Europe Economics Update Budget gridlock will keep Belgium’s deficit high Belgium's political crisis and high budget deficit have largely gone unnoticed in past couple of months while all eyes have been on France. This Update answers some key questions about its political... 30th August 2024 · 3 mins read
Europe Economics Update Germany and Spain HICP (Aug.) Inflation figures for Germany and Spain suggest that euro-zone headline inflation may have fallen to the ECB’s 2% target in August and that the core rate edged down. That paves the way for a September... 29th August 2024 · 2 mins read
Europe Economics Update Progress towards Capital Markets Union will be slow Capital Markets Union (CMU) is regarded by many European policymakers as one of the key reforms needed to close the gap between EU and US productivity. But a full CMU is a long way off, and in any... 28th August 2024 · 4 mins read
Europe Economics Update EU semiconductor industry will continue to lag behind Although the EU is making progress in expanding its semiconductor production capacity, including through a new plant in Dresden, it is still a long way behind the US and Asia and is unlikely to catch... 23rd August 2024 · 5 mins read
Europe Economics Update Big fall in negotiated wage inflation The scale of the fall in negotiated wage inflation in Q2 was largely due to one-off payments made in Germany in March but not repeated in Q2. However, the underlying trend in wage inflation is clearly... 22nd August 2024 · 3 mins read
Europe Economics Update Services inflation will start falling again soon There are good reasons to expect services inflation to start falling again towards the end of this year and in 2025. But as long as wage growth remains high, services inflation will stay strong too. 20th August 2024 · 2 mins read
Europe Economics Update Dovish rate cut by Riksbank, more to follow We think the Riksbank will follow today’s 25bp rate cut with a cut at each of the three remaining meetings this year to take the policy rate to 2.75%. But we expect the terminal rate to be 2.5% which... 20th August 2024 · 3 mins read
Europe Economics Update Norges Bank remains hawkish Norges Bank’s decision to leave its policy rate unchanged at today’s meeting, at 4.5%, was never in doubt. However, we still suspect that continued declines in inflation will allow it to start cutting... 15th August 2024 · 3 mins read
Europe Economics Update Riksbank to cut rates with more on the way Since the Riksbank’s last meeting in June, Swedish inflation and activity data have been weaker than policymakers expected. We think this will encourage them to cut the key policy rate from 3.75% to 3... 14th August 2024 · 5 mins read
Europe Economics Update Norges Bank will stick to hawkish tone for now Inflation in Norway has continued to fall more quickly than policymakers expected. But with the krone coming under renewed pressure recently, we think they will maintain a hawkish tone next week. 9th August 2024 · 2 mins read
Europe Economics Update Strong franc opens door to FX purchases and rate cuts Recent safe haven flows into the franc may have prompted limited FX interventions by the SNB. But we think that the policy rate will remain its main policy tool, even for dampening the franc’s... 8th August 2024 · 3 mins read
Europe Economics Update How much damage would Trump tariffs do to Europe? Several organisations have estimated that a universal 10% tariff on US imports, as proposed by Donald Trump, would reduce euro-zone GDP by at least 1%. We think the hit would be much less than 0.5%. 8th August 2024 · 4 mins read
Europe Economics Update Prospects for German industry remain poor German industrial output rebounded in June and may well expand a bit over the coming year or so. But any recovery will be weak and the sector will remain in structural decline. 7th August 2024 · 4 mins read
Europe Economics Update Tourism to keep supporting southern outperformance Tourism in the euro-zone is likely to continue growing at a decent pace over the coming quarters due to rising real wages and increased capacity. This will be a particular boon to the southern... 5th August 2024 · 4 mins read
Europe Economics Update High household saving rate unlikely to plummet Tight monetary policy and low consumer confidence have pushed the euro-zone’s household saving rate up to unusually high levels. While interest rates are set to keep falling and confidence might... 29th July 2024 · 3 mins read
