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New French President Emmanuel Macron has a better chance than his predecessors of overhauling France’s sclerotic labour market and bloated public sector. But he may still have to dilute some of his reforms, limiting the effect on GDP growth. … Can Macron …
10th May 2017
Today’s Riksbank minutes suggest that the proponents of last month’s shock QE extension are unlikely to change their minds on the direction of monetary policy any time soon. So there is little chance of a material shift in the Riksbank’s policy stance …
The sharp decline in Norwegian CPI-ATE inflation has paused over the past three months, but it should soon resume. We think that it will fall to 1.0% later in the year, and remain well below the Norges Bank’s target in the medium term. … Norwegian & …
Anti-euro parties probably have a better chance of forming a government in Italy than in France. The election of an Italian eurosceptic government would not spell immediate disaster, but risks to the economy and the country’s struggling banks would rise …
9th May 2017
Despite declining, German industrial production remained at a high level in March and grew strongly in Q1 overall. Other German hard data have been weaker, but surveys imply that GDP growth was strong in Q1 and point to a good start to Q2. … German …
While Angela Merkel’s prospects for September’s federal elections have improved recently, a surprise defeat probably wouldn’t be a game-changer for the German economy. Meanwhile, the rise of small parties that oppose the sharing of fiscal burdens limits …
8th May 2017
Yesterday’s election of centrist liberal Emmanuel Macron as the next French President bodes well for the revitalisation of France’s lacklustre economy and the European project more generally. But he will encounter plenty of opposition and may have to …
Centrist liberal Emmanuel Macron looks set to comfortably defeat populist eurosceptic Marine Le Pen in Sunday’s final round of France’s presidential election and might even manage to secure a parliamentary majority in June’s National Assembly elections. …
5th May 2017
March’s Swedish production data suggest that GDP growth picked up further in Q1. And as stronger activity is consistent with a rise in inflationary pressure, we think that the Riksbank will have to raise interest rates sooner than it currently …
Survey data suggest that economic momentum among the major euro-zone economies has converged in 2017. Indeed, in April the spread between the Composite PMIs for Germany, France, Italy and Spain was the second lowest on record. Each economy has benefited …
4th May 2017
Centrist presidential candidate Emmanuel Macron reaffirmed his proposals to overhaul the French labour market in last night’s head-to-head television debate with his rival Marine Le Pen. While his plans will meet with strong resistance from unions and …
Despite March’s rise in retail sales, consumer indicators suggest that household spending growth slowed in Q1. Meanwhile, the final euro-zone Composite PMI implies that the economy made a strong start to Q2. … Euro-zone Retail Sales (Mar.) & Final PMIs …
The Norges Bank’s decision to leave interest rates unchanged came as no surprise, but we are among a very small minority of forecasters who think that the Bank will cut rates later in the year. … Norges Bank stands pat, but a rate cut not far …
After depreciating against the euro in April, we think that the Swiss franc, Swedish krona and Norwegian krone will rebound, but for different reasons. Political risk could yet re-escalate in Europe and elsewhere, boosting demand for the safe-haven franc. …
3rd May 2017
National Front presidential candidate Marine Le Pen has often been at pains throughout this election campaign to avoid the topic of a French exit from the European Union and the euro. But this is merely presentational; her “Frexit” ambitions are as strong …
The “preliminary flash” estimate of euro-zone GDP supported the message from earlier national data that the recovery maintained a decent pace in Q1. However, economic growth is still putting little upward pressure on inflation. … Euro-zone GDP (Q1 Prel. …
General government figures for 2016 revealed that most euro-zone countries’ fiscal positions improved last year, although some countries still fell short of their targets. Meanwhile, timelier central government data showed that Greece had a weak start to …
2nd May 2017
Today’s agreement means that EU officials can now turn their attention to the question of debt relief for Greece. One way or another, a deal is likely to be done to allow Greece to meet repayments due in July. But we remain sceptical that Greece will be …
March’s small fall in the level of euro-zone unemployment came as something of a disappointment and suggests that, despite the growing strength of the economy, wage growth will remain subdued and keep a lid on inflation. … Euro-zone Unemployment (Mar.), …
The PMIs weakened in April, but still point to faster manufacturing growth. And the Swedish survey suggests that inflation there will rise, supporting our view that the Riksbank erred in extending its asset purchases. … Manufacturing PMIs …
Following Mr Macron’s victory in the first round of the French presidential election, Nordic and Swiss currencies depreciated and government bond yields rose. And dovish comments from policymakers at the ECB and Riksbank added more downward pressure to …
28th April 2017
We think that the French economy is in better shape than data released this week suggest. On balance, its underlying health should boost support for the centrist presidential candidate Emmanuel Macron in next Sunday’s second round run-off. … Will France’s …
This week’s Bank Lending Survey brought more good news for the ECB. Lending conditions have continued to improve, and growth in the demand for credit points to a continued decent recovery in investment. Banks also reported that ECB policies had provided a …
April’s rise in euro-zone HICP inflation put it back in line with the ECB’s target, but the rise reflected the timing of Easter and we doubt that it will lead the Bank to alter its view that underlying inflation is not on a sustained upward path. … …
March’s euro-zone money and credit data point to steady economic growth. But they remain consistent with subdued core inflation. … Euro-zone Monetary Indicators Monitor …
April’s fall in the Swiss KOF Economic Barometer leaves it still pointing to a pick-up in annual GDP growth to around 2%. But with inflation extremely low and given signs that the strong franc is affecting exports, we expect the SNB to keep policy very …
Provisional Q1 GDP data for France, Spain and Austria suggest that euro-zone economic growth accelerated at the start of 2017. And the slower growth in France in Q1 should prove temporary. … France, Spain & Austria GDP (Q1, 1st …
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting next week. After all, the Bank will not be updating its forecasts, and there has been little to change policymakers’ minds about the economic outlook. So for now at least, …
27th April 2017
Given the shift in Mr Draghi’s language at today’s press conference, we think that in June the ECB will remove the reference to “lower” interest rates from its forward guidance. While this would end the loosening bias, any policy tightening is still a …
April’s increases in harmonised CPI inflation in Germany and Spain suggest that the euro-zone rate rose back to the ECB’s target of close to 2%. But the increase partly reflected the timing of Easter and underlying inflation pressures remain subdued. … …
The EC Economic Sentiment Indicator suggests that euro-zone growth accelerated further at the start of Q2. But with consumers’ inflation expectations falling back, we do not expect the ECB to signal any major changes to its policy plans later today. … EC …
Only the Riksbank Governor’s casting vote secured today’s unexpected QE extension. While we have pushed back our expectation for the first repo rate rise in Sweden, we still think that the Riksbank will have to raise rates sooner and faster than it …
Even if centrist Emmanuel Macron wins the second round of the presidential election, his En Marche! party almost certainly won’t secure a majority in the National Assembly following June’s legislative elections. As a result, he will need to compromise and …
The sharp jump in the Swedish Economic Tendency Indicator is consistent with our view that in tomorrow’s monetary policy announcement the Riksbank will signal an end to its asset purchases programme. And with stronger growth consistent with rising …
26th April 2017
April’s further rise in the German Ifo contrasted with the fall in the PMI in the same month, but both surveys point to very strong growth in the euro-zone’s largest economy. … German Ifo Survey …
24th April 2017
The opinion polls were right for once and a strong showing for centrist liberal reformer Emmanuel Macron in the first round of the French election has raised hopes of growth-boosting labour market reforms and EU cooperation. But the risk of a Le Pen …
Prospects appear to have improved for all of the Nordic and Swiss economies, with surveys pointing to annual GDP growth of up to 3% in Switzerland and 5% in Sweden. Inflation has been subdued on the whole, but several factors point to a marked divergence …
21st April 2017
After a tumultuous and ultimately nail-biting campaign, French voters head to the polls on Sunday to begin the process of electing their President. The opinion polls suggest that this first-round vote will go down to the wire with the second round within …
April’s rise in the euro-zone composite PMI added to evidence that the economy is faring very well, pointing to strong GDP growth of up to 0.7% per quarter. … Euro-zone Flash PMIs …
The ECB is likely to stick to the script this month, with a weak outlook for underlying inflation justifying its plan to buy assets until at least the end of the year. The Bank will probably drop the possibility of future interest rate cuts from its …
20th April 2017
As next week’s monetary policy meeting is the last before asset purchases are set to end in June, the Riksbank will probably signal whether they will be extended. While CPIF inflation, which excludes the direct effect of interest rate changes, …
Assuming that Marine Le Pen loses in the second round of the French presidential election, her most radical eurosceptic and protectionist policies will gain little traction at home over the next five years. But if her loss is a narrow one, she may have …
The euro-zone has continued to perform very well and we now expect growth to be stronger than the consensus forecast this year and next. Inflation has been lower than we had assumed, meaning that household spending growth should not slow too sharply. …
19th April 2017
The euro-zone goods trade surplus rose in February but probably narrowed in Q1 as a whole. With higher energy prices explaining much of that narrowing, trade volumes may still have boosted GDP in Q1. What’s more, we expect net trade to make a strong …
Activity surveys suggest that economic growth in the largest Nordic and Swiss economies is set to pick up. In Switzerland, the KOF Business Barometer points to annual GDP growth rising from Q4’s 0.6% to around 2.5%. In Sweden, the NIER Economic Tendency …
13th April 2017
The strength of economic survey indicators in Q1 has not yet been reflected in either the retail sales or industrial production data. But construction appears to have boomed and car registrations, which help to gauge non-retail consumer spending trends, …
France’s presidential election puts the country, and arguably the entire European Union, at a historic crossroads. The more likely path is one of liberal reforms that could boost growth and strengthen European cooperation. But a lurch towards …
While conventional metrics give some support to the Swiss National Bank’s view that the franc is “significantly overvalued”, the evidence from the economy implies that it is not. What’s more, we think the currency is more likely to rise in the near term …
March’s fall in inflation was partly due to temporary effects and inflation should rise in April. As there is now an increasing risk that inflation will overshoot the Riksbank’s target, later this month we expect the Bank to signal that its asset …
12th April 2017
11th April 2017
