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German election result in the balance

After a sharp rise in support for the SDP the election result looks set to be very close. Whatever the outcome, economic policy will not change very much, but fiscal policy may be slightly less conservative, and Germany may be more open to European integration, if the Greens have a role in government.
Andrew Kenningham Chief Europe Economist
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European Economics Update

Answers to your questions on the ECB

We held a Drop-In today to discuss our views on the ECB and what the chances are of a further hawkish surprise in the coming weeks. (You can see an on-demand recording here.) This Update answers several of the questions that we received, some of which we couldn’t answer during the event.

24 May 2022

European Economics Update

Rising interest costs add to pressure on EZ households

We estimate that euro-zone households’ debt interest payments will quadruple as a share of income over the next couple of years as the ECB raises its policy rate. This will put yet further strain on households which are already struggling with higher costs and as such weigh on economic growth. 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.

24 May 2022

European Data Response

Euro-zone Flash PMIs (May)

The small fall in the euro-zone Composite PMI in May suggests that activity is holding up better than we had feared. But the services rebound is likely to run out of steam amid high inflation and the drop in new orders bodes ill for industry. So GDP growth is still likely to be weak for much of this year. 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.

24 May 2022

More from Andrew Kenningham

European Economics Update

What to make of rising inflation expectations

Market-based measures of inflation expectations have risen during the past few months, but they are still consistent with our view that inflation will remain well below target over the medium term. And while firms expect to raise prices in the near future, we think the impact on inflation will be short-lived.

19 August 2021

European Economics Weekly

German election getting complicated

The latest opinion polls suggest that Germany’s election, on 26th September, will be a close-run affair, with many coalition governments still potentially feasible. Whether or not the Greens are part of the government may turn out to be the most important factor for the economy. Next week we expect to learn more about the temporary fall in core euro-zone inflation in July, and to learn that employment rebounded in Q2.

13 August 2021

European Data Response

Euro-zone Industrial Production (June)

The second successive monthly fall in euro-zone industrial production in June was largely due to ongoing supply-chain difficulties in Germany. As these will ease only slowly, we don’t expect industry to contribute much to economic growth in the coming months, even though demand is still red hot.

12 August 2021
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