Recession to begin in Q4 as inflation broadens

We doubt that the recent strength in some of the official euro-zone activity data will last. The timelier surveys unanimously point to weaker activity to come, and the headwinds to growth from rising interest rates and high inflation will intensify in Q4. Next week, Italy’s government will publish its 2023 budget, which looks set to include additional spending on energy support measures but should not alter the plan to reduce the budget deficit in the medium term.