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Domestic price pressures in the euro-zone are strong

High inflation in the euro-zone isn’t all down to energy prices and global demand-supply imbalances. Domestic price pressures are also very strong, bolstering the case for tighter monetary policy.
Jack Allen-Reynolds Senior Europe Economist
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European Data Response

German ZEW Survey (August)

The ZEW survey fell again in August and is at a level consistent with the economy contracting. We now think a recession is unavoidable in the second half of this year as the impact of high energy prices on both households and industry takes effect. Europe Drop-In (18th Aug.): Winter is coming to the European economy – but how harsh will it get? Join this special briefing on the economic impact of Russia’s gas supply threat. Register now.  

16 August 2022

European Economics Weekly

Energy crisis hotting up

The biggest problem in Europe’s energy markets is the reduction in Russia’s gas exports. But extreme weather conditions are compounding the problem by making life difficult for nuclear, hydro and coal-fired power plants. Next week, we expect to learn that employment increased slightly in the second quarter. Drop-In: Europe under siege – The economic impact of Russia’s gas threat Thursday, 18th August 10:00 ET/15:00 BST. Register now.

12 August 2022

European Economics Focus

Why we expect a euro-zone recession

We think the euro-zone will soon fall into recession as high inflation, tighter monetary policy and weak global growth take their toll. While the economy should recover next year, the rebound will be held back by a lack of policy support. What’s more, we think the biggest risks to our forecasts are to the downside, notably from Russia turning off the gas taps completely or the ECB failing to avert a sovereign debt crisis.

11 August 2022

More from Jack Allen-Reynolds

European Economics Update

ECB FX intervention is unlikely

There has been some discussion of possible FX intervention by the ECB to support the euro, but there is next to no chance of that being announced at today’s press conference, and unless the single currency falls much further we think likely the Bank will limit itself to verbal interventions in future. Indeed, the ECB is more likely to tolerate…

27 June 2022

European Economics Weekly

US recession fears won’t deter ECB

Fears about a possible US recession have prompted investors to revise their ECB interest rate expectations down this week, but we have pushed ours up to show the deposit rate peaking at 2%. While next week we expect the euro-zone economic sentiment indicator to add to the evidence that growth slowed in June, we think that policymakers at the central bank will be more concerned by the inflation data, which look set to reach a new record high.

24 June 2022

European Data Response

Euro-zone Flash PMIs (June)

June’s euro-zone PMI surveys showed a further slowdown in the services sector, while activity in the manufacturing sector now seems to be falling outright. With the price indices remaining extremely strong, the euro-zone appears to have entered a period of stagflation.

23 June 2022
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