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Short-term gain, long-term pain April’s data suggest that the boost to the euro-zone economy from exporters front-running US tariffs came to an end at the start of the second quarter. Euro-zone industrial production and exports were very strong in Q1 as …
13th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The upcoming fiscal stimulus in Germany will boost core inflation a bit, but we think the effect will be small and that the core rate will average just over 2% in 2026 and 2027. The stimulus will have only a very small direct impact on consumer prices and …
12th June 2025
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
11th June 2025
Euro-zone GDP rose strongly in Q1 but the economy will struggle in the rest of this year as tariff front-running ends and higher US tariffs start to weigh more heavily on activity. Increased defence and infrastructure spending will then support GDP growth …
10th June 2025
Tariff scenarios compared Along with its slightly hawkish communications, which we commented on here , the ECB published estimates this week of how US tariffs could affect the economy. In short, they think tariffs of 10% or more would reduce GDP …
6th June 2025
Wage growth looks set to slow from 4.5% last year to around 3% by the end of 2025, leaving it within touching distance of the 2.5% rate we think is consistent with the ECB’s inflation target. Euro-zone wage growth has been on a steady downward trend since …
Euro-zone GDP and Employment (Q1 2025) Front-running boost will be unwound in second quarter The upward revision to euro-zone Q1 GDP growth to 0.6% q/q from 0.3% is largely due to a surge in pharmaceutical exports which we already know is being reversed …
Tariff front-running already reversing German industrial production and export figures for April suggest that the boost to activity from US tariff front running is already reversing and that underlying industrial activity remains weak. With US tariffs …
The ECB’s decision to cut the deposit rate by 25bp to 2.0% was in line with expectations and the messaging in the press conference suggests that a pause at the next meeting in July is most likely. We think the Bank will lower interest rates once more this …
5th June 2025
ECB likely to cut further The ECB’s decision to cut the deposit rate by 25bp to 2.0% and give no clear signals about the future path of monetary policy was in line with expectations. We forecast one more rate cut in the second half of the year with risks …
Updated Q1 Ireland data to prompt massive revision to euro-zone outturn We think that the huge upward revision to Ireland’s Q1 GDP data this morning, to show a rapid expansion that was in large part driven by tariff front-running, will lead to euro-zone …
Services inflation down and further declines to come May’s steep decline in services inflation, to its lowest level in more than three years, confirms that the previous month’s jump was just an Easter-related blip and that the downward trend in services …
3rd June 2025
The latest twists and turns in the US tariff saga once again dominated the week. We responded to the court ruling that suspended Trump’s tariffs here . The news that tariffs have now been reinstated doesn’t alter our main conclusions. The latest legal …
30th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
Strong, but not unanimous support for June cut. Opinion is divided on what to do next. An early exit by Lagarde would not cause sudden shift in policy. A 25bp interest rate cut next week, taking the deposit rate to 2.0%, looks very likely. But divisions …
29th May 2025
Yesterday’s US court ruling has added yet more uncertainty to the EU-US trade relationship and at face value has weakened President Trump’s position. But the risk of tariffs remains very real not least because sectoral tariffs, which are unaffected by the …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. The ECB’s forthcoming assessment of its 2021 strategy review won’t …
28th May 2025
For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral …
27th May 2025
Economy weak, inflation expectations eased May’s euro-zone business and consumer survey from the European Commission shows a small improvement in sentiment, but the data are still consistent with the economy struggling. And the price expectations indices …
ECB account reveals disagreement The account of last month’s ECB meeting, published on Thursday, showed diverging views on the risks to inflation and the appropriate monetary policy stance. It noted that “a few” members of the Governing Council “could …
23rd May 2025
US-EU brinkmanship highlights risks President Trump’s threat of a 50% tariff from 1 st June may well turn out to be a negotiating tactic and seems very unlikely to be where tariffs settle over the long run. But if it were implemented it could result in a …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Germany’s historic shift to looser fiscal policy will give the …
Small boost from tariff front-running not enough to stop economy stalling This page has been updated with additional analysis since first publication. The euro-zone’s flash PMIs for May suggest that manufacturing output continues to be supported by the …
22nd May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. The push to enlarge the EU has gained momentum since the start …
20th May 2025
By seeking to extend the “polluter pays” principle to building owners and road users, the ‘sequel’ to the EU’s Emissions Trading Scheme was always likely to run into public and political opposition. The risk for the EU is that any concessions to make ETS2 …
19th May 2025
April’s surprisingly large jump in services inflation appears to have been entirely an Easter timing effect that will reverse in May. Meanwhile, there are some near-term upside risks to headline inflation from higher food prices, but we still expect the …
The agreement to roll back some tariffs reached by the US with both China and the UK raises the question of whether the EU will reach a similar deal before 9 th July, when the pause on the so-called “reciprocal” tariffs expires. We suspect a US-EU deal …
16th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. European markets have had a strong start to the year, and we are …
15th May 2025
This page has been updated with additional analysis since first publication. GDP growth likely to slow again Euro-zone GDP growth was revised down to 0.3% q/q in Q1 but the underlying picture was weaker than this and we expect growth to slow again the …
Bumper growth suggests SNB will cut by just 25bp next month Switzerland’s GDP growth shocked to the upside in the first quarter and grew by 0.7% q/q, shaking off concerns that trade uncertainty would weigh on the economy. This means the SNB is more likely …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Most euro-zone governments look set to continue running large budget …
14th May 2025
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe’s economy will receive a modest boost from the German-led …
Recent actions by the Trump administration have raised doubts about the dollar’s safe-haven credentials, and could contribute to a further decline in its share of global FX reserves. At the same time, European governments, led by Germany, are set to …
Global Trade Stress Monitor …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. There has been an increase in optimism about the EU in recent months …
12th May 2025
An interactive dataset looking into EU macroeconomic imbalances. This content was last updated on 12th May 2025. If you have subscriber access to this data, you can download it via the menu options in the top right of each chart or table. If you would …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
Next week’s election in Portugal is likely to have little impact on the country’s economic prospects, not least because it looks like it will be a repeat of last year’s election results. Regardless of the outcome, we expect the public debt ratio to fall …
9th May 2025
Euro-zone GDP expanded at a decent pace in Q1 but that was partly due to temporary tariff front-running effects. And while higher defence and infrastructure spending will support euro-zone GDP growth late this year and in 2026, the boost will be smaller …
Tariff damage likely to be limited This week brought further evidence that the impact of US tariffs on activity in the euro-zone has been limited so far, and may even have been positive. March’s industrial production data from Germany and Ireland showed …
Riksbank leave rates unchanged, but signals cuts may be coming While the Riksbank left its policy rate unchanged at 2.25% today, policymakers indicated that a rate cut is likely this year given the weakness of the economy. We now think that they are …
8th May 2025
Rebound in German industry unlikely to last The big rise in German industrial output and orders in March confirms that conditions in the sector have stabilised in recent months. However, some of the strength might be due to tariff front running. And with …
Retail sales edged down in March This publication has been updated with additional analysis Euro-zone retail sales declined in March, reversing part of the increase in February. We expect spending growth to remain weak for the rest of the year as any …
7th May 2025
Inflation lower than expected, but the core rate to remain high for rest of year Sweden’s CPIF inflation was unchanged in April which will give the Riksbank little cause for concern going into its policy decision tomorrow. We expect it to keep the policy …
Merz significantly weakened by first round election failure The failure of CDU leader Friedrich Merz to be elected Chancellor in the first round of voting will probably not prevent him and the Grand Coalition from taking power in the coming days or weeks. …
6th May 2025
