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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
German headline and core inflation remain very low and look set to fall further. With disinflationary pressures even stronger in many of the smaller euro-zone economies, deflation remains a real threat for the region as a whole. … German CPI (1st Est. …
The joint EU/IMF support packages may have provided Greece with some breathing space but it will not prevent years of economic hardship. Whatever its actions, the Government has no choice but to return its huge budget deficit to balance. … Greece: From …
The recent rescue package along with rulings made by the European Commission might be steps towards euro-zone fiscal integration that could feasibly benefit the region’s economies in the long run. But the near-term implication is greater pressure for a …
26th May 2010
On the face of it, there are signs that Ireland may be about to exit recession. But any recovery will be down to its exceptionally strong trade links with non-euro-zone economies, rather than any benefit from its early fiscal tightening. Accordingly, a …
24th May 2010
On the face of it, the recent weakening of the euro should provide the euro-zone’s external sector with a boost over the coming months. But given that exporters have tended previously to respond to a weaker currency by raising their prices in euros, the …
May’s falls in the euro-zone PMI and German Ifo business surveys are slightly worrying signs, but both still point to pretty strong growth for the time being. … Euro-zone Flash PMIs & German Ifo …
21st May 2010
Q1’s unexpected fall in GDP casts further doubt on the strength of the Norwegian recovery and supports our view that the Norges Bank will not increase interest rates as rapidly as its forecasts suggest. … Norwegian GDP …
20th May 2010
Switzerland’s low levels of public and private sector debt suggest that it will continue to out-grow the euro-zone over the next couple of years. But it will suffer from strong trade links with the region, particularly if the Swiss National Bank fails to …
19th May 2010
The latest Spanish GDP figures confirm that the economy just about exited recession at the start of the year. But with the Government recently announcing new austerity measures and the private sector still sitting on mountains of debt, the pick-up may …
May’s renewed decline in the ZEW index suggests that investors are still very worried about the effect of the periphery’s problems on the German economy. … German ZEW Survey (May), EZ CPI (Apr.) & Trade …
18th May 2010
Fears that the ECBs bond purchases will stoke inflation or encourage fiscal laxity are overblown. They do not constitute full-blown quantitative easing and will not allow euro-zone economies to escape a very painful fiscal squeeze. … What to make of the …
While some of the forces bearing down on the euro over recent months may now be easing, there are plenty of other reasons to expect the currency to fall further. Indeed, our forecast that the euro will drop to $1.20 by the end of this year looks too timid …
17th May 2010
Q1’s modest rise in euro-zone GDP confirms that the economic recovery in the region has failed to gain any real momentum even before the painful fiscal consolidation faced by many economies has begun. … Euro-zone GDP (Q1) & Industrial Production …
12th May 2010
The bold measures announced by European policymakers at the weekend may have reduced the chance of financial market meltdown. But this does not change our fundamental view that the Iberian Peninsula is set for several more rough years yet. … Iberian …
11th May 2010
The bolder than anticipated announcement of up to €750bn in loans and guarantees for euro-zone governments together with ECB government bond purchases hopefully reduces the immediate risk of financial market meltdown in the region. But it does not change …
10th May 2010
The latest data from the three main economies suggest that the region ended Q1 on a high note. But while the economic recovery may gain momentum in the short term, a prolonged period of fiscal consolidation, particularly in the periphery, is likely to …
The continued turmoil of Greek financial markets reflects a growing recognition that the rescue package - even if delivered swiftly - does not address Greece’s fundamental problems. There is still a significant risk of some form of default over the coming …
March’s surge in German industrial production confirms that the euro-zone’s largest economy is shaking off troubles in the periphery for now. But weather-related weakness earlier this year suggests that GDP broadly stagnated in the first quarter. … German …
7th May 2010
The ECB is trying to inject calm amid the fiscal turmoil, maintaining a dovish stance after leaving interest rates at 1%. Some might have been disappointed that there were no hints of further unconventional policy support to come. But President Trichet …
6th May 2010
With the impending bailout failing to reduce Greek bond yields and concerns spreading to other peripheral economies, some have suggested that the ECB might yet step in and buy government bonds itself. Whether it does or not, it is becoming clearer by the …
Despite having the highest level of government debt in the euro-zone, Italy has so far been largely untouched by the growing contagion effects of the Greek fiscal crisis. But there is no room for complacency if it is to stay below the markets’ radar. … …
The euro-zone’s fiscal crisis has clearly intensified, with Greek bond yields remaining extremely high despite the agreed bailout and concerns spreading to other peripheral economies. But the recovery in the broader economy seems to have carried on …
5th May 2010
With the joint euro-zone/IMF fiscal lifeline increasingly likely to be in place in a matter of days, the possibility of a near-term Greek funding crisis has been greatly reduced. But with government debt set to soar to astronomical levels this may just …
4th May 2010
With signs that Europe is perhaps finally getting its act together and is close to finalising a bailout package, the chances of a near term Greek Government default have greatly diminished. While there are still one or two potential sticking points, we …
3rd May 2010
Continued uncertainties about the proposed rescue package for Greece, coupled with the exceptionally grim medium-term outlook for the economy and public finances, point to a significant risk of some form of default on Greek Government debt over the next …
30th April 2010
The euro-zone CPI and unemployment figures add to the view that the region is set for a prolonged period of weak price pressures. … Euro-zone Flash CPI (Apr.) & Unemployment …
Any earlier suspicions that ECB interest rate hikes might have been on the horizon have surely been blown away by the Greek crisis. For now, the recovery in the broader euro-zone economy seems to have continued regardless. But there is a clear risk of …
29th April 2010
April’s improvement in the EC business and consumer survey suggests that, for the time being at least, the euro-zone’s fiscal crisis is not preventing a recovery in the broader economy. … Euro-zone EC Survey & German Unemployment …
Recent falls in the euro and euro-zone bond yields, coupled with stronger economic data from the core economies, has led to suggestions that the Greek crisis might have a silver lining. But we find it hard to believe that the effect of the episode can be …
28th April 2010
The euro-zone should stay together for another few years at least. But the region’s periphery requires an excruciating competitive adjustment that might well plunge it into depression. Meanwhile, fiscal tightening will damage even the core economies for a …
The crisis in Greece could pose as big a risk to the global economy and financial markets as the collapse of Lehman Brothers did in September 2008. In some respects the wider fall-out might even be worse. … Is Greece the next …
The latest German inflation figures show that, while the economy may be performing much better than the euro-zone’s periphery, core price pressures even there are firmly downward. … German CPI (1st Est. …
With considerable uncertainties over when the joint IMF/euro-zone rescue package for Greece will be implemented, Greece is still dangling from a precipice. If Europe is to pull Greece back up it will have to make funds available swiftly and put a …
27th April 2010
The European economy has shown further signs of recovery in response to the continued improvement in global economic and trade conditions. But the fiscal crisis in the euro-zone’s peripheral economies is casting an ever darker shadow over the medium-term …
Last week’s euro-zone data will have added to hopes that the recovery resumed at the start of this year, following Q4’s stagnation. But concerns about the region’s medium-term prospects remain, with the latest public finances data revealing the borrowing …
26th April 2010
April’s increase in the euro-zone composite PMI provides further hope that the recovery is regaining momentum. But with few signs from the hard data that the region’s heavy reliance on external demand is waning, the outlook remains fragile. … Euro-zone …
22nd April 2010
Greece is in the midst of another hellish week and now faces no choice but to seek to formally activate the European rescue package. While this may help to ease the markets’ frazzled nerves, the latest upward revision to the 2009 budget deficit highlights …
April’s sharp rise in German ZEW investor sentiment provides some hope that the recovery has not ground to a complete halt after the economy’s poor start to the year. … German ZEW Survey …
20th April 2010
Worries are growing that the paralysis of European air travel, caused by the volcanic eruption in Iceland, could have a damaging impact on European recovery prospects. But while there is no doubt that it will hit certain sectors hard, the overall impact …
19th April 2010
Despite the firmer details provided on the Greek rescue package, markets have made it crystal clear that they have deep reservations about the bailout. Before even considering lending on more favourable terms, they want to see euro-zone cash in Greek …
On the face of it, March’s sharp rise in euro-zone CPI inflation may look a little alarming. But with a fundamental lack of inflationary pressure in the economy, deflation rather than a surge in inflation is still the greater danger. … Euro-zone CPI …
16th April 2010
Greek bond yields have continued to surge as doubts remain over whether the euro-zone will actually be able to provide financial support to Greece. But a growing worry is that the ongoing crisis prompts Greek households and firms to remove their money …
15th April 2010
The European Commission’s warnings about Portugal’s budget plans are a timely reminder that the euro-zone’s fiscal crisis extends well beyond Greece. … Portugal warnings underline broader fiscal …
14th April 2010
On the face of it, February’s euro-zone industrial production figures confirm that the sector continues to expand at a healthy pace. But there are several reasons why these figures should be treated with a degree of caution. … Euro-zone Industrial …
Opinions on the broader implications of the Greek rescue package for the future of the euro-zone not surprisingly differ widely. But the conditions that made the bail-out necessary will have a profound effect on the region’s economy over the coming years. …
Last week’s further blow-out in Greek bond yields suggests that any slim chances that Greece had of muddling through its crisis on its own have all but evaporated. Some form of rescue - or at least a much stronger promise of assistance - looks likely to …
12th April 2010
While President Trichet sought to reassure markets today that aid would be provided for Greece if necessary, his call for aggressive fiscal tightening there and elsewhere underlined the prospect of only a very modest economic recovery in the region as a …
8th April 2010
