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There are some good reasons why the ECB should be worried about the prospect of a bout of consumer price deflation in the euro-zone. But it is not clear that it has the firepower to prevent it. … Should the ECB fear …
4th November 2013
The ECB’s Bank Lending Survey (BLS), published last week, suggested that credit constraints might soon start to ease in the euro-zone. But this improvement is only tentative; the fragility of the region’s banks will weigh on the economy for some time yet. …
With the economic recovery still pretty fragile, the euro climbing higher and inflation falling sharply, President Draghi may adopt a slightly softer stance at the ECB’s interest rate press conference on 7th November. But there appears to be little chance …
31st October 2013
The latest euro-zone inflation and unemployment figures provide another clear signal that the recovery is still very fragile and will increase pressure on the ECB to take further action to support the economy. … Euro-zone Flash CPI (Oct.) & Unemployment …
Contrary to expectations, French President François Hollande may fulfil his promise to reduce unemployment by the end of the year. But he will do so by relying on temporary initiatives rather than tackling the considerable structural problems of the …
October’s rise in the EC’s euro-zone Economic Sentiment Indicator (ESI) suggests that the region’s modest recovery continued in the early stages of Q4. … Euro-zone EC Survey, German Unemp. (Oct.) & Spa. GDP …
30th October 2013
Belgian GDP rose for the second straight quarter in Q3, suggesting that euro-zone GDP recorded another moderate expansion too. … Belgian GDP …
Although Cyprus has already begun to gradually relax its capital controls, restrictions on deposits leaving the country remain in place. With a fragile banking sector and an economy deep in recession, it seems unlikely that Cyprus will be able to lift …
On balance, the smaller peripheral economies in the euro-zone are still making inroads into their budget deficits, but there are some signs that Italy and Spain are faring a bit less well. … Euro-zone Fiscal Monitor …
29th October 2013
Although the Bank of Spain’s Q3 GDP estimate suggested that Spain may have exited its two-year recession, the fall in the euro-zone composite PMI in October highlighted that the region’s economic recovery remains fragile. For now at least, then, we see …
28th October 2013
September’s euro-zone monetary data perhaps offered tentative signs that the fall in bank lending is easing, but a decent pick-up in credit remains a distant prospect. … Euro-zone Monetary Indicators Monitor …
25th October 2013
The fall in German Ifo business sentiment in October provided another timely reminder that the euro-zone recovery remains fragile. … German Ifo Survey (Oct …
Despite falling in October, the euro-zone PMIs suggest that the region’s modest expansion continued at the start of Q4. … Euro-zone Flash PMIs …
24th October 2013
As expected, both the Swedish Riksbank and Norway’s Norges Bank both held their policy rates unchanged today. Given our below-consensus outlook for both economies, we do not expect either to hike rates until 2015. … Swedish and Norwegian rates on hold …
As expected, both the Swedish Riksbank and Norway’s Norges Bank both held their policy ratesunchanged today. Given our below-consensus outlook for both economies, we do not expect eitherto hike rates until 2015. … Swedish and Norwegian rates on hold until …
The rise in euro-zone consumer confidence in October adds to signs that the euro-zone recovery is gradually improving. However, we think that a strong and sustained recovery in consumer spending is still some way off. … Euro-zone Flash Consumer …
23rd October 2013
Q3’s GDP estimate from the Bank of Spain suggests that the economy has finally emerged from its two year long recession. But we doubt that the economy will generate a strong enough recovery to bring the unemployment rate and public debt down significantly …
The recent pick-up in the euro-zone economy stands in marked contrast to the accelerating contraction in bank credit. Given the importance of banks to the region, a “creditless recovery” will not be strong enough for the euro-zone to grow out of its debt …
21st October 2013
Given the recent run of positive economic news from the euro-zone, it is perhaps no surprise that the spread between Italian and German government bond yields has narrowed. But we remain concerned about the outlook for Italy and think that the recent fall …
Euro-zone policymakers took another step along the path towards banking union last week, while the resolution of the US shutdown debacle appeared to remove an external threat to the region’s fragile economic recovery. But one legacy of the episode has …
While the struggle to form a new German Government looks set to continue for another month, this does not mean that major change is afoot. Angela Merkel might make some concessions on a national minimum wage in order to form a grand coalition with the …
17th October 2013
We think that the continued strength of the franc will weigh heavily on Switzerland’s exports for some time yet. But fears of overheating in the property market seem overdone, implying that a brighter outlook for domestic spending should ensure a steady …
Euro-zone Finance Ministers made little progress on Banking Union at their summit this week. If next year’s stress tests find large holes in bank balance sheets, there is still no clear mechanism to fill them. … What will happen after next year's bank …
Ireland’s 2014 Budget presented an apparently conducive backdrop for the country’s exit from its euro-zone support programme later this year. But Ireland’s post bail-out prosperity is not yet assured. … Budget keeps Ireland on track for bail-out …
15th October 2013
Despite the euro-zone economy’s recent recovery, likely constraints on future rates of economic growth and limits to further austerity mean that more of the region’s economies could yet choose, or be forced, to turn to default as a way out of their debt …
The continued rise in ZEW investor sentiment in October suggests that the German economy is so far weathering the storm of political turmoil elsewhere. … German ZEW Survey …
Despite a rise in production in August, the euro-zone industrial sector is unlikely to have provided much of a boost to the wider economy in Q3. … Euro-zone Industrial Production (Aug …
14th October 2013
The US federal government shutdown is unlikely to have major direct effects on the European economy and financial markets provided that it is resolved fairly quickly. Nonetheless, the episode has served as a timely reminder that euro-zone policymakers …
Speculation has risen in recent weeks that Slovenia will be forced into some form of euro-zone bailout. But the country can still avoid asking for outside help in dealing with its banking crisis. … Slovenia can still save itself from a …
11th October 2013
The latest industrial figures heighten the risk that both the French and Italian economies contracted in Q3, confirming that the euro-zone’s recovery is strongly reliant on Germany. … French & Italian Ind. Production …
10th October 2013
Despite the sharp rise in production in August, the German industrial sector will provide the wider economy with a slightly smaller boost in Q3 than Q2. … German Industrial Production …
9th October 2013
The European economy has shown further signs of recovery, with the euro-zone finally emerging from recession in the second quarter and other parts of the continent also faring better. But growth in the peripheral countries of the currency union looks set …
8th October 2013
Evidence mounted last week that euro-zone unemployment has peaked. Particularly encouragingly, many of the peripheral economies have now enjoyed several months of falling unemployment. What’s more, employment growth in the region is likely to pick up over …
7th October 2013
President Draghi struck a cautiously optimistic tone about the euro-zone’s nascent recovery. But while he made it clear that the ECB stands ready to prevent excessive rises in market interest rates, there was little sign that further imminent action to …
2nd October 2013
The fall in euro-zone CPI inflation to 1.1% in September – its lowest rate since February 2010 – leaves it well below the ECB’s target of “below, but close to, 2%”. While falling energy inflation has played an important role, core inflation has also …
A contentious component of the Greek bail-out package has been its privatisation programme. This Update summarises some of the views expressed at a panel discussion in which Ben May was involved at the Euromoney “Greece Privatisation and Investment Forum” …
1st October 2013
August’s euro-zone unemployment figures provided further tentative signs that labour market conditions are improving. … Euro-zone Unemployment (Aug. 13) & Final Manu. PMI …
Silvio Berlusconi’s decision to withdraw his support for the coalition Government may not trigger elections. But the fragile political situation highlights the huge challenges that Italy faces just to make further inroads into its budget deficit, let …
30th September 2013
September’s euro-zone flash CPI figures confirmed that the ECB enjoys plenty of room to loosen monetary policy further. … Euro-zone Flash CPI …
Last week’s surprise (to most people) decision by the US Federal Reserve not to “taper” its asset purchases has some near-term benefits for the euro-zone. But it does not eliminate the longer-term challenges facing the European Central Bank. … Surveys …
September’s European Commission business and consumer survey echoed the message from other recent indicators that the euro-zone economy probably expanded again in Q3. But growth is too slow to resolve the region’s debt crisis. … Euro-zone EC Survey …
27th September 2013
The continued weakness of the euro-zone monetary data in August suggests that the pick-up in the real economy rests on fragile foundations. … Euro-zone Monetary Indicators Monitor …
26th September 2013
The firmer tone of the economic data has ruled out any change in interest rates at the ECB Governing Council meeting on 2nd October, while the US Federal Reserve’s recent communication problems will have strengthened the ECB’s resolve to keep its own …
25th September 2013
Greece and Ireland have continued to cut their budget deficits. But the fragile political situation in Italy has contributed to some budget slippage there. … Euro-zone Fiscal Monitor …
The execution of more long-term refinancing operations (LTROs) by the ECB could ease concerns over a potential liquidity crisis in the banking sector. But it could also further strengthen the pernicious links between euro-zone governments and banks. … …
24th September 2013
September’s rise in German Ifo business sentiment confirmed that the economy is recovering, but we continue to expect GDP growth to be reasonably sluggish over the coming quarters. … German Ifo Survey …
While Angela Merkel did not win enough votes to govern alone in yesterday’s election, her strong support was a clear vindication of her domestic and international policy stance so far. She is likely to end up governing as part of a grand coalition with …
23rd September 2013
September’s rise in the euro-zone’s composite PMI suggests that the bloc’s recovery continued in Q3. But there are still good reasons to worry about the economic outlook. … Euro-zone Flash PMIs …
Last week’s surprise (to most people) decision by the US Federal Reserve not to “taper” its asset purchases has some near-term benefits for the euro-zone. But it does not eliminate the longer-term challenges facing the European Central Bank. … Fed …
