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February’s Italian industrial production data added to signs that the long recession may finally be coming to an end. But the recovery still looks surprisingly slow given the boost provided by falls in the euro exchange rate and the oil price. … Italian …
13th April 2015
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 …
We have revised our forecasts for euro-zone GDP growth higher to reflect the positive effects of lower oil prices and the decline in the euro. But growth could slow again next year as those positive forces fade and the deep-seated constraints to growth …
10th April 2015
February’s French industrial data suggested that activity in the euro-zone’s second-largest economy may have gained a little pace at the start of 2015. And the healthy rise in Spanish production suggests that the recovery there continued apace in Q1. … …
The ECB’s quantitative easing programme has got off to a solid start with the Bank buying the planned quantity of assets and financial markets responding positively. And with the recovery seeming to gain pace, there has even been talk that the Bank might …
9th April 2015
The recent bout of negative inflation in the euro-zone appears to have contributed to a modest upturn in economic growth. But it would be premature to conclude that deflation will prove to be a good thing for the currency union. … Is deflation good for …
German industrial production and trade data for February offered tentative signs that the economy is benefitting from the weaker exchange rate. But the data seem to confirm that growth slowed in Q1 compared to Q4. … German Industrial Production & Trade …
Recent indicators have brought signs of a renewed recovery in the euro-zone economy, reflecting the beneficial effects of lower oil prices and the decline in the euro exchange rate. But the picture continues to be clouded by the uncertainty surrounding …
8th April 2015
February’s euro-zone retail sales data showed that while the consumer recovery remained fairly strong, it did not pick up further pace. … Euro-zone Retail Sales …
The more detailed list of proposed reforms submitted by Greece last week potentially provided the basis for an agreement that will allow it to meet its near-term financial obligations. But the tussles over Greece’s bailout payment are likely to prove a …
3rd April 2015
The minutes of the ECB’s monetary policy meeting on 4th and 5th March should help to dampen suggestions that the recent signs of improvement in the euro-zone economy will prompt the ECB to end its quantitative easing (QE) programme before the scheduled …
Recently published data show that Spain, Portugal and France made headway in reducing their general government deficits in 2014. But progress among the peripheral countries at the start of 2015 has been rather more mixed, particularly in Greece. … …
2nd April 2015
The euro-zone economic recovery has gained some pace thanks to a pick-up in consumer spending growth. The annual growth rate of retail sales volumes rose to near a ten-year high in January, due partly to falling prices. And a sharp rise in consumer …
1st April 2015
The latest data on euro-zone inflation and unemployment did not lift the threat of a prolonged period of deflation in the currency union. … Euro-zone Flash CPI (Mar.) & Unemployment …
Greece is running out of time to produce a list of reforms that will satisfy its creditors and secure the additional bail-out payment it requires to meet its near-term financial obligations. But even if it is successful, the much more daunting challenge …
31st March 2015
March’s rise in German HICP inflation will add to hopes that recent price declines were a temporary phenomenon that will have positive effects on the economy. But with core inflation still very low even in Germany, there remains a risk of a more damaging …
March’s EC business and consumer sentiment indicators supported the evidence from other surveys that euro-zone economic activity picked up slightly in the first quarter. But growth still looks likely to be too slow to reduce substantially the spare …
Buoyed by falling unemployment, rising equity prices and a boost to their spending power from a lower oil price, euro-zone consumers have become increasingly confident, with the EC’s measure of consumer sentiment rising in March to its highest level since …
27th March 2015
February’s euro-zone monetary data add to the evidence from activity surveys that economic growth in the euro-zone will pick up in the coming months. But troubles in the Greek banking sector remain a major downside risk to the outlook. … Euro-zone …
26th March 2015
March’s rise in the German Ifo index provided further evidence that the recovery in the euro-zone’s largest economy continued in Q1 as firms shrugged off fears over Greece and the weaker euro started to have an effect. … German Ifo Survey …
25th March 2015
While lower inflation and the drop in the euro might boost growth in the euro-zone relative to that in the US, structural constraints, respective policy conditions and the effects of the Greek crisis are likely to limit the extent of any convergence. … …
24th March 2015
March’s further rise in the euro-zone composite PMI adds to the signs that the region’s economic recovery may have picked up a bit of pace in Q1. But growth remains pretty sluggish and France is still performing particularly poorly. … Euro-zone Flash …
A continued economic recovery and the Government’s early repayment of IMF loans have allowed Portugal to distance itself further from beleaguered Greece. But with debt still worryingly high and the recovery unlikely to gain much momentum, market concerns …
23rd March 2015
While there have been few firm developments in the ongoing Greek crisis in recent weeks, the general news on the progress towards plugging the country’s short-term financing hole and finding a lasting solution to its debt burden has supported our view …
20th March 2015
The Norges Bank unexpectedly left its policy rate on hold at 1.25% today but with the economic situation set to deteriorate, we think that the Norges Bank will be forced to cut rates at its next meeting in May. … Norway’s central bank holds rates, but …
19th March 2015
The Swiss National Bank’s decision to leave its deposit rate at -0.75% presumably reflects the slight softening of the franc over recent weeks. But we expect renewed upward pressure on the currency to lead it to cut rates and intervene in foreign exchange …
The vast amount of spare capacity in the Greek economy means that the underlying state of the public finances is rather better than the headline numbers suggest. But it would be wrong to conclude that the closing of Greece’s output gap will solve its debt …
18th March 2015
The Swedish Riksbank unexpectedly loosened monetary policy further today, citing the deflationary risks from the stronger krona , and said it was prepared to do more if needed. With the ECB’s QE likely to push the krona up against the euro even …
January’s euro-zone trade data suggested that the region’s exports are still not benefitting substantially from the weakness of the euro. … Euro-zone Trade & Construction …
Iceland’s central bank left its main interest rates on hold today as it waits to judge the outcome of the ongoing wage negotiations. But with labour market tensions growing and the Sedlabanki raising its 2015 GDP forecasts, we think that the next move in …
The Swedish Riksbank unexpectedly loosened monetary policy further today, citing the deflationary risks from the stronger krona, and said it was prepared to do more if needed. With the ECB’s QE likely to push the krona up against the euro even further, we …
March’s modest rise in the ZEW investor sentiment index suggests that hopes for the German economy have been tempered by worries over the effects of the Greek crisis. … German ZEW (Mar.) & Euro-zone Employment …
17th March 2015
While France has been given an extra two years to meet its new budget targets set by Brussels, we think that it will still struggle to achieve the necessary fiscal consolidation given France’s prevailing political and economic backdrop. … France will …
16th March 2015
The drop in the euro to a 12-year low against the US dollar should clearly provide some support to both activity and inflation in the euro-zone. But it would be wrong to think that its effects are mechanical or that a weaker currency can solve all of the …
13th March 2015
Q4’s modest rise in Irish GDP appeared to confirm that growth is slowing from the very rapid rates experienced earlier this year, perhaps as statistical distortions have faded. Nonetheless, business surveys point to a continued strong recovery ahead. … …
12th March 2015
The combination of Greece’s renewed problems and the onset of deflation is a very toxic one for the euro-zone. At best, it is likely to keep economic growth in the region fairly subdued. At worst, it could fully re-ignite the crisis and blow the currency …
January’s euro-zone industrial production data suggested that industry had a poor start to 2015, with little evidence of a boost from the weaker euro or lower oil prices. … Euro-zone Industrial Production …
Rising expectations for US interest rates and an escalation of the Greek crisis could push the euro down to parity against the US dollar and beyond. But we expect it to stage a partial recovery in 2016. … How low will the euro …
11th March 2015
The latest data on German wage growth suggest that pay is finally beginning to respond to the long labour market recovery. With deflation offering a further boost to real wage growth, we expect the German consumer recovery to gain pace this year. … Is …
Sweden’s headline inflation rate turned positive in February for the first time in eight months. But deflationary pressures have not disappeared altogether and we continue to think that the Riksbank will need to take additional action in April. … …
Sweden’s headline inflation rate turned positive in February for the first time in eight months. But deflationary pressures have not disappeared altogether and we continue to think that the Riksbank will need to take additional action in April. … Swedish …
Concerns that the ECB will struggle to find enough willing sellers of assets to implement its quantitative easing programme may be wide of the mark. But limits set by the Bank itself imply little scope for the programme to be expanded beyond its current …
10th March 2015
Iceland’s economy continued to expand in Q4, suggesting that the country remains well on the road to recovery. … Iceland GDP (Q4) …
January’s French industrial data support the message from the German and Spanish releases that activity was expanding slowly at the start of the year. But the fall in Italian production suggests that the three-year recession there has continued. … French …
Iceland’s economy continued to expand in Q4, suggesting that the country remains well on the road to recovery. … Iceland GDP (Q4 14) …
As the ECB’s quantitative easing programme starts today, it already seems to be having a more positive impact than we had envisaged. But here we explain why we maintain our view that the policy will neither mark the start of a strong recovery nor …
9th March 2015
President Draghi was sounding rather smug last week as he announced the start of the Bank’s quantitative easing programme and forecast that inflation would rise back to target in the medium term. But we doubt very much that the new policy will prompt a …
6th March 2015
The second estimate and breakdown of euro-zone GDP in Q4 confirmed that the region’s recovery remained very weak at the end of last year but provided some tentative signs that it is becoming better balanced. … Euro-zone GDP Breakdown …
