Filtered by Region: Europe Use setting Europe
We survey 12 major advanced economy housing markets to understand why house price falls have been small despite high starting points and sharp increases in mortgage rates. We then use this information to ascertain whether the correction in house prices is …
14th February 2024
We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm GMT on Wednesday 13th March. (Register here .) The next general election won’t be as pivotal for the economy or the markets as the …
13th February 2024
The surge in labour costs across Central and Eastern Europe (CEE) in recent years has led to a sharp loss of competitiveness and raised concern about the impact on the region. We remain relatively optimistic on the medium-term outlook and still think that …
9th February 2024
Are European and UK commercial real estate markets facing the same level of distress as the US? We held a Property Drop-In on Wednesday, 14th February , A recording of the session can be viewed here . Falling interest rates will not prevent a rise in …
7th February 2024
The drop in inflation across advanced economies has caused real interest rates to rise by even more than nominal rates. While there are various ways to measure real interest rates, they all confirm that policy is now in very restrictive territory, …
31st January 2024
Turkey’s policy U-turn underway since the election last year has been relatively encouraging so far and policymakers’ commitment to orthodoxy has given us reason for optimism. While the scale of the challenge of achieving macroeconomic stability is …
25th January 2024
The goal of keeping government debt ratios stable or falling means that many euro-zone countries will need to tighten fiscal policy substantially and some will need to run primary budget surpluses for a long time to come. Italy has the most challenging …
19th December 2023
The key indicators that have usually convinced the Bank of England to cut interest rates suggest the first cut could come in Q1 2024. That said, rates have risen to a lower peak than most models suggest, which implies they need to stay higher for longer …
30th November 2023
With the government still languishing far behind in the opinion polls and an election required before the end of January 2025, the Chancellor, Jeremy Hunt, is under more pressure than ever to pull something out of the bag at the Autumn Statement on …
15th November 2023
The Riksbank’s request for a capital injection from the government is not a good look for an independent central bank. But its QE-related losses will be smaller than those of many other central banks: the “bailout” is required because of its accounting …
3rd November 2023
The prospect of a long period of high bond yields and some signs of fiscal slippage by Prime Minister Meloni’s government have worsened the outlook for public finances in Italy. We now think the debt ratio is likely to increase rather than to fall in the …
1st November 2023
In contrast to the past few years, when the risks to the euro-zone inflation outlook have been consistently skewed to the upside, those risks now look more balanced. So in this Focus , we explore the downside risks and how the ECB might respond to them. …
12th October 2023
Note: We previewed Poland’s election and the economic and financial market issues surrounding it in a Drop-In on Thursday, 12 th October . Watch the 20-minute recording here . The outcome of Poland’s parliamentary election this Sunday will likely have a …
11th October 2023
When the ECB Governing Council announces the results of its operational review later this year, it is likely to say it will continue to use the deposit rate as its key policy tool . We also expect the ECB to establish a new framework for lending reserves …
12th September 2023
Sharp falls in inflation mean that the economies of Central and Eastern Europe (CEE) are on the cusp of a broad-based monetary loosening cycle. That said, we think that the legacy of the inflation shock over the past two years will be more persistent …
5th September 2023
Absent major fiscal stimulus in China, global steel demand growth will be weak in the next few months. Accordingly, we forecast price declines in major steel markets towards year-end. Only when economic growth recovers and interest rates fall do we see …
29th August 2023
One key lesson from the bouts of inflation in the 1970s and 1980s is that core inflation faded only once a loosening in the labour market drove down the job vacancy rate to more normal levels. We estimate that a fall in the job vacancy rate from 3.0% in …
2nd August 2023
The message from electric vehicle sales data is now clear: the EV revolution is alive and kicking and poses important implications for oil demand. We are slightly more optimistic on the pace of EV adoption than other forecasters and suspect the drag on …
31st July 2023
Tighter monetary policy has had a big impact on financial conditions in the euro-zone, but we think its effect on activity is still in its early stages . Even if the region falls into a mild recession, it will be some time before policymakers are …
26th July 2023
While the wholesale European natural gas price is now close to pre-energy crisis levels again, we don’t expect EU gas consumption to rise in response. Rather, we think that EU gas consumption has structurally fallen. This is the main reason why we think …
20th July 2023
House prices in the euro-zone have fallen sharply and further declines seem quite likely. This will weigh on construction activity and household consumption, both of which are already weak, and contribute to the euro-zone remaining in recession over the …
5th July 2023
Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . A return to mortgage rates of around 6% for the first time …
20th June 2023
The Help to Buy: Equity Loan scheme was designed to counter an alarming drop in housebuilding and home ownership among young adults. It succeeded to some extent on both fronts, so the loss of the policy when the housing market is in the midst of a …
22nd March 2023
The Budget has taken a bit of a backseat given the renewed worries about the health of the global banking system, but the Chancellor, Jeremy Hunt, was a bit more generous than we expected and probably plans to splash more cash ahead of the 2024/25 …
15th March 2023
We expect the Spring Budget on 15 th March to contain some giveaways confined to 2023/24. But a downgrade to the Office for Budget Responsibility’s (OBR) medium-term GDP growth forecasts will prevent an unwinding of the £54bn (1.8% of GDP) of fiscal …
8th March 2023
Q uantitative tightening and the repayment of TLTROs mean that the ECB’s assets are likely to decline by around one quarter by the end of 2024. We expect the repayment of TLTROs to have a negligible macroeconomic impact. QT should also proceed smoothly, …
20th February 2023
The energy crisis in Central and Eastern Europe (CEE) has lost some of its bite as natural gas prices have slumped and countries have made good progress in replacing Russian energy supplies. This has brightened the near-term outlook and reduced the risk …
6th February 2023
The shift away from variable towards fixed-rate mortgages in many European countries over the past 15 years means that it will take longer than in the past for interest rate hikes by the ECB to feed through to household interest expenditure. This …
23rd January 2023
Labour’s big lead in the polls raises the question of what difference a Labour government would make to the economic outlook. The answer is probably not much. A tight grip on the public finances is likely by whichever party is in charge. And the …
9th January 2023
Voters in Turkey head to the polls in 2023 and if the ruling People’s Alliance and President Erdogan cling on to power, the authorities are likely to double down on their “new economic model”, raising the threat of simultaneous currency, banking and …
21st November 2022
Next year will be characterised by falling headline inflation, which should help to prevent interest rate expectations and bond yields from rising much further. But we also expect core inflation to remain above 2% for some time. As a result, we think …
17th November 2022
While the UK government’s apparent U-turn on fiscal policy offers some hope of relief for sterling, we think the outlook remains precarious. We continue to expect that sterling will lose further ground against the US dollar in the near term. But while …
20th October 2022
We think online demand will continue to be an important driver of relative rental prospects in European industrial markets as we move into the post-pandemic era. But the outlook for traditional demand, rental affordability and supply will also play a …
12th October 2022
An end to Russian gas exports to Europe would prompt us to forecast a deeper recession in the euro-zone this winter than we currently anticipate. The hit would come partly through higher inflation, which would further squeeze real incomes, and partly …
9th August 2022
We are revising up our forecast for core inflation in the euro-zone because the labour market is tighter, demand stronger and inflation expectations higher than we had anticipated. Moreover, fiscal policy will be tightened only gradually and there are …
27th June 2022
The war in Ukraine will exacerbate two key macro risks in Central and Eastern Europe (CEE) this year: wage-price spirals (particularly in Poland) and widening current account deficits (particularly in Hungary and Romania). Monetary policy will do most of …
19th May 2022
Equilibrium real interest rates in the euro-zone appear to be below zero and lower than in most other advanced economies. We expect them to stay that way. While the ECB is likely to raise interest rates sooner and further than most economists expect, this …
3rd May 2022
This month’s French presidential election no longer looks like the shoo-in for incumbent Emmanuel Macron that it did only a few weeks ago. Right-wing nationalist Marine Le Pen’s chances have risen sharply over the past week or so and a surprise victory …
8th April 2022
The industrial sector would bear the brunt of any power rationing imposed as a result of Europe’s shift away from Russian energy, but the direct economic impact of this would be smaller than one might expect. However, the knock-on impact from higher …
30th March 2022
We estimate that euro-zone governments’ fiscal deficits will be around 1% higher than expected this year, as a result of the war in Ukraine, mostly due to government subsidies for energy, support for refugees and higher defence spending. This will soften …
29th March 2022
The Chancellor, Rishi Sunak, provided more support to the economy than we had expected over the next few years in today’s Spring Fiscal Statement, but he could have gone further in 2022/23. Instead, he chose to bank some extra cash so there’s scope for …
23rd March 2022
For the most part, EMs are well placed to withstand rising US interest rates, but there are pockets of vulnerability where external financing needs are significant. Among the large EMs, Turkey (unsurprisingly) stands out, and current account risks are …
22nd March 2022
The Chancellor, Rishi Sunak, will use his Spring Statement on 23 rd March to soften the blow for households facing rising energy and food costs. However, any hopes that he will announce a big handout may be disappointed as he tries to strike a balance …
16th March 2022
We think that most of the fall in the size of the UK’s labour force since the onset of the COVID-19 pandemic should eventually be reversed. Even so, we wouldn’t be surprised if this took another two years or so. That suggests to us that the labour market …
14th March 2022
After soaring towards the tail end of 2020, steel prices in Europe have eased back in recent months. And we think that prices will fall much further over the next couple of years, as a combination of healthy profit margins and low inventories continue to …
18th November 2021
We expect the ECB to interpret a period of above-target inflation as “transient” even if it lasts for well over a year. Although it will end its emergency PEPP programme next March, we think the Bank will step up the pace of its conventional asset …
15th November 2021
The UN’s annual climate change conference, COP26, will not have any discernible impact on Norway’s intention to keep pumping oil and gas over the coming decades. The irony is that Norway’s success in handling its resource windfall means that it is well …
10th November 2021
This year, the EU announced reforms to its Emissions Trading Scheme (ETS) which, if introduced, would boost the price of each carbon permit and ultimately help the bloc to rapidly reduce its greenhouse gas emissions. In the first of a two-part Focus …
Europeans are returning to cities, though the return to offices has been much slower and this has had negative effects on city retail. Looking ahead, weaker demand for office and retail will weigh on performance in cities with large concentrations of …
2nd November 2021
This Budget was perhaps more notable for what the Chancellor didn’t do rather than what he did. The OBR handed Rishi Sunak a significant upgrade to its forecasts for the public finances but, while the Chancellor spent some of the windfall a substantial …
27th October 2021
