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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.
Jack Allen-Reynolds Senior Europe Economist
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European Data Response

German Ifo Survey (May)

The Ifo survey for May suggests that activity in Germany may be holding up a little better than we had feared. But the headline Business Climate Index is still consistent with GDP contracting in year-on-year terms and the expectations component shows that businesses think the situation will get worse. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.

23 May 2022

European Data Response

Euro-zone Consumer Confidence (May)

The small increase in euro-zone consumer confidence in May left it only slightly higher than its low point at the start of the pandemic. With confidence extremely low and real incomes squeezed by high inflation, we expect a drop in household spending to cause the euro-zone economy to contract in Q2.

20 May 2022

European Economics Weekly

High inflation, record trade deficit

Data released over the past week revealed that the euro-zone recorded its first monthly current account deficit since 2012 and provided further evidence that underlying price pressures are building. We expect the latter to prompt the ECB to raise rates by 25bp, if not 50bp, in July. Next week, the PMIs and Ifo for May will provide more evidence that the euro-zone and German economies are at risk of recession. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.  

20 May 2022

More from Jack Allen-Reynolds

European Data Response

Euro-zone Final HICP (Dec.)

Euro-zone inflation is likely to have peaked at 5% in December, with energy inflation set to fall sharply this year. But we think that core inflation will settle at around 2%, prompting the ECB to prepare the ground for interest rates to rise next year.

20 January 2022

European Economics Weekly

Euro-zone GDP barely grew in Q4, inflation risks rise

Data released this week suggest that our assumption that euro-zone GDP rose by 0.2% in Q4 could be too optimistic, but we still think that the economy will grow in Q1. Meanwhile, rapid house price inflation adds to the case for the ECB to, in Jay Powell’s words, start thinking about thinking about raising interest rates.

14 January 2022

European Economics Update

Rate hikes might not spell the end of ECB QE

We doubt that “fiscal dominance” – worries about the impact of higher interest rates on debt sustainability – would stop the ECB from raising interest rates. But it might encourage the Bank to backstop the bond market even after raising rates by committing to re-start asset purchases if needed.

11 January 2022
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