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The prospect of gaining power has prompted Greece’s anti-bailout party Syriza to soften its stance on some issues. But markets are still right to be worried, given uncertainty around its plans for debt renegotiation and fiscal loosening. … Are markets …
15th December 2014
We disagree with speculation that the resurgence of the Greek crisis and the fall in the oil price have reduced the chance of quantitative easing. Indeed, we think that both factors have increased the risk of deflation, supporting our view that the ECB …
12th December 2014
Euro-zone industrial data for October and employment figures for Q3 confirmed that, even before the resurgence of the Greek crisis and associated political and economic uncertainty, underlying economic activity was very weak. … Euro-zone Industrial …
Ireland’s small gain in GDP in Q3 leaves it on track to expand by close to 5% this year. But the published data may exaggerate the underlying strength of the economy. … Ireland GDP …
11th December 2014
The renewed fall in Sweden’s headline inflation rate in November will maintain the pressure on the Riksbank to push back the date at which it first expects to raise rates from the middle of 2016 when it meets next week. … Swedish CPI …
While the Swiss National Bank (SNB) left policy on hold today, it reaffirmed its “utmost determination” to defend its ceiling for the franc exchange rate. It may introduce a negative interest rate to help with this, but the key policy tool will continue …
The renewed fall in Sweden’s headline inflation rate in November will maintain the pressure on the Riksbank to push back the date at which it first expects to raise rates from the middle of 2016 when it meets next week. … Swedish CPI (Nov. …
The Icelandic Government’s preparations to scale back capital controls early next year certainly represent a positive first step towards lifting the restrictions. However, we remain cautious at this early stage since nothing has been announced and there …
10th December 2014
Contagion effects from Greece’s latest crisis have so far been reassuringly limited. But that may not last and the episode is a reminder that even those economies which have cut their budget deficits dramatically are not immune from political instability …
While the recent rise in Spanish house prices is another encouraging sign for the economy, we expect the housing recovery to be extremely slow. The Spanish economy still needs to undergo a painful rebalancing towards exports to ensure a sustained revival. …
9th December 2014
The two-month extension to Greece’s EU programme, agreed yesterday by euro-zone finance ministers, was expected given recent wrangling over the Greek Budget. But the further austerity it could bring poses risks for the Greek economic recovery. And the …
October’s modest rise in German industrial production suggests that the benefits of a weaker euro are so far being offset by weak demand in Germany and the rest of the euro-zone and bodes ill for GDP in the fourth quarter. … German Industrial Production …
8th December 2014
The rise in the euro during the ECB’s press conference last week apparently reflected disappointment that President Draghi did not provide more explicit signals that quantitative easing (QE) is coming. But we don’t think he could have been much more …
5th December 2014
The breakdown of euro-zone GDP in Q3 offered little encouragement that the region’s lacklustre economic recovery is about to pick up any meaningful momentum. … Euro-zone GDP Breakdown …
Iceland’s economy rebounded in Q3 after contracting for two consecutive quarters, led by a surge in investment. Although the quarterly data are very volatile, this expansion suggests that Iceland is continuing to recover gradually. … Iceland GDP …
Iceland’s economy rebounded in Q3 after contracting for two consecutive quarters, led by a surge in investment. Although the quarterly data are very volatile, this expansion suggests that Iceland is continuing to recover gradually. … Iceland GDP (Q3 …
ECB President Mario Draghi could hardly have sent clearer signals today that the central bank will launch a programme of quantitative easing very soon, probably in January. But we doubt that the policy will be big and effective enough to revive the …
4th December 2014
The recent further falls in global oil prices look set to push euro-zone consumer price inflation - already very low at just 0.3% in November - below zero in the early months of 2015. Provided that oil prices stabilise, the period of falling prices should …
3rd December 2014
The new Swedish Government lost a key parliamentary vote on its Budget today, throwing politics in the country into turmoil and raising the possibility of fresh elections. But the potential upheaval poses less of a risk to the Swedish economy than does …
The European Central Bank (ECB) is set to launch a full-blown quantitative easing (QE) programme this week or in January. But the political and economic limitations on the policy’s size and effects suggest that it is unlikely to revive the euro-zone …
November’s final composite PMI was revised down from the flash estimate and provided more evidence that the euro-zone economy has remained weak in Q4. … Euro-zone Final PMIs (Nov.) & Retail Sales …
Q3’s Swiss GDP figures suggested that the economy is still holding up well against the twin pressures of euro-zone weakness and the strong franc. But the Swiss National Bank may have more work to do to protect its currency ceiling and head off deflation. …
All peripheral economies narrowed their budget deficits in October, but Portugal is expected to miss its target for 2014 as a whole. … Euro-zone Fiscal Monitor …
2nd December 2014
The recent fall in oil prices will have some modest positive effects on the euro-zone economy. But it does not preclude the need for the European Central Bank (ECB) to provide more policy support. … Will lower oil prices do the ECB’s job for …
The likely introduction of “full-blown” quantitative easing by the ECB may well put pressure on other European central banks to follow suit and introduce their own unconventional measures in order to curb the appreciation of their currencies, protect …
1st December 2014
The fall in the euro since the spring looks likely to have at least some upward effect on both the growth of euro-zone exports and the level of euro-zone consumer price inflation. But the ECB should not conclude that the exchange rate has done its job for …
28th November 2014
The latest euro-zone consumer prices and unemployment figures gave the ECB yet another nudge to take urgent further action to revive the recovery and tackle the threat of deflation. … Euro-zone Flash CPI (Nov.) & Unemployment …
The rise in Swedish GDP in Q3 provides further evidence of a steady recovery and will help to alleviate fears of a Japanese-style bout of deflation and stagnation. But growth is not strong enough for policymakers to be complacent about deflation risks. …
The rise in Swedish GDP in Q3 provides further evidence of a steady recovery and will help to alleviate fears of a Japanese-style bout of deflation and stagnation. But growth is not strong enough for policymakers to be complacent about deflation risks. … …
It seems clear that the ECB will soon embark on a full-blown quantitative easing programme incorporating sovereign debt purchases. The key questions now are when and how big ? While we think that the contingencies for QE set out by President Draghi have …
27th November 2014
November’s fall in German inflation to a five-year low highlights the absence of price pressures in even the strongest parts of the euro-zone. And while German unemployment remains very low, this still does not seem to be affecting wage growth. … German …
October’s euro-zone monetary data highlighted the sluggish nature of the recovery in the region’s banking sector and will help to maintain the pressure on the ECB to provide further stimulus. … Euro-zone Monetary Indicators Monitor …
November’s EC business and consumer survey did nothing to relieve the pressure on the European Central Bank to provide more policy support to the euro-zone economy in the form of a full-blown quantitative easing programme. … Euro-zone EC Survey …
An ECB quantitative easing (QE) programme will probably not be decisive enough to prompt a rise in inflation expectations like that which lifted US Treasury yields during the Fed’s bouts of QE. Accordingly, core euro-zone bond yields are likely to stay …
26th November 2014
The Greek Government does not appear to have been too rattled by last month’s market turmoil, sticking to its budget plan despite opposition from the Troika. But it may come under pressure to seek faster repayment of outstanding taxes, threatening the …
25th November 2014
The second release of Q3 German GDP confirmed that the economy expanded by a meagre 0.1%. The breakdown offered some hope, with consumer spending and exports rising strongly, but surveys suggest that the recovery will be slow at best. … German GDP (Q3) …
November’s rise in the German Ifo survey is a relief after the fall in the PMI and leaves the key surveys painting a somewhat mixed picture. But both point to slow growth at best, which will do little to revive the euro-zone as a whole. … German Ifo …
24th November 2014
The objections of German Bundesbank President Jens Weidmann to the prospect of an ECB quantitative easing programme including government bond purchases are unlikely to prevent such a programme being implemented in the next few months. But along with the …
21st November 2014
EC President Jean-Claude Juncker’s proposal for a €300bn EU investment programme will probably do little more than shift existing funds around the economy with little or no positive impact on growth. … Juncker’s investment plan is unlikely to amount to …
Norway has been one of the strongest growing economies of the developed world over the last decade. But with households buckling under high debt burdens and lower oil prices set to exacerbate the decline of the energy sector, a weaker growth path lies …
20th November 2014
The renewed slowdown in the growth of Portuguese exports in recent quarters has underlined the need for the country to implement further decisive reforms in order to lift growth from the anaemic rates seen over the last decade. … Weaker Portuguese …
Q3’s reasonably solid gain in GDP maintained Norway’s position as the strongest of the Nordic economies. But signs of weaker household spending and the likely negative effects of lower oil prices point to slower growth ahead. … Norwegian GDP …
November’s fall in the euro-zone composite PMI was a serious blow to hopes that the recovery would resume towards the end of the year. … Euro-zone Flash PMIs …
Q3’s reasonably solid gain in GDP maintained Norway’s position as the strongest of the Nordic economies. But signs of weaker household spending and the likely negative effects of lower oil prices point to slower growth ahead. … Norwegian GDP (Q3 …
