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Euro-zone exports continued to recover in May. But as the global economic revival loses momentum, weaker export growth will exacerbate the negative effects of the fiscal squeeze on the wider economy. … Euro-zone Trade Balance …
16th July 2010
May’s euro-zone industrial production data confirm that the recovery remains on track for now. But as global demand slows and domestic demand is hit by the fiscal squeeze, the revival in the wider economy may falter before too long. … Euro-zone Industrial …
14th July 2010
On the face of it, today’s Greek treasury bill auction, the first since April’s bailout package was activated, provides some reassurance that markets’ confidence may be gradually returning. But Greece is still a long way from being able to rely on the …
13th July 2010
July’s fall in German investor sentiment highlights concerns that peripheral debt worries and banking sector problems might stem the recovery in the euro-zone’s largest economy before long. … German ZEW …
Last week’s confirmation that stress tests of EU banks will be published on 23rd July did little to ease fears about the sector, probably because the scenarios considered will not be adverse enough. At least the ECB’s latest comments suggest that it will …
12th July 2010
After leaving interest rates unchanged today, the ECB confirmed that it would continue to support the banking sector with unlimited liquidity provision. And its cautious tone regarding the economic outlook suggested that official interest rate hikes are …
8th July 2010
May’s sharp rises in German industrial production and exports add to evidence that any negative effects on the sectors from the euro-zone fiscal crisis are being more than offset by the global economic upturn and weaker euro for now. … German Industrial …
The announcement that fairly detailed stress tests of EU banks will be published later this month brings only limited comfort. The adverse scenario that will be considered is nowhere near adverse enough and, crucially, there is still no clear promise of …
Further falls in euro-zone business confidence in June add to evidence that the economic recovery will fade in the second half of the year. But just as importantly, there are growing signs that divergences between the core and the periphery are …
7th July 2010
The threatened break-up of the euro-zone, which many see as a potential disaster, would actually open the door to renewed economic growth, not just for the weaker members of the zone, but for Europe as a whole. … Why the euro-zone needs to break …
We have come to the conclusion that the balance of probabilities has swung against the euro-zone surviving in its present form. We have been brought to this point by our analysis of the problems of indebtedness, competitiveness and structural economic …
6th July 2010
Perennially weak growth and a mountain of government debt mean that the Italian public finances are a potential time-bomb waiting to explode. Indeed, we think the size of the Governments debts will eventually prompt the markets to turn their sights on …
5th July 2010
On the face of it, there were some encouraging signs last week that the euro-zone banking system is becoming less reliant on the ECB for funding and is switching to borrowing from more conventional sources. But we think that these developments are not …
May’s euro-zone unemployment figures highlight the growing divergences between the core and peripheral euro-zone economies and add to evidence that the latter group’s economic woes are far from over. … Euro-zone Unemployment & Producer prices …
2nd July 2010
The widely predicted interest rate hike by the Swedish Riksbank from 0.25% to 0.5% made it thesecond western European central bank to tighten interest rates during the current cycle. But withother parts of Europe set for a much larger fiscal squeeze, we …
1st July 2010
With concerns about the euro-zone banking sector growing again, markets will be hoping for reassurance that the ECB will continue to provide ample liquidity. At the same time, the ECB is likely to stress that its asset purchases will continue to be fully …
The widely predicted interest rate hike by the Swedish Riksbank from 0.25% to 0.5% made it the second western European central bank to tighten interest rates during the current cycle. But with other parts of Europe set for a much larger fiscal squeeze, we …
Ireland exited recession with a bang in Q1, suggesting that the impact of fiscal tightening there and in the rest of the periphery may be less than generally feared. But the improving outlook largely reflects developments in the export sector, something …
30th June 2010
June’s euro-zone CPI data confirm that price pressures are very subdued. And while the continued fall in German unemployment brings hope of a modest consumer recovery there, it will not be strong enough to cause a marked pick-up in inflation. … Euro-zone …
June’s small increase in the EC measure of euro-zone economic sentiment is a relief after falls in other surveys lately. But it still points to only a modest recovery in the region as a whole, with the periphery performing very badly. … Euro-zone EC …
29th June 2010
May’s euro-zone money supply and bank lending figures suggest that banks remain in no mood to lend, highlighting the need for the ECB to maintain its unconventional policy support measures. … Euro-zone Monetary Indicators Monitor …
28th June 2010
Last week’s news on the euro-zone economy was fairly downbeat and suggested that divergences within the region have continued to widen. Germany, in particular, still seems to be benefitting from the weaker euro. But the outlook for the peripheral …
Recent data on the public finances suggest that the euro-zone peripheral governments are broadly on track to meet their ambitious fiscal targets for 2010. But these governments still face an enormous task to meet their medium-term goals. … Are the …
25th June 2010
The recent sharp rise in German consumers’ willingness to buy brings hope that announced fiscal austerity measures have not so far led households to abandon spending plans. But the weakness of fundamental determinants of household incomes suggests that a …
23rd June 2010
June’s fall in the euro-zone composite PMI index is another sign that the announced austerity measures may be starting to take their toll on the economy. But for the time being at least, the index still points to pretty strong growth. … Euro-zone Flash …
June’s improvement in the German Ifo business survey came as a relief amid evidence elsewhere that troubles in the periphery are starting to damage sentiment in core euro-zone countries. … German Ifo Survey …
22nd June 2010
On the face of it, the fact that the euro last week saw its strongest weekly gain in nine months might suggest that the worst is past for the single currency. The improvement could partly have reflected easing concerns about peripheral debt after a …
21st June 2010
The SNB’s hints that it will scale back its currency intervention suggest that the franc is set to appreciate more sharply and interbank interest rates should rise back towards the Bank’s target of 0.25%. But with growth set to slow before long, we doubt …
17th June 2010
Speculation that the Swiss National Bank’s (SNB’s) currency intervention has stemmed the decline in the trade-weighted euro seems overplayed. But the SNB’s struggle to prevent the franc surging against the euro is further proof of the strong fundamental …
16th June 2010
June’s drop in German ZEW investor confidence is a worrying sign that fears about peripheral debt are damaging sentiment towards core euro-zone economies too. … German ZEW (Jun.), E-Z Trade (Apr.) & Employment …
15th June 2010
The recovery in the euro-zone industrial sector continues apace. But it is far from clear that this will help the weakest economies in the region to cope with the coming fiscal squeeze. … Euro-zone Industrial Production …
14th June 2010
On the face of it, the latest news on the euro-zone economy has been reasonably encouraging, suggesting that the recovery has continued despite the fiscal crisis. National data point to another increase in industrial production in April, supporting …
The ECB maintained a supportive stance today, treating signs of an economic recovery with caution. While the Bank seems unlikely to resort to outright quantitative easing for now, sterilised bond purchases, generous bank lending and very low official …
10th June 2010
While the recent flurry of austerity measures in Germany and elsewhere goes some way towards meeting deficit reduction targets, there is considerably more to be done. And with the cuts already announced causing public uproar, some euro-zone countries will …
Q1’s GDP figures confirmed that, for now at least, Italy is expanding at a reasonably healthy pace. But with signs that the euro-zone fiscal crisis is damaging business and consumer confidence, growth looks set to slow over the remainder of the year. … …
Markets’ continued concern about the euro-zone fiscal outlook has prompted the euro to depreciate further and peripheral government bond yields to remain high over the past month. Worryingly, there are tentative signs that markets’ gloom may be starting …
9th June 2010
April’s rise in German industrial production provides hope that the recovery in the wider economy is gaining momentum. But with fiscal policy in Germany and elsewhere set to be tightened dramatically, the revival certainly remains fragile. … German …
8th June 2010
The past week’s data have added to concerns that strains in the region’s periphery are spreading to broader economic activity. While business sentiment remains consistent with a continued recovery for now, recent falls are worrying and the decline in …
7th June 2010
The second euro-zone GDP release for Q1 confirms that domestic spending remains weak and with fiscal tightening set to intensify, there is little prospect of an improvement any time soon. … Euro-zone GDP …
4th June 2010
The latest ratings downgrade of Spanish Government debt has triggered a new wave of concern in the markets. While Spain’s problems are far less acute than those of Greece, the Government still faces a tough task to convince the markets that it can return …
3rd June 2010
April’s drop in euro-zone retail sales brought more worrying evidence of the weakness of the consumer sector even before fiscal tightening really kicks in. … Euro-zone Retail Sales (Apr.) & Final PMI …
After making radical changes to unconventional policy just a few weeks ago, further alterations seem unlikely this month. The ECB will give little away about the size and type of future bond purchases. For now, it will stress that its actions are being …
Fears that Belgium might be the ‘Greece of the North’ have not yet been picked up by the markets. (See Chart 1.) But with persisting weaknesses in the banking sector and a renewed bout of political instability, risks to the economic and fiscal outlook are …
2nd June 2010
April’s sharp rise in euro-zone producer price inflation may prompt concerns that inflationary pressures are building. But we continue to think that deflation, rather than a surge in inflation is the greater threat for the region. … Euro-zone PPI …
The Swiss economy is recovering a little more slowly than had been hoped, but it continues to easily outperform the euro-zone. The key risk now is that close trade links to the region and a strong franc soon prompt the export-led revival to stall. … Swiss …
1st June 2010
April’s further rise in euro-zone unemployment adds to evidence that domestic demand in the region looks set to remain weak. … Euro-zone & German Unemployment …
Recent market developments, coupled with the prospect of a prolonged bout of fiscal consolidation, appear to be starting to have a damaging impact on confidence in the wider euro-zone economy. In the short term, this may not prevent the economic recovery …
31st May 2010
The sharp increase in Swedish activity in Q1, coupled with large upward revisions to growth in the preceding quarters, suggests that the Riksbank may bring forward its plans to raise interest rates in the summer or early autumn. … Swedish GDP …
28th May 2010
A bank levy along the lines of that recently proposed by the European Commission seems unlikely to alter banks’ behaviour or the state of European public finances dramatically. But the difficulty in agreeing to a uniform EU policy is another sign that a …
27th May 2010
