Euro-zone will continue to impress

The European economies are still in good shape, with the euro-zone benefitting from reduced political uncertainty and high levels of business and consumer confidence. We think that this strong performance will continue. While consumer spending growth looks set to slow from its recent strong pace, the conditions are ripe for an acceleration in investment, particularly given our view that the ECB will keep interest rates at rock bottom for a long time yet. Outside the single currency area, performance has been somewhat mixed, with the UK showing some signs of Brexit blues. But strong growth and mounting inflationary pressures in Sweden suggest that the Riksbank will be the first of Europe’s major central banks to raise interest rates.