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Portugal’s exports have been amongst the euro-zone’s fastest growing over the last few years. But the country’s external position remains very fragile, leaving it vulnerable to renewed market pressures. … Export success masks Portugal’s external …
28th July 2015
June’s euro-zone monetary data point to a continued economic recovery, although they suggest that growth will not gather much more pace. … Euro-zone Monetary Indicators Monitor …
27th July 2015
July’s rise in German Ifo business sentiment is an encouraging sign that the recovery has continued despite the Greek crisis, although it does not seem to be gaining much pace. … German Ifo Survey …
Greece last week passed the necessary reforms to start negotiations with its creditors on a third bailout. But with the country back in recession, it will struggle to meet the creditors’ fiscal goals. Indeed, euro-zone fiscal data for Q1 last week showed …
24th July 2015
July’s renewed fall in the euro-zone composite PMI offers some early support to our view that the fragile recovery will slow in the second half of the year. … Euro-zone Flash PMIs …
The recent decline in the euro suggests that the markets see the new Greek bailout plan as less favourable for the single currency than a swift Grexit. But the driving force on the euro over the next year or so will be the widening divergence between …
22nd July 2015
Spain’s and Portugal’s recoveries offer some hope for Italy, the periphery’s laggard. But Italy’s exports are still too uncompetitive and its firms too unprofitable to mimic the export and investment-led recoveries seen in Iberia. So Italy’s colossal …
Even if the planned new Greek bailout is quickly and smoothly implemented, the economy looks set to remain in a deep and prolonged recession. … Will the Greek economy ever return to …
21st July 2015
Even if the planned new Greek bailout is quickly and smoothly implemented, the economy looks set to remain in a deep and prolonged recession. … Greek elections won’t ensure passage of …
20th July 2015
The plan for a third Greek bailout has cleared a number of hurdles over the last week, including provisional approval by the Greek and German parliaments. But there are plenty of obstacles yet to be negotiated, including the fiscal targets, the proposed …
17th July 2015
Spanish households will struggle to maintain their recent impressive rates of spending growth. And with households facing years of stagnant wages and high unemployment, opposition to further economic reforms may build. … Spanish households face tougher …
The broader European economy has continued to weather the Greek crisis well, helped by lower oil prices and, in the euro-zone itself, the decline in the euro exchange rate. But these positive forces look likely to fade in the second half of the year and …
16th July 2015
ECB President Mario Draghi maintained a distinctly dovish tone at today’s Governing Council meeting, reiterating the Council’s willingness to step up its QE programme if the economic outlook or financial market conditions worsen. But he was more …
May’s euro-zone goods trade data suggested that the depreciation of the euro over thepast year is still only providing a modest boost to export growth. … Euro-zone Trade …
France’s June inflation data confirmed that price pressures remain very subdued in the euro-zone’s second-largest economy. And the substantial slack in the labour market means that core inflation is likely to remain very weak. … French CPI …
15th July 2015
While yesterday’s announcement of an agreement to provide Greece with a third bailout was greeted with understandable relief, there are still very big hurdles to be cleared before the deal is finalised. … Greek “deal” still has major hurdles to …
14th July 2015
May’s weak industrial production data and the fall in German ZEW investor sentiment in July suggested that the euro-zone’s fragile recovery may be slowing. … Euro-zone Industrial Production (May) & German ZEW …
The fall in Sweden’s headline inflation rate below zero in June vindicated the Riksbank’s decision earlier this month to cut its policy rate further and extend its bond-buying programme. But we think that it still has more work to do. … Swedish Consumer …
Today’s tentative deal for a new Greek bailout clearly reduces the risk of a near-term exit from the single currency. But significant hurdles must be overcome before the deal is finalised. And the negotiations over debt restructuring, which have been put …
13th July 2015
There appears to be a chance that Greece and its creditors will come to a last minute agreement on a new bailout which avoids an imminent Greek departure from the currency union. But there are many hurdles left to negotiate before the deal is finalised. …
10th July 2015
If a Greek exit from the euro-zone resulted in substantial market turmoil, the ECB would probably respond by unleashing its fabled OMTs. This is a potentially powerful tool to limit contagion. But practical constraints on the size of OMTs, as well as …
The rebound in French and Italian industrial production in May came as a welcome relief after Q2’s weak start and the disappointing German data earlier in the week. But across the euro-zone as a whole, industry is still likely to have struggled in Q2. … …
The ECB’s Governing Council may have to playboth villain and hero over the coming week, effectively forcing Greece out of the euro-zone bypulling the plug on Greek banks’ life support and then clearing up the resulting mess. Who’d be acentral banker? … …
9th July 2015
The French economy’s decent start to 2015 is unlikely to have been sustained in Q2. Looking further ahead, we think that the recovery will struggle to gain significant pace over the next few years. In particular, high unemployment and inadequate reforms …
EC President Jean-Claude Juncker’s claim that Greece’s creditors now have a “detailed Grexit scenario” may be a bluff to strengthen their bargaining position. But it is not hard to imagine what the key elements of a Plan B for Greece would consist of. … …
8th July 2015
Although the ECB’s OMT programme may allow Portugal to weather a Grexit, the country still faces serious challenges that might jeopardise the country’s long-term position within the currency union. … Is Portugal the euro-zone’s next weakest …
While Greece and its creditors look set to make one last attempt to reach an agreement, it might very soon be time to accept the inevitable and refocus efforts on how best to manage the country’s exit from the currency union. … Time to let Greece …
7th July 2015
Sweden’s exporters are finally starting to feel the benefits of the krona’s decline over the past couple of years. But firms’ desire to widen profit margins, weak global demand and uncertainty about the krona in the face of ECB stimulus and the Greek …
May’s German industrial production figures supported other evidence suggesting that the euro-zone’s main growth engine is unlikely to have picked up speed in Q2. … German Industrial Production …
While yesterday’s resounding Oxi (No) vote in the Greek referendum does not guarantee a Greek exit from the euro-zone, it has surely raised the probability of such an event further above 50%. … Oxi vote pushes Grexit probability further above …
6th July 2015
Sunday’s Greek referendum result looks likely to be very close. But regardless of whether the outcome is Nai or Oxi , unless any resulting deal includes a substantial form of debt relief, the crisis will not come to an end and Greece’s continued …
3rd July 2015
Although euro-zone retail sales only rose slightly in May, the outlook for consumer spending is bright. And the rise in June’s composite PMI suggested that the wider recovery was sustained in Q2, despite the crisis in Greece. … Euro-zone Retail Sales …
The large degree of spare capacity in the Greek economy suggests that it could perform well if the constraints of fiscal austerity and a strong currency were removed via a euro-zone exit. But Greece’s performance would depend on policies to tackle the …
Sweden’s central bank today stepped up its monetary policy stimulus to protect the nascent uptrend in inflation and fight the recent strengthening of the krona . But with the upward pressure on the currency unlikely to abate, we think that the Riksbank …
2nd July 2015
Recent reforms will help Italy’s fragile banking system. But a legacy of bad debts and the earlier tightening of lending standards will weigh on the country’s recovery for a while yet. … Reforms will help Italian banks crawl back to …
Sweden’s central bank today stepped up its monetary policy stimulus to protect the nascent uptrend in inflation and fight the recent strengthening of the krona. But with the upward pressure on the currency unlikely to abate, we think that the Riksbank may …
Greece’s crisis escalated further in June, culminating in a default to the IMF, the imposition of capital controls and the expiry of the second bailout programme. In response, Greek 10 year government bond yields have shot up to almost 15%. But outside of …
1st July 2015
The expiry of Greece’s second bailout programme and its “default” to the IMF have raised the crisis to a new level. With latest polls suggesting that a majority of voters will vote to reject the creditors’ latest offer in Sunday’s referendum, the risks of …
The declines in oil prices since last summer might add as much as 1 percentage point to euro-zone consumer spending growth this year. However, unless oil prices fall further , which we do not expect, this boost will fade in 2016. This is a key reason …
A Yes vote in Sunday’s Greek referendum, if it goes ahead, will not guarantee the country’s futureinside the euro-zone. Not only is it unclear just what deal such an outcome would lead to, but weremain doubtful that Greece’s debt position is ultimately …
30th June 2015
The renewed decline in euro-zone HICP inflation in June highlighted that the ECB still has a lot of work to do to hit its inflation target in the medium term. … Euro-zone Flash CPI (Jun.) & Unemployment …
June’s sharp fall in German HICP inflation confirmed that underlying price pressures have remained very subdued even in the euro-zone’s strongest economy. … German Flash CPI …
29th June 2015
The European Commission’s monthly Business and Consumer Survey for Junesuggested that the euro-zone recovery may have gained some pace in Q2. But thesurvey was carried out before last weekend’s escalation of the Greek crisis. … EC Business & Consumer …
The Greek Government’s decision to call a referendum has elevated the crisis to a higher level. Whilea deal may yet come together, a near-term Grexit now seems more likely than not. This Updateconsiders the key questions relating to the “Greferendum” and …
The failure of Greece and its creditors to reach a deal at last week’s many meetings has left very little time before the current bailout expires on Tuesday. Saturday’s Eurogroup meeting looks pretty much like the last chance saloon if a deal is to be …
26th June 2015
May’s euro-zone monetary data were consistent with continued economic recovery.But with the probability of a Greek default and Grexit building by the day, the riskof a full-blown banking crisis in the country is growing. … Euro-zone Monetary Indicators …
There is no sign that the ECB has begun to “front-load” its asset purchases ahead of the summer lull in liquidity, despite suggestions by officials that it would do so. But the Bank will nonetheless meet its medium-term target for QE of €1.1tn. In fact, …
25th June 2015
While a deal between Greece and its creditors may finally emerge in the next few days, it still looks unlikely to include the substantial debt relief needed to end the crisis and eliminate the risk of Grexit. … Without major debt relief, a Greek deal …
24th June 2015
