My subscription
...
Filters
My Subscription All Publications

Europe

European Economics Update

European Economics Update

Historical experience highlights recession risks

History suggests that the surge in energy prices over the past year means there is a good chance that the euro-zone will suffer a recession in 2022. It also suggests that it will be tricky for the ECB to tighten monetary policy without causing a recession further ahead.

20 May 2022

European Economics Update

End of negative rates is nigh!

The account of the ECB’s April meeting shows that a lot of policymakers thought the criteria for rate hikes had already been met. Since then, the case for rate hikes has only strengthened. While not our central forecast, a 50bp hike in July is increasingly likely, and even a June hike is not out of the question.

19 May 2022

European Economics Update

Case for rate hikes much stronger than in 2011

The ECB’s rate hikes in 2011 were a mistake, not just because they exacerbated the widening in peripheral bond spreads. Underlying inflation was subdued and policymakers were too concerned with acting pre-emptively to contain inflation expectations. They could hardly be accused of that this time! Based on the outlook for inflation, the case for normalising monetary policy is now much stronger.

16 May 2022
More Publications

European Economics Update

Wage pressures intensify amid high inflation

The current bout of high inflation is influencing wage negotiations in the euro-zone and stronger pay growth this year seems all but guaranteed, reinforcing the ECB’s resolve to normalise policy. But as things stand, a wage-price spiral still looks unlikely.  

European Economics Update

Rising inflation expectations causing alarm

Policymakers at the ECB are becoming more concerned about inflation expectations, with professional forecasters, financial investors, consumers and firms all anticipating that the pace of price increases will continue to accelerate. This makes it more likely that the Bank will begin normalising policy soon. Markets Drop-In (11th May, 10:00 EDT/15:00 BST): We’re discussing our Q2 Outlook reports and what they say about the potential performance of bonds, equities and FX rates as inflation peaks in a special 20-minute briefing on Wednesday. Register now.

10 May 2022

European Economics Update

EUR/USD: The case for parity

We think the euro will eventually weaken further, falling to parity against the US dollar, as the euro-zone economy falters, the terms of trade shock from higher energy prices feeds through, and the global economic outlook continues to worsen. Markets Drop-In (11th May, 10:00 EDT/15:00 BST): We’re discussing our Q2 Outlook reports and what they say about the potential performance of bonds, equities and FX rates as inflation peaks in a special 20-minute briefing on Wednesday. Register now.

European Economics Update

ECB may need more than promises to contain spreads

The prospect of tighter monetary policy in the euro-zone has raised the threat of a bigger sell-off in the region’s bond markets. If this happens, we think the ECB would ultimately intervene to prevent any lasting damage. But we doubt that it will agree the details of a new QE programme until it is urgently needed and, as a result, we think the euro-zone bond market is vulnerable to a sharp sell-off.

European Economics Update

Europe’s supply problems still intense

The timeliest surveys show that supply problems faced by euro-zone companies have eased a little this year, but remain intense. This will continue to weigh on production and keep inflation high. UK Drop-In (5th May 10:30 EDT/15:30 BST): Our UK Economics team are holding a special 20-minute briefing to discuss the latest MPC decision and what it means for their outlook for UK growth, inflation and BoE policy. Register now

1 to 8 of 604 publications
See More ↓