a lesser extent, furniture and electronics. This boost is unlikely to last and if oil prices rise gradually as we expect, spending growth in these sectors in …
23rd February 2016
February’s sharper-than-expected decline in the German Ifo Business Climate Indicator (BCI) added to the evidence that growth there is slowing and further justified additional ECB policy support. … German Ifo Survey (Feb.) & GDP Breakdown …
February’s sharp decline in the euro-zone Composite PMI supported other evidence that the region’s recovery has slowed in Q1 and added to pressure on the ECB to provide further decisive policy support at next month’s meeting. … Euro-zone Flash PMIs …
22nd February 2016
Last week, January’s ECB minutes were published, revealing that all members of the Governing Council thought that it was necessary to reconsider the monetary stance. Separately, President Draghi set out two criteria that would inform the Council’s …
19th February 2016
Although Sweden’s headline inflation rate rose by more than expected in January, the upward trend is far from assured. As such, we still see a strong possibility of additional policy easing by the Riksbank later this year. … Swedish Consumer Prices …
18th February 2016
Although Sweden’s headline inflation rate rose by more than expected in January, the upward trend is far from assured. As such, we still see a strong possibility of additional policy easing by the Riksbank later this year. … Swedish Consumer Prices (Jan. …
The adverse reaction to the decision by Sweden’s Riksbank to lower its policy rate further below zero illustrates investors’ concerns about the impact of negative interest rates on banks’ profitability. But we doubt this will deter the European Central …
17th February 2016
In 2015, growth in Norway’s mainland economy slowed to its weakest pace in six years. And low oil prices seem likely to continue to weigh on the economy. We suspect that this will prompt the Norges Bank to loosen monetary policy in March. … Norwegian …
16th February 2016
In 2015, growth in Norway’s mainland economy slowed to its weakest pace in six years. And low oil prices seem likely to continue to weigh on the economy. We suspect that this will prompt the Norges Bank to loosen monetary policy in March. … Norwegian GDP …
Data released on Friday showed that Finland’s economy returned to recession in the second half of last year. We suspect that this will be short lived, but the risks to our already below-consensus GDP growth forecasts lie to the downside. … Finland’s …
15th February 2016
We have argued that both the potential costs and benefits to the UK of leaving the EU would be small over the medium term. But this is not a zero-sum game and while we doubt that Brexit would have any significant benefits for the rest of the EU, the …
Despite the decline in the euro-zone’s goods trade surplus in December, net exports probably increased in Q4 as a whole, raising GDP. Nevertheless, we suspect that net trade will make little contribution to growth this year. … Euro-zone Trade …
There are ominous signs that the turmoil in financial markets is starting to have bigger effects on the euro-zone. While Q4’s GDP figures showed growth maintained its pace at the end of last year, the concerns over euro-zone banks have added to the …
12th February 2016
The fact that euro-zone GDP growth did not slow in Q4 last year provides little comfort in the current environment of global market turmoil and does not preclude the need for further decisive policy action from the European Central Bank. … Euro-zone GDP …
Several financial market indicators are warning of an impending euro-zone recession. For now, even we think that is too pessimistic. But it supports our non-consensus view that growth is set to slow. And if asset prices continue to fall, the probability …
11th February 2016
Today’s decision by Sweden’s Riksbank to cut its repo rate further below zero demonstrated that it is prepared to set aside its worries about a housing market bubble and strong domestic demand in order to respond to very low inflation and policy easing by …
The renewed concerns over the health of the euro-zone’s banks present an awkward policy dilemma for the European Central Bank and further raise the downside risks to the currency union’s economy. … Bank troubles intensify downside risks to …
10th February 2016
Although Iceland’s central bank decided today to keep its key interest rates unchanged again, upward inflation pressures and domestic economic strength mean that rate hikes are likely later this year. … Icelandic rates on hold but more policy tightening …
December’s weak industrial production data from France and Italy showed that the sector is still struggling and add to the risk that euro-zone GDP growth slowed in Q4. … French & Italian Industrial Production …
December’s shockingly weak industrial production figures suggest the German economy barely grew in Q4 and pile further pressure on the ECB to match its dovish words with decisive action at its March policy meeting. … German Industrial Production & Trade …
9th February 2016
The European Commission made only minor concessions to the Portuguese Government over its 2016 Budget and the pace of fiscal consolidation will still be faster this year than last. This suggests that other euro-zone governments’ attempts to resist …
8th February 2016
Denmark’s large current account surplus should narrow in the coming years as the economic recovery there takes hold, but it will not disappear entirely. This will sustain the upward pressure on the krone’s peg to the euro, underlining the need for …
The latest fiscal data suggest that the euro-zone’s peripheral economies generally improved theirbudgetary positions last year. But, with the exception of Ireland, their public debt is not yet falling asa share of GDP. … Euro-zone Fiscal Monitor …
Euro-zone consumer price inflation looks likely to pick up later this year, driven by the fading direct effect of lower oil prices and the feed-through of previous falls in the euro to consumer prices. But these effects should be temporary. The indirect …
5th February 2016
Having succeeded in bringing the euro down sharply last year, the European Central Bank (ECB) has recently fallen behind in the race amongst global policymakers to weaken their currencies in order to boost growth and stave off deflation. Only very bold …
4th February 2016
Hard data for the fourth quarter of last year, including GDP estimates for some countries and industrial production and retail sales figures for the region as a whole, suggest that euro-zone GDP posted a quarterly gain of just 0.3%. This would be the same …
3rd February 2016
Given the political turbulence after recent elections in Spain and Portugal, there are some concerns about the potential outcome of the Irish election, now scheduled for just three weeks’ time. But the Irish economy should be better able to cope with any …
December’s euro-zone retail sales data suggest that the consumer sector lost some steam at the end of last year. And the final PMIs for January added to the evidence that the wider recovery had a slow start in 2016. … Euro-zone Retail Sales (Dec.) & Final …
December’s fall in euro-zone unemployment was encouraging, but the rate remains too high to boost wage growth. And the still deeply negative rate of producer price inflation points to more deflationary pressure in the pipeline. … Euro-zone Unemployment & …
2nd February 2016
The decline in oil prices and inflation has probably had a more positive impact on the euro-zone economy than expected as the region’s consumers have spent their windfalls. But as the oil boost fades, policymakers will need to provide other sources of …
1st February 2016
President François Hollande’s declaration in a speech earlier this month that France is in a “state of economic emergency” was hardly reassuring. But, if it’s even possible, we would actually argue that the situation is even more worrying. The French …
29th January 2016
January’s small rise in euro-zone CPI inflation presents no impediment to decisive additional policy loosening by the European Central Bank (ECB) at its next meeting in March. … Euro-zone Flash CPI …
December’s euro-zone monetary data suggested that money and lending growth in the currency union has peaked, adding to the case for the ECB to loosen monetary policy significantly in March. … Euro-zone Monetary Indicators Monitor …
Provisional Q4 GDP data from France, Spain and Austria suggested that the euro-zone’s modest economic recovery is unlikely to have gathered steam in the final quarter of last year, providing a weak platform for growth in 2016. … France, Spain & Austria …
January’s German CPI data revealed a slight rise in inflation following weather-related weakness in December. But while the rate is set to rise further in the months ahead, underlying inflation pressures remain weak enough to warrant further ECB action. …
28th January 2016
January’s EC consumer and business survey supported the message from other survey indicators that the euro-zone’s economy slowed at the start of the year. … EC Business & Consumer Survey …
Even a very sharp slowdown in China would not be enough on its own to push Germany into recession. But if, contrary to our forecasts, a slowdown in China prompted a more generalised slowdown in global demand, this would hit the German economy very hard. …
27th January 2016
January’s German Ifo survey brought the strongest signals yet that the recent global economic concerns and associated financial market gyrations have started to hit the euro-zone’s biggest economy. … German Ifo Survey …
25th January 2016
We said after December’s “Draghi disappointment” that we would take future verbal policy steers from the ECB with a healthy pinch of salt. But there are some good reasons to expect the President and colleagues to follow through on their latest dovish …
22nd January 2016
January’s decline in the euro-zone Composite PMI suggests that the economy got off to a slow start this year. With the twin boosts from previous sharp falls in oil prices and the euro set to fade, a further slowdown is on the way. … Euro-zone Flash PMIs …
The ECB signalled firmly today that further policy loosening is imminent. While we are wary of putting too much faith in its communications after last month’s disappointment, there are good reasons to expect it to cut interest rates and accelerate its …
21st January 2016
