With euro-zone inflation set to average around 6% this year, we expect aggregate real household incomes to fall by about 1.5%. The impact on consumption will be cushioned to some extent by fiscal support and, to a greater extent, by a decline in the saving rate. This should help the economy to avoid a recession but we think that GDP growth will be weaker than the consensus or ECB expect this year.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.