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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 …
29th April 2015
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 …
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 …
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 …
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 …
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 …
