Europe Economics Update Another shot at TARGET2 While some of the concerns over TARGET2 imbalances might be over-done, they are nonetheless a reminder of the depth of the economic and financial problems facing the currency union. 31st May 2012 · 1 min read
Europe Economics Update Can a bail-out solve Spain’s problems? A worsening domestic economy and limited scope for the state bank reconstruction fund (FROB) to defuse Spain’s banking crisis, make an EU/IMF bail-out package look unavoidable. But in our view, it is... 30th May 2012 · 1 min read
Europe Economics Update Euro-zone Monetary Indicators Monitor (Apr.) The latest monetary data confirm that the ECB’s generous liquidity measures are not prompting banks to lend more to the rest of the economy. 30th May 2012 · 1 min read
Europe Economics Update Euro-zone Fiscal Monitor (May) Recent fiscal data suggest that Greece and Spain will struggle to meet their existing budget deficit forecasts for 2012 without implementing further austerity measures. But for now at least, the... 29th May 2012 · 1 min read
Europe Economics Update Problems mount for the next Greek Government Markets have reacted positively to some signs of growing support for the pro-bail-out parties amongst Greek voters. But the formation of a government headed by New Democracy is unlikely to end deposit... 28th May 2012 · 1 min read
Europe Economics Update The euro has yet to price in a break-up Even after the recent falls, the euro exchange rate does not appear to incorporate a significant “break-up premium”. As such, we see scope for further considerable declines as the crisis continues. 24th May 2012 · 1 min read
Europe Economics Update Can Greece survive outside the euro-zone? Many commentators argue that even though Greece might benefit from leaving the euro-zone in the long run, an immediate exit would result in the Government running out of money with potentially... 24th May 2012 · 1 min read
Europe Economics Update What more can the ECB do to help? The renewed escalation of the euro-zone crisis has prompted calls for the European Central Bank to take more action. But whilst the ECB has scope to provide more support without taking unacceptable... 23rd May 2012 · 1 min read
Europe Economics Update Would a country exiting the euro also have to leave the EU? Despite much confusion on this point, there does not appear to be any insurmountable legal barrier to a country leaving the euro and remaining within the European Union (EU), even without the prior... 22nd May 2012 · 1 min read
Europe Economics Update Euro-bonds can't keep the euro-zone together Calls for jointly issued “euro-bonds” are growing louder again. But they are unlikely to be implemented quickly or effectively enough to prevent some form of euro-zone fragmentation. 22nd May 2012 · 1 min read
Europe Economics Update Will falling bank deposits force Greece out? The recent rapid decline in Greek bank deposits underlines our warnings that it could be pressures on the banking system which provide the primary trigger for some form of euro-zone break-up. 17th May 2012 · 1 min read
Europe Economics Update Just how hard would a Greek exit hit the ECB? One often advanced reason why Greece and other countries simply could not leave the euro-zone is the potential damage to the institution at the core of the currency union, the European Central Bank... 17th May 2012 · 1 min read
Europe Economics Update Is Portugal still next in line? Domestically, Portugal’s economy suffers from a broader range of factors dragging on medium-term growth prospects than its peripheral European peers. And externally, an imminent euro-zone exit by... 16th May 2012 · 1 min read
Europe Economics Update Greece: After the election A victory for Greece’s anti-bail-out parties in the June election would not necessarily mark the end of the bail-out deal. But any agreement which is reached between the Government and the troika is... 16th May 2012 · 1 min read
Europe Economics Update Contagion is still the key danger The direct economic and financial effects of a Greek exit from the euro-zone need not be catastrophic. The key question remains whether the policymakers can prevent contagion effects from prompting a... 15th May 2012 · 1 min read
Europe Economics Update Higher German inflation won’t rescue the periphery Suggestions that higher German inflation will allow the euro-zone’s peripheral economies to regain lost competitiveness look hopelessly optimistic. Those countries still face deep and prolonged wage... 14th May 2012 · 1 min read
