Filtered by Region: Europe Use setting Europe
The Bank of England’s hawkish tone at its policy meeting on Thursday has inevitably led to questions about whether interest rates will be cut again this year and whether the Bank’s rate-cutting cycle will soon end. (See here .) In some ways, the Bank’s …
8th August 2025
EU protected from higher chip and pharma tariffs President Trump this week threatened a 100% tariff on semiconductor imports produced by firms that do not plan to invest in the US. We wrote about the global implications here . But in principle, the EU has …
Trump-Putin meeting in the spotlight Expectations that the touted Trump-Putin meeting could lead to a breakthrough in talks to halt fighting in Ukraine are likely to be fairly low. After all, little progress has been made towards ending the war so far. …
Tariff agreement reduces downside risks for CEE US President Trump and EU Commission President von der Leyen closed a trade deal this week which will impose a 15% tariff on most EU goods to the US. This was broadly in line with what we had expected, and …
1st August 2025
The surveys published this week have sent vastly different signals on the health of the economy in Q3. The backward-looking balance of the CBI’s Growth Indicator fell to a record-low in July (the series began in October 2003), barring the Global Financial …
Tariffs are now firmly back in the driver’s seat when it comes to commodity prices, with this week bringing fresh news on reciprocal, metals and energy tariffs. Arguably the most straightforward to digest was the confirmation of 50% copper tariffs. While …
Although European equities declined significantly this week, it seems unlikely that this is due to the US-EU trade agreement that was announced last Sunday and confirmed in the US Executive Order towards the end of the week. After all, the deal was in …
Some (relatively) positive news on tariffs ... The tariff saga took another twist this week with the EU and US reported to be approaching an agreement which would see a US tariff of 15% applied to most EU goods. We commented on the implications for the EU …
25th July 2025
Public borrowing may have been bang in line with the Office for Budget Responsibility’s forecast for the first three months of the 2025/26 fiscal year. (See here .) But the underlying upward trend looks worrying. Having reached a cumulative total of …
Reports this week suggest that the EU and US are on the brink of agreeing a trade deal with a 15% baseline tariff on US imports. ( See here. ) It’s hard to spin it as a good deal, but it would at least avoid much higher US tariffs and retaliation from the …
We have not changed our view that inflation and interest rates will fall further than most expect. (See here and our UK Data Dashboard .) But the data released over the past week raises the chances that inflation will remain higher for longer and rates …
18th July 2025
CBRT may opt to tread more cautiously The big macroeconomic event in the region next week is the Turkish central bank (CBRT) meeting, at which it’s likely to resume its easing cycle. There is a wide range of forecasts as to the size of the interest rate …
Attention returns to sanctions on Russia One of the key themes that developed in the oil market this week was the prospect of additional and tightening sanctions on the Russian energy sector. Indeed, the week began with President Trump threatening on …
The latest news on trade negotiations between European countries and the US are increasing concerns around future tariffs. US President Trump has said that a 200% tariff on pharmaceutical products and related goods will “probably” be announced by the 1st …
The US dollar is ending the week a touch stronger as President Trump continues to ratchet up his tariff threats again and US interest rate expectations edge higher. As widely expected, the 9 th July deadline for the “pause” on the US’ reciprocal tariffs …
11th July 2025
Fiscal tightening to cause inflation spike in Romania Romania’s fiscal tightening measures will add to the country’s inflation problem in the near term, and we’ve significantly revised up our CPI forecast over the next year. While inflation may be lower …
The further fall in GDP in May provided yet another excuse to talk down the UK economy. But there is some evidence that we are past the worst and the situation will improve from here (or, at the least, become less bad). Coming after the 0.3% m/m fall in …
The media focus this week has continued to be on EU-US trade negotiations as the pause on Liberation Day tariffs was extended beyond the 9 th of July deadline and President Trump threatened to send a letter raising tariffs on the EU again. But in the …
Muddled guidance in Poland, but further cuts likely The decision by the National Bank of Poland (NBP) to cut interest rates by 25bp at its meeting on Wednesday was a dovish surprise to most analysts who had expected policy to be left unchanged, although …
4th July 2025
A rate cut at the ECB’s meeting on 24 th July seemed off the table only a few weeks ago, as energy prices had spiked due to the Israel-Iran conflict and ECB President Lagarde had stressed after June’s meeting that the Bank was in a “good position” on …
Today (Friday 4 th July) marks the one-year anniversary of the government’s election victory. But on Wednesday this week it looked like there was a chance that the Chancellor, Rachel Reeves, wasn’t going reach the milestone after the Prime Minister …
Romania takes a (small) step in the right direction The fiscal tightening measures announced by Romania’s new government, which took office this week, are a welcome development for investors after the political turmoil last month and the alarming widening …
27th June 2025
There were two key developments for the inflation outlook this week. First, some of the upside risk to CPI inflation posed by the conflict in the Middle East and higher energy prices has subsided. After the price of Brent oil ended the UK business day on …
Euro powering ahead The catalyst for this week’s further appreciation of the euro was nothing to do with Europe: instead, it reflected President Trump’s renewed attacks on the Fed and suggestions that he will appoint the next Fed Chair earlier than …
Risk of further escalation continues to mount The continued Israel-Iran military strikes are likely to have a limited direct impact on Israel’s economy – so long as the conflict remains confined to a matter of weeks. But the risk of escalation is high, …
20th June 2025
Europe is taking Trump’s side on China When President Trump returned to office, his aggressive treatment of traditional allies raised the possibility that the EU and China would come together in defence of free trade. But the opposite is happening: US …
At our in-person Roundtables in London on Tuesday 1st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) Upside risk to inflation from Middle East …
Given the further escalation of the Israel-Iran conflict in the past few days, this Weekly considers its possible implications for euro-zone inflation and monetary policy. These will depend mainly on how the conflict will affect energy prices , which we …
Mapping out conflict scenarios Much of the focus this week has understandably been on oil markets. Oil prices continued to climb as the Israel-Iran conflict escalated, reaching $76pb from $73 at the start of the week. In particular, the potential for US …
The Israeli air strikes on Iran overnight have renewed fears of a widening of conflict in the Middle East. We covered the implications for the oil market and the global economy in a report here , and discussed the latest developments in a Drop-in …
13th June 2025
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20 minute online Drop-In at 3pm BST on Thursday 19th June. (Register here .) If the Chancellor, Rachel Reeves, was hoping that at the end of the week of her Spending Review we’d …
OPEC+ watches on closely Israeli strikes on Iran and fears over the potential nature of Iranian retaliation sent Brent crude prices from ~$67pb to a peak of $78pb this week. While prices have since fallen back to $75pb at the time of writing, they are …
Short-term gain, long-term pain April’s data suggest that the boost to the euro-zone economy from exporters front-running US tariffs came to an end at the start of the second quarter. Euro-zone industrial production and exports were very strong in Q1 as …
The European Commission gave its approval for Bulgaria join the euro-zone this week, which clears the way for the country to adopt the euro on 1 st January 2026. Bulgaria’s accession had been delayed over the past couple of years in large part due to …
6th June 2025
Fiscal policy back in focus With confidence-sapping fiscal “black holes” and rises in business taxes dominating much of her first year in office, the Chancellor, Rachel Reeves, will finally get to splash the cash by announcing a series of infrastructure …
Tariff scenarios compared Along with its slightly hawkish communications, which we commented on here , the ECB published estimates this week of how US tariffs could affect the economy. In short, they think tariffs of 10% or more would reduce GDP …
We have consistently argued that the influence of Trump’s tariffs on the UK economy would be modest. As a result, the impact on UK GDP of the eventual outcome of the US court ruling on the legality of the 10% universal tariff will probably also be small. …
30th May 2025
The polls ahead of the second-round run off of Poland’s presidential election on Sunday point to a very tight race, with the two remaining candidates sharing virtually equal levels of support. The president of Poland has little direct input into domestic …
The latest twists and turns in the US tariff saga once again dominated the week. We responded to the court ruling that suspended Trump’s tariffs here . The news that tariffs have now been reinstated doesn’t alter our main conclusions. The latest legal …
“One Big Beautiful Bill” (but not for clean energy) The passage of President Trump’s fiscal package – termed the “ One Big Beautiful Bill ” – through the House of Representatives is another step back for climate action in the US. Indeed, the bill would …
Assessing the fallout after a busy election weekend Last Sunday was a busy day of voting in CEE and threw out some surprises. Pro-EU centrist Nicusor Dan won the second round of Romania’s presidential election, even though he’d lagged in the polls. …
23rd May 2025
ECB account reveals disagreement The account of last month’s ECB meeting, published on Thursday, showed diverging views on the risks to inflation and the appropriate monetary policy stance. It noted that “a few” members of the Governing Council “could …
The headline news this week was the bigger-than-expected leap in CPI inflation from 2.6% in March to 3.5% in April. (See here .) It would be easy to conclude that most of the increase was due to one-off price rises that will stay in the inflation rate for …
Israel readying strikes on Iran’s nuclear facilities? Rumours that Israel could strike Iran’s nuclear facilities suggest that conflict in the region could escalate. But there are reasons to think that the fallout for the oil market, and therefore the Gulf …
22nd May 2025
The agreement to roll back some tariffs reached by the US with both China and the UK raises the question of whether the EU will reach a similar deal before 9 th July, when the pause on the so-called “reciprocal” tariffs expires. We suspect a US-EU deal …
16th May 2025
The implications of the government’s latest policies for the economy bring to mind the quote “what the right hand giveth, the left hand taketh away”. The right hand – EU reset In the right hand is the UK-EU reset, which will begin on Monday to much pomp …
The polls ahead of presidential elections in Romania and Poland this Sunday point to diverging political paths for the two largest economies in Central and Eastern Europe over the coming years. We’ll be discussing the implications of Sunday’s election …
The strong showing for far-right nationalist, George Simion, in the first round of Romania’s Presidential election on Sunday has deepened the country’s political crisis, and the fallout in Romania’s financial markets could get more messy in the coming …
9th May 2025
Five months ago, we incorporated a 10% tariff on all UK goods exports to the US in our forecast. That has turned out to be a good call. Despite this week’s UK-US trade deal, the 10% “baseline” tariff remains. (See here for our response to the US-UK trade …
Tariff damage likely to be limited This week brought further evidence that the impact of US tariffs on activity in the euro-zone has been limited so far, and may even have been positive. March’s industrial production data from Germany and Ireland showed …
