Expanded vaccine coverage to keep Delta in check

The recent fall in aggregate new daily Covid cases in the euro-zone, largely due to the success of the vaccination programme, means that governments in the region should be able to avoid re-imposing significant new restrictions in the coming months.
Michael Tran Assistant Economist
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European Economics Update

Further thoughts on Italy’s presidential vote

Italy’s presidential election, which will begin next week, threatens to reignite political uncertainty that has been quiescent since Mario Draghi became prime minister last year. While we agree that losing Mr Draghi as prime minister would put the Recovery Plan at risk, there are some reasons for comfort. Drop-In (14:00 GMT, 26th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.

21 January 2022

European Data Response

Euro-zone Consumer Confidence (Jan.)

January’s broadly unchanged reading for consumer confidence suggests that household spending might be holding up fairly well, despite a surge in Covid cases. We expect consumption to recover quickly once the Omicron wave fades and restrictions are eased. Drop-In (14:00 GMT, 26th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.

21 January 2022

European Economic Outlook

Inflation falling but rates may rise to zero

We expect consumption to rebound from the Omicron wave within a few weeks, lifting euro-zone GDP to its pre-pandemic level in the first half of the year. But GDP will remain below its pre-pandemic path for the foreseeable future. Meanwhile, more stable energy prices will cause headline inflation to come down sharply, but the lingering effects of the pandemic will prolong supply-chain problems and wage inflation is likely to rise. As a result core inflation will stay above the ECB’s 2% inflation target throughout 2022. And against that backdrop, the ECB will end its net asset purchases by December and prepare the ground to raise its deposit rate to zero by the end of 2023.

21 January 2022

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Nordic & Swiss Data Response

Sweden Consumer Prices (Jul.)

The slight pick-up in Swedish headline inflation in July was primarily driven by a rise in energy inflation. However, the fall in core inflation to its lowest level since 2014, means that the Riksbank will be in no hurry to raise interest rates.

13 August 2021

European Data Response

Euro-zone Flash HICP (July)

Euro-zone inflation resumed its upward trend in July and we expect it to rise further in the remainder of the year. But this is largely due to temporary factors, which should fade in 2022.

30 July 2021

European Data Response

EC Survey (July)

Economic sentiment in the euro-zone continued to improve in July as restrictions were lifted further. The EC Survey also showed that persistent input shortages are causing price pressures to grow across all sectors. That said, we expect inflation to fall back sharply once these shortages dissipate.

29 July 2021
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