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The influx of refugees into Germany has caused much speculation about the costs to the government and possible benefits to the economy. But while the trend presents opportunities for the long term, it is unlikely to have a major impact on the public …
15th October 2015
The improvement in Sweden’s labour market in recent months has exceeded consensus expectations and those of the Riksbank. But conditions are still far from healthy and wage growth remains subdued, suggesting that the unemployment data will not stop the …
Although France’s headline HICP inflation rate held above zero in September, today’s data revealed that price pressures remain exceptionally weak and will add to the growing pressure on the ECB to increase its policy support. … French CPI …
14th October 2015
August’s decline in euro-zone industrial production suggested that the sector is still struggling to grow despite the weaker euro and that it will not be a major driver of the euro-zone’s sluggish recovery. … Euro-zone Industrial Production …
With the periphery’s problems far from over, hopes for the euro-zone’s future rest with the core countries. But neither Germany nor France seem set for an economic transformation and the fiscal union that may be the region’s best chance of future growth …
October’s German ZEW survey confirmed that concerns over the global environment and the scandal at Volkswagen are taking a toll on investor confidence, which might affect economic activity in the months ahead. … German ZEW …
13th October 2015
The small rise in Sweden’s headline inflation rate in September to just above zero may be just about enough to prevent the Riksbank from loosening policy further at the end of this month. But we still expect further action by December. … Swedish Consumer …
The European economy has performed relatively well over recent months amid financial market unrest and signs of a slowdown elsewhere. But the euro-zone’s exporters are still not benefitting from the weakness of the exchange rate as much as had been hoped …
The small rise in Sweden’s headline inflation rate in September to just above zero maybe just about enough to prevent the Riksbank from loosening policy further at the end of this month. But we still expect further action by December. … Swedish Consumer …
Last week’s news on the euro-zone brought the strongest signs yet that some parts of the currency union are starting to feel the effects of the deterioration in the international environment. In particular, German exports and industrial production fell …
9th October 2015
A mixed set of national industrial production data for August from France, Italy and the Netherlands suggested that while euro-zone industry might have fared slightly better in Q3 than it did in Q2, the sector is still struggling. … French, Italian & …
This Focus takes a detailed look at the outlook for Greece after the implementation of its third bailout and concludes that the country’s six-year crisis is far from over. Indeed, a Grexit is still likely at some point, with important ramifications for …
7th October 2015
August’s sharp falls in German and Spanish industrial production suggest that weakness in emerging economies may have caused their GDP growth to slow in Q3. … German & Spanish Industrial Production …
While the re-election of Portugal’s centre-right coalition appeared to be an endorsement of the austerity stance it has taken, its failure to secure a parliamentary majority means that it may struggle to take the tough decisions needed to keep the …
5th October 2015
August’s euro-zone retail sales data suggest that the consumer recovery remained on track. And the final PMIs point to quarterly GDP growth remaining at around 0.4% in Q3. But September’s monthly fall could be a sign of things to come. … Euro-zone …
The hard data available so far for Q3, as well as the more timely activity surveys, suggest that the economy performed fairly well last quarter. GDP growth probably maintained its pace from Q2 and may even have picked up slightly. But the ECB is likely to …
2nd October 2015
The consumer outlook has dimmed slightly over the summer, suggesting that the economic recovery needs to become more broad-based if it is to gain momentum. The Q2 GDP breakdown showed that the quarterly pace of household spending growth slowed again. …
1st October 2015
The improvement in most peripheral countries’ current account positions since the financial crisis should not be fully reversed as their economies recover. However, if and when Greece returns to “normal”, it will need a significant devaluation to avoid …
The euro-zone’s peripheral economies appear to have strengthened their fiscal positions further in the year to August. But for most, this year’s budget targets still look ambitious. … Euro-zone Fiscal Monitor …
30th September 2015
Today’s decision by Iceland’s central bank to leave its main interest rates on hold merely marks a pause for breath in its tightening cycle. We think that further rate rises will be needed before the end of the year. … Icelandic interest rates on hold, …
The return of inflation to negative territory in the euro-zone, as well as the continued high rate of unemployment, will heap further pressure on the ECB to increase its stimulus. … Euro-zone Flash CPI (Sep.) & Unemployment …
Today’s decision by Iceland’s central bank to leave its main interest rates on hold merely marks apause for breath in its tightening cycle. We think that further rate rises will be needed before the endof the year. … Icelandic interest rates on hold, but …
September’s drop in inflation back below zero for the first time since January highlights that price pressures are very subdued and will add to pressure on the ECB to increase its policy support. … German Flash CPI …
29th September 2015
This weekend’s general election in Portugal looks set to be a close contest with a minority government currently appearing the most likely outcome. But whichever party ends up on top, it faces an uphill struggle in keeping the country’s nascent economic …
September’s EC business and consumer survey suggests that the economic recovery maintained its pace in Q3. But growth was still fairly slow and we think that the ECB will need to increase its stimulus to provide a further boost to the economy. … EC …
The high level of consumer and business confidence in September added to the recent run of positive data coming from Italy. But strong confidence alone will not be enough to secure a sustained economic recovery. … Rising Italian confidence not enough to …
28th September 2015
The gradual recovery in the Dutch housing market looks set to continue, supported by rising realdisposable incomes, mortgage lending growth and government policy. This bodes well for bothhousehold spending and investment, suggesting that the wider …
25th September 2015
The news last week that Volkswagen had cheated emissions tests prompted speculation that “Made in Germany” branding had been dealt a blow that could seriously jeopardize the economy’s prospects. Given the importance of the car industry to German output …
August’s euro-zone monetary data point to low inflation and continued sluggish growth, adding to the evidence that more monetary stimulus from the ECB isnecessary. The run on Greek banks seems to have slowed or even ended, but lending there is likely to …
The Norges Bank’s decision to cut its policy rate today was accompanied by a suggestion that further interest rate cuts could follow. We think that another cut could come in Q2 next year. … Norges Bank cuts rates and signals more loosening to …
24th September 2015
The small rise in the German Ifo index in September came as a modestly pleasant surprise in light of the recent softening in some other business surveys. But the China slowdown and VW scandal present clear threats to the outlook. … German Ifo Survey …
Italy’s public debt load is worryingly high, but private sector debt is much less of a concern. This provides some grounds for optimism that a recovery in the private sector which increases the size ofthe economy could eventually help to bring down the …
23rd September 2015
September’s dip in the euro-zone composite PMI left it pointing to steady GDP growth in Q3. But the uncertain global environment and fading boosts from thelower oil price and weaker euro look set to see growth slow in the months ahead. … Euro-zone Flash …
This weekend’s regional election could put Catalonia on a course towards secession, casting a cloudover Spain’s recovery and galvanising other independent-minded regions of the euro-zone … Catalan cloud could rain on …
22nd September 2015
While the result of Greece’s election strengthens the Syriza-led government’s mandate to implement the country’s third bailout, the major challenge for both Greece and its creditors – to find a workable and lasting solution to its unsustainably high debts …
21st September 2015
The boost to activity and inflation from the euro’s weakening since last summer will soon begin to fade. The ECB might feel that it can wait for tighter monetary policy in the US to drag the euro lower, providing a renewed stimulus to the euro-zone’s …
18th September 2015
Suggestions that a defeat for the Syriza party in this weekend’s Greek election would kill off the eurozone’s anti-austerity movement are over the top. But there is little prospect of Germany and the eurozone’s institutions significantly loosening the …
17th September 2015
The recent depreciation of the Swiss franc and renewed increase in economic activity has allowed the Swiss National Bank (SNB) to keep policy on hold for the time being. But we think that renewed upward pressure on the currency and further export weakness …
The likelihood that inflation will soon fall, as well as signs that Norway’s economy has continued to slow in Q3, is likely to prompt the Norges Bank to loosen policy again next week. … Norges Bank likely to cut its policy rate next …
16th September 2015
Whichever party wins this Sunday’s Greek election is likely to stick broadly to the conditions of the new bailout in the near term. But even an austerity-minded government will struggle to meet future budget goals as the economy underperforms. …
15th September 2015
September’s ZEW survey confirmed that recent market turmoil and concerns over the global environment have had an adverse impact on German investor confidence. For now, though, the economy itself remains robust. … German ZEW …
The euro-zone’s goods trade surplus rose to a record high in July, adding to the evidence that the economy got off to a good start in Q3. But we suspect that the trade surplus will fall in the second half of the year as the effects of the weaker euro …
July’s rise in industrial production merely offset the declines in the previous two months, so is not the beginning of a stronger upward trend in the sector. The survey evidence points to fairly sluggish growth over the rest of the year. … Euro-zone …
14th September 2015
We don’t expect the prospect of higher US interest rates to hit the euro-zone too hard. But the ECB should not take any chances and certainly should not rely on higher US interest rates to lower the euro and boost the economy. … Will Fed lift-off hit or …
11th September 2015
It looks increasingly likely that the ECB will expand its asset purchase programme, possibly even as soon as next month. We think that the Bank will step up the pace of purchases, perhaps to €80bn per month. It might also suggest that those purchases will …
10th September 2015
Ireland’s impressive recovery continued in Q2. And with the conditions in place for sustained rapid growth, it is set to remain the euro-zone’s fastest-growing economy. … Ireland GDP …
Anxiety about Grexit may have subsided but the underlying issues have not changed. Greece still needs a weaker currency. The well-worn argument that Greece would not be able to take advantage of a weaker currency because it is a fairly closed economy has …
8th September 2015
