Europe Economics Update

How the Iran shock may affect the euro-zone

The jump in energy prices since the weekend’s military attacks is a mild stagflationary shock for the euro-zone. If the increase is sustained, it would add around 0.3 percentage points to inflation...

· 5 mins read

Global Economics Update

The consequences of the Middle East conflict

The global economic impact of conflict in the Middle East will hinge on its effect on energy markets. If oil stays near $70-$80 per barrel, DM inflation will be only about 0.2-0.3 percentage points...

· 8 mins read

Europe Economics Update

Taking stock of the German fiscal stimulus

With Germany’s fiscal stimulus now beginning to show up in the data, we think the increase in defence and infrastructure spending may be even slower and smaller than we had assumed – but that may be...

· 5 mins read

Global Economics Update

Questions & answers on the new US tariff regime

The imposition of a 10% Section 122 tariff on all countries leaves the weighted-average US tariff rate about 3.5%-points lower than was the case under the IEEPA framework, although the difference will...

(Updated 24th February 2026) · 8 mins read

Europe Economics Update

Switzerland to lead Europe on AI

While we think it will take several years before AI has a meaningful impact on Europe’s economies, Switzerland may be an exception. There is already some evidence of a positive boost from AI. And we...

· 3 mins read

Europe Economics Update

EZ housebuilding subdued, civil engineering growing

There is likely to be an increase in civil engineering activity in the euro-zone this year as Germany’s government boosts infrastructure spending. However, we think that this boost will be smaller...

· 2 mins read

Europe Economics Update

Euro-zone productivity to remain slow

Data released this morning confirm that euro-zone productivity growth remained sluggish last year. While productivity is already benefitting from AI in the US, we expect it to stay slow in the euro...

· 2 mins read

Europe Economics Update

Consensus overcautious on Spanish consumers

While the consensus expects economic growth in Spain to slow in 2026, we think that strong consumption will keep the economy growing at a similar pace to the 2.8% recorded last year.

· 3 mins read

Europe Economics Update

ECB on hold for several more months

While the ECB left rates on hold today and put a positive spin on the outlook for the economy, we think its next move is likely be a rate cut, albeit not until much later in the year.

· 3 mins read

Europe Economics Update

Analysing public debt sustainability in the euro-zone

Among the largest euro-zone countries, public debt looks most worrying in France because it is on an upward trajectory and Italy because it is likely to remain very high. Government debt is also set...

· 4 mins read

Europe Economics Update

ECB Bank Lending Survey (Q4 2025)

The ECB’s Q4 Bank Lending Survey, published this morning, suggests that banks have become more cautious about lending to companies while consumers remain reluctant to spend. It also showed that the...

· 3 mins read

Europe Economics Update

How the EU-India trade deal will affect the euro-zone

The recently signed EU-India trade deal promises big tariff reductions which should support EU export growth. However, the starting level of exports is low, the phase-in will be gradual, and imports...

· 4 mins read

Europe Economics Update

SNB on the FX sidelines, but negative rates coming

We do not think that the SNB has intervened in FX markets in recent days despite the Swiss franc’s large appreciation. Instead, we think policymakers are likely to combat any disinflationary pressure...

· 3 mins read

Europe Economics Update

Will the ECB respond to the rising euro?

The euro’s recent appreciation will reduce euro-zone inflation by a trivial amount, so for now the ECB is likely to do nothing to prevent it other than perhaps the mildest form of verbal intervention...

· 3 mins read

Commodities Update

Trump’s threats strain US-Europe energy relationship

Strains in US-Europe relations under President Trump mean that European policymakers may perceive the region’s growing dependence on the US for energy to be a strategic vulnerability. This is not as...

· 4 mins read