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March’s euro-zone trade data suggest that the weakness of the euro has still had little impact on net exports, and therefore provided only modest support to the recovery. … Euro-zone Trade (Mar.) & Consumer Prices …
19th May 2015
A public referendum could help to break the current deadlock between Greece and its creditors. But it might only be a short-term solution and much could depend on its precise purpose and phrasing. … Would a referendum end the Greek …
18th May 2015
The Greek crisis has intensified, with last week’s Eurogroup meeting offering little hope of near-term financial support and the Government resorting to reserves held at the IMF to make a loan repayment to the Fund itself. Meanwhile, data for Q1 …
15th May 2015
With a bailout payment still not forthcoming, the Greek Government might have to resort to IOUs to pay public sector workers. While they could serve as a brief stop-gap, they would not solve Greece’s fundamental problems, which require an exit from the …
14th May 2015
Iceland’s healthy economic recovery after its financial collapse in 2008 highlights the attractions of currency depreciation, if necessary accompanied by capital controls. Such a path has its economic costs, but Greek policymakers might consider them a …
13th May 2015
Although Iceland’s central bank left its main interest rates on hold today, it adopted a much more hawkish tone, signalling that it was likely to start hiking rates as early as next month. … Sedlabanki holds, but interest rates to rise …
Q1’s euro-zone GDP figures confirmed that the currency union outgrew both the US and UK in the first quarter. But with signs that the Greek crisis is starting to constrain the recovery, the euro-zone’s outperformance is likely to be short-lived. … …
The renewed fall in Sweden’s headline inflation rate in April suggests that the Riksbank’s policy easing so far has eradicated the threat that deflation becomes entrenched. Accordingly, further measures will be needed. … Swedish Consumer Prices …
12th May 2015
The renewed fall in Sweden’s headline inflation rate in April suggests that the Riksbank’s policy easing so far has not eradicated the threat that deflation becomes entrenched. Accordingly, further measures will be needed. … Swedish Consumer Prices (Apr. …
The new coalition government is likely to impose significant budget cuts that would drag on Finland’s already ailing economy. But there are reasons to think that fiscal consolidation might be less of a constraint on growth than it has been over the past …
8th May 2015
The sharp rise in euro-zone bond yields and further appreciation of the euro last week might look like a response to the recent improvement in the euro-zone’s economic performance. But the renewed rise in oil prices is perhaps a more likely driver, with …
March’s German industrial production and trade data offer some signs that the weaker euro is providing a boost to the economy, but seem to confirm that GDP growth slowed in Q1 compared to Q4. … German Industrial Production & Trade …
While euro-zone officials appear increasingly resigned to some form of Greek sovereign debt default, we doubt that this alone would revive the economy and secure the country’s membership of the euro. … Could a debt default revive the Greek …
7th May 2015
The Norges Bank left its policy rate unchanged at 1.25% today, but we suspect that a weakening labour market and faltering economic growth will prompt a rate cut at its next meeting in June. … Policy unchanged in Norway, but rate cut still on the …
Although March’s French industrial production figures were a little disappointing, the sector has fared well at the start of 2015 and appears to have made a decent contribution to GDP growth in the first quarter. … French Industrial Production …
The euro-zone economy looks likely to have outgrown both those of the US and UK in the first quarter of the year, for the first time since Q1 2011. But the outperformance looks set to be short-lived. Not only are the slowdowns in the US and UK likely to …
6th May 2015
March’s euro-zone retail sales data suggested that overall household spending registered a fairly strong increase in Q1. But the decline in April’s composite PMI implied that the economy might have slowed a touch at the start of Q2. … Euro-zone Retail …
The latest euro-zone fiscal data showed that only Italy and Ireland made any improvement in their budgetary positions in Q1. And the latest data from Greece are far from encouraging. … Euro-zone Fiscal Monitor …
1st May 2015
April’s rise in euro-zone CPI inflation to zero left the latest bout of falling prices shorter, at four months, than that seen back in 2009. But with fundamental forces still bearing down on inflation, it is too soon to declare that the dangers of …
The strength of Ireland’s recovery has been overstated due to a number of statistical distortions to GDP. But the economy does still seem to be on the mend. And the conditions are in place for Ireland to be one of the euro-zone’s strongest performers over …
30th April 2015
While the recent bout of falling prices in the euro-zone ended in April, the threat of deflation in the currency union has certainly not lifted altogether. … Euro-zone Flash CPI (Apr.) & Unemployment …
While Spain’s economic recovery gathered further pace in the first quarter, the large amount of spare capacity left in the economy is sustaining deflationary pressures. … Spanish GDP (Q1 est.) & CPI …
Sweden’s Riksbank stepped up its fight against deflation by more than doubling the size of its government bond purchase programme and reiterating its willingness to make monetary policy even more expansionary. We still think that the Riksbank will have to …
29th April 2015
April’s slightly bigger-than-expected rise in German HICP inflation will reinforce hopes that recent price declines were a temporary phenomenon that will have positive effects on the economy. But with core inflation still low, there remains a risk of a …
France’s economic outlook appears particularly uncertain at the moment, with the business surveys painting a mixed picture. But even the most positive of these surveys still points to fairly sluggish GDP growth by past standards, suggesting that a strong …
The European Commission’s monthly Business and Consumer survey for April echoed the message from some other recent surveys that the crisis in Greece might be starting to constrain the euro-zone recovery. … EC Business & Consumer Survey …
March’s euro-zone monetary data suggest that economic growth might pick up in the coming months. But the continued wrangling over Greece’s fiscal situation presents a significant risk to the country’s banking sector. … Euro-zone Monetary Indicators …
Rising expectations of a Greek exit from the euro-zone are still not prompting contagion effects or more general concerns about the euro-zone economy. We fear that the markets are too relaxed. … Why are the markets still so relaxed about a …
28th April 2015
Revivals in Spain’s and Ireland’s housing markets should help to support their wider economic recoveries. While Spain’s housing recovery is likely to be slow, Ireland’s is already going strong. This has prompted concerns of another bubble in Ireland, but …
27th April 2015
Friday’s Eurogroup meeting did not appear to result in any further progress towards a solution to the Greek crisis. While Greece has found a bit more money down the back of the sofa (or in state entities), there are still no indications of how Greece …
24th April 2015
April’s rise in the Ifo German Business Climate Indicator (BCI) suggests that economic conditions are holding up despite the Greek crisis and comes as a relief after falls in the ZEW and PMI surveys. … German Ifo Survey …
April’s fall in the euro-zone composite PMI suggested that fears over Greece might already be starting to dampen economic growth in the region, offsetting any boost from loose monetary policy and the weakness of the euro. … Euro-zone Flash PMIs …
23rd April 2015
The ongoing uncertainty and legal suits over the wind-down of a small Austrian provincial bank might seem like the least of the euro-zone’s current concerns. But the wind-down of Hypo Alpe Adria’s bad bank may well set a precedent for the new …
22nd April 2015
Suggestions that Greece can default but remain inside the euro-zone overlook the fact that Greece needs both a very large debt write-down and a more competitive currency. … Can Greece default and stay in the …
21st April 2015
April’s fall in German ZEW investor sentiment suggests that fears over Greece are starting to dent confidence in the German economic recovery. … German ZEW …
The risks of a Greek default and possible euro-zone exit rose further last week as its creditors made clear that a bailout disbursement was unlikely in the near term. Despite this, ECB President Mario Draghi was in a bullish mood at last week’s press …
17th April 2015
The Greek crisis has reached a new crunch point amid signs that the Eurogroup will not grant desperately needed financial aid after next week’s meeting. Greece might resort to IOUs and/or capital controls to avoid a disorderly default and keep the banks …
16th April 2015
Dutch consumers have finally started to open their wallets, prompting hopes of a consumer-led economic revival. But even if renewed falls in household spending look unlikely, the combination of the feeble labour and housing market recoveries, households’ …
ECB President Mario Draghi sent a clear signal today that the recent improvement in the euro-zone’s economic outlook would not result in an early termination of the quantitative easing programme that was only launched last month. … ECB will implement …
15th April 2015
February’s euro-zone trade data suggest that the weakness of the euro is still only providing a small boost to the region’s exports. … Euro-zone Trade …
Sweden’s headline inflation rate picked up further in March. But with inflation likely to remain well below target and the underlying rate unchanged, we continue to think that the Riksbank will cut rates further at its late-April meeting. … Swedish …
14th April 2015
Investment has been the weakest link in France’s feeble economic recovery so far. But it is not clear that the French Government’s latest plans will alter this picture dramatically. For that, a sustained rise in business confidence, helped by bolder …
February’s strong rise in euro-zone industrial production suggested that industry is starting to feel the benefits of a weaker euro and a lower oil price. … Euro-zone Industrial Production …
The opposition Centre Party looks likely to be the largest party in a coalition government after Finland’s general election on 19th April. But the outcome of the election is unlikely to have a major impact on the economic outlook. Most of the major …
13th April 2015
With the ECB’s quantitative easing programme putting upward pressure on German asset prices in particular, some point to a risk of bubbles developing there. We think the greater risk is that such concerns may place limits on the policy support that is …
