Europe Data Response EC Survey (Mar.) On the face of it, March’s Economic Sentiment Indicator (ESI) is not as downbeat as some of the other surveys. But we think that it understates the drop in activity, and worse is likely to come in... 30th March 2020 · 2 mins read
Europe Economics Weekly ECB steps up, EU leaders at loggerheads Evidence is mounting that the slump in euro-zone GDP will be even steeper than the 15% drop that we had anticipated. This will put huge pressure on the public finances. The ECB has at least taken the... 27th March 2020 · 8 mins read
Europe Economics Update Euro-zone inflation set to turn negative The precipitous fall in oil prices and virus-related plunge in demand is likely to push euro-zone inflation to a record low of -1% in the summer. While the risk of deflation becoming entrenched seems... 27th March 2020 · 3 mins read
Europe Economics Update Joint fiscal support would aid EZ economic recovery Euro-zone policymakers’ plan to offer precautionary credit lines to some governments is a step in the right direction, but it is too small and not the best tool for the job. It stops well short of... 26th March 2020 · 5 mins read
Europe Economics Update ESM help welcome but more will be needed It now seems likely that euro-zone policymakers will exploit the European Stability Mechanism’s lending capacity to offer financial help to all member states to tackle the hit from the coronavirus... 25th March 2020 · 3 mins read
Europe Data Response Euro-zone Flash PMIs (Mar.) March’s slump in the euro-zone Composite PMI is so sharp that at any other time it would look like a spreadsheet error. But now it is all too believable, and April’s data could be even worse. 24th March 2020 · 2 mins read
Europe Data Response EC Consumer Confidence (Mar.) The plunge in the EC euro-zone consumer confidence index in March – its largest fall on record – leaves it consistent with household spending plummeting. Given the continued fast spread of the virus... 23rd March 2020 · 3 mins read
Europe Economics Update ESM could be a game-changer While the ECB’s extra €750bn in bond purchases has reduced financial market stress, governments also need to deliver a large fiscal response without triggering a fresh sovereign debt crisis. In our... 20th March 2020 · 6 mins read
Europe Economics Weekly ECB’s next challenge is to raise its issuer limits Following the huge expansion of its asset purchases this week, the ECB’s will still need to raise the issuer limits on its bond holdings. We think it will eventually do so, providing a credible... 20th March 2020 · 6 mins read
Europe Economics Update Additional €750bn of QE will not be ECB’s last move The ECB announced late yesterday evening a new €750bn programme of bond purchases which is intended to contain borrowing costs for southern economies. This gives it a lot more firepower which should... 19th March 2020 · 3 mins read
Europe Economics Update Fiscal costs of virus could easily top 10-15% of GDP The combination of the government responses to the coronavirus and the slump in economic activity will cause euro-zone budget balances to deteriorate by at least 10-15% of GDP this year. While this... 18th March 2020 · 6 mins read
Europe Economics Update Banking risks add to pressure on ECB to act quickly The economic slump in the euro-zone increasingly threatens to trigger a wider financial sector crisis. In order to head off the risks to the banking sector, the ECB will need to provide unequivocal... 18th March 2020 · 3 mins read
Europe Economics Update EZ facing more than 10% quarterly slump in GDP With the euro-zone economy set to contract by 10-15% q/q in Q2 as numerous businesses come to a standstill, governments will have no choice but to provide support to businesses and households on an... 17th March 2020 · 4 mins read
Europe Economics Update ECB will be forced into more drastic action Last week’s ECB decision gave it more ammunition to combat the fallout from the coronavirus, but it will not be enough. We now think the Bank will soon make an explicit commitment to keep sovereign... 16th March 2020 · 3 mins read
Europe Economics Weekly Market rout as EZ policymakers fail to convince Despite a rebound today, euro-zone financial markets have had a disastrous week as policymakers, including the ECB, failed to convince investors that they will respond adequately to the economic shock... 13th March 2020 · 5 mins read
Europe Economics Update Border controls are creeping up the policy agenda While the widespread re-introduction of border controls in Europe does not seem likely at present, it is possible that more governments turn to them as part of a wider policy response against the... 13th March 2020 · 3 mins read
