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The euro-zone’s gradual recovery appears to be slowing as we had warned as boosts from the euro’s depreciation and falling oil prices fade. However, the ECB has hinted at limits to its future policy support and the euro-zone region will continue to suffer …
14th April 2016
Despite February’s fall in industrial production, the sector looks likely to have had a fairly strong Q1. But survey evidence suggests that this is unlikely to be sustained. … Euro-zone Industrial Production …
13th April 2016
ECB officials appear to be trying to strike a balance between holding the door open to further policy action and yet stressing the limitations of monetary policy in order to pressure governments into taking steps themselves to encourage growth. But there …
8th April 2016
February’s rise in euro-zone retail sales volumes caused the annual growth rate to pick back up to a healthy 2.4% and suggests that total consumer spending growth accelerated in the first quarter compared to Q4. But spending volumes have been boosted …
6th April 2016
February’s surprisingly small fall in German industrial production offers hope of a pick-up in GDP growth in the first quarter. But it is too early to conclude that the euro-zone’s main growth engine is now firing on all cylinders. … German Industrial …
After years of recession, the Italian economy returned to growth last year and further policy support could see the recovery pick up slightly in 2016. But there has been little improvement in the economy’s potential growth rate, so the recovery will …
5th April 2016
The latest fiscal data for central governments show that Greece made a notably strong start to 2016 while the performance over the periphery as a whole was mixed . Meanwhile, the first releases of annual general government data for 2015 were positive …
February’s euro-zone retail sales data point to strong consumer spending growth in Q1, but we doubt that this will be sustained. And the downward revision to March’s Composite PMI added to signs that the overall recovery is slowing. … Euro-zone Retail …
The public spat between Greece and the IMF underlines the fragility of the country’s latest bailout deal and demonstrates that its long-term future inside the currency union is still far from assured. … Greece/IMF spat underlines fragility of …
4th April 2016
February’s fall in euro-zone unemployment suggests that the labour market remains in reasonable health, but it is still too weak to generate any real inflationary pressure. … Euro-zone Unemployment & Producer Prices …
We have argued for some time that the consumer recovery, which was the main driver of growth in 2015, would slow this year. Last week brought further evidence that this process is underway. Declining consumer confidence and signs that the labour market …
1st April 2016
Recent weak activity and inflation data in the euro-zone have underlined the fact that the ECB cannot afford to simply sit back and allow the euro exchange rate to strengthen further. … The ECB can’t afford to ignore the …
31st March 2016
Cyprus’ exit from its bailout and budding economic recovery are good news. But major challenges lie ahead in addressing non-performing loans and generating growth outside the financial services sector. We see Cyprus not as the great success story that it …
The Norges Bank has clearly become more concerned about threats to financial stability, but we do not think that this will prevent it from cutting the policy rate to zero by the end of the year. … Will financial stability concerns prevent Norges Bank …
30th March 2016
March’s falls in euro-zone business and consumer confidence support other evidence that the region’s slow recovery is losing pace. … EC Business & Consumer Survey, German HICP …
The Norges Bank has clearly become more concerned about threats to financial stability, but we do not think that this will prevent it from cutting the policy rate to zero by the end of the year. … Will financial stability concerns prevent Norges Bank rate …
February’s euro-zone monetary data suggest that December’s interest rate cut by the ECB had only a small effect. While the Bank has since increased its stimulus, we doubt that this will boost money and lending growth significantly. … Euro-zone Monetary …
29th March 2016
Although the French economy appeared to make a decent start to the year, surveys published this week supported our view that the recovery’s underlying momentum will remain very weak. And the Government’s watered-down labour market reform bill will …
24th March 2016
Any economic effects of last week’s tragic terrorist attacks in Brussels clearly pale into insignificance compared to the loss of life and social consequences. But the direct economic impact seems likely to be quite small. Otherwise, survey data …
The shift away from growth-sapping austerity in the euro-zone is encouraging. But while fiscal policy may no longer be a drag on economic growth, the planned loosening is unlikely to provide a meaningful boost to the recovery and thereby transform the …
23rd March 2016
The prospect of ECB corporate bond purchases is already having a positive effect on firms’ financing costs. But we don’t think that this will be enough to generate a meaningful recovery in investment. … Are ECB corporate bond purchases a …
Greece and its creditors have reached some compromises that might allow the first bailout review to be concluded next month and negotiations over debt relief to begin. But the growing financial and political costs of the refugee crisis are another …
22nd March 2016
The euro-zone PMI and German Ifo and ZEW surveys for March suggest that the slowdown in activity seen at the start of the year has eased, but the surveys still point to only modest growth in Q1 as a whole. … Euro-zone Flash PMIs, German Ifo & ZEW …
We do not think that the recent strengthening of the euro is the result of a change of tactics from the ECB, away from trying to manage the exchange rate towards attempting to boost domestic demand. Nevertheless, if it is sustained , the stronger euro …
18th March 2016
The growing unease over the potential impact of negative interest rates suggests that Sweden’s Riksbank will think twice about cutting the repo rate further below zero. It can draw on other policy measures so it is not yet out of options. But its …
17th March 2016
January’s euro-zone goods trade data showed that export growth slowed again at the start of 2016, suggesting that the previous small boost from the weaker euro has faded. We expect the region’s trade surplus to narrow further this year. … Euro-zone Trade …
The lack of upward pressure on the franc following the last ECB meeting has allowed the Swiss National Bank (SNB) to leave policy on hold for now. But deflation dangers are particularly severe in Switzerland and we suspect that the Bank has more work to …
We think that today’s interest rate cut by the Norges Bank will be followed by another 25bp reduction in June. But concerns about household debt will prevent further loosening beyond that. … Norges Bank cuts rates, but concerns about debt …
Despite its latest policy loosening, the ECB’s behaviour over recent years has been consistent with an inflation objective of closer to 1% than 2%. This has depressed economic growth and increased the risk of the euro-zone sliding into a deflationary …
16th March 2016
Iceland’s central bank decided today to keep its key interest rates unchanged for the third meeting in a row, citing low global inflation and a strengthening currency. But with inflationary pressures building and the economy growing strongly, more rate …
While the distribution of helicopter money in the euro-zone is not a likely near-term measure, the lesson of recent years is that seemingly unimaginable policies can become reality. And it may suit the ECB to keep the idea hovering. … Is the ECB about …
15th March 2016
The latest changes to its lending operations mean that the ECB will now pay commercial banks to lend to the wider economy. But we still suspect that they will be unwilling to take the associated risks and with firms and households reluctant to borrow, …
The renewed fall in Sweden’s inflation rate in February was largely down to movements in energy prices. But with underlying price pressures still largely absent, the Riksbank may well need to take further policy action. … Swedish Consumer Prices …
The renewed fall in Sweden’s inflation rate in February was largely down to movements in energy prices. But with underlying price pressures still largely absent, the Riksbank may well need to take further policy action. … Swedish Consumer Prices (Feb. …
January’s strong rise in euro-zone industrial production was probably just a blip. Survey evidence suggests that the sector remains too weak to prevent the region’s economic recovery from slowing this year. … Euro-zone Industrial Production …
14th March 2016
The adverse market reaction to the ECB’s bolder-than-expected package of policy measures unveiled on Thursday reflected concerns, partly prompted by comments from President Mario Draghi , that the central bank is running out of policy ammunition. Those …
11th March 2016
While a ‘no’ vote in the upcoming Dutch referendum on the European Union’s Association Agreement with Ukraine might have few direct effects, such an outcome would illustrate the Dutch population’s growing discontent with the EU and bode ill for the …
10th March 2016
While the ECB today delivered a package of measures which exceeded market expectations, there is no guarantee that it will revive the euro-zone’s flagging economic recovery and eliminate the threat of deflation in the currency union. … ECB belatedly …
In Q4, Ireland’s economy recorded another rapid expansion, but we are not too concerned about the economy overheating. Growth is likely to slow this year and price pressures appear to be fairly weak . … Ireland GDP …
January’s rise in French industrial production supports the message from German data that the sector had a good start to the year. But German exports fell in January, suggesting that softer global demand is damaging growth. … French Industrial …
Although Icelandic GDP contracted in the final quarter of last year, the big picture is that annual GDP growth accelerated sharply in 2015. … Iceland GDP …
Although Icelandic GDP contracted in the final quarter of last year, the big picture is that annual GDP growth accelerated sharply in 2015. … Iceland GDP (Q4 …
The resumption of the first formal review of Greece’s third bailout has raised hopes that the country’s creditors may soon grant it some form of debt relief. But it won’t be big enough to make Greece’s debt burden sustainable and hence ensure its …
9th March 2016
The latest rise in Portuguese bond yields reflects fears that its debt will soon be classified as junk by all four major ratings agencies, leading the country to be excluded from the ECB’s asset purchases. These fears seem justified, suggesting that …
8th March 2016
The second estimate of euro-zone GDP in Q4 showed that the consumer recovery, which boosted growth last year, is losing steam. With recent evidence that growth is slowing and inflation expectations are falling, this adds to the pressure on the ECB. … …
January’s surprisingly strong gain in German industrial production is unlikely to signal the start of a lasting recovery and hence should not discourage the ECB from further bold policy loosening on Thursday. … German Industrial Production …
