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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 …
$50 oil is not a pipe dream Plenty of oil market analysts, including ourselves, have slashed their price forecasts this week following the OPEC+ decision to raise output in June by more than the group had originally outlined for the second month in a row. …
The larger-than-expected fall in the Nationwide measure of house prices in April has raised concerns about how quickly the housing market is losing momentum. After price gains of 1.1% m/m and 0.7% m/m in November and December last year, prices are down …
2nd May 2025
We think there are two key takeaways from the flurry of activity figures released this week. First, the euro-zone economy held up better than we expected in Q1. GDP expanded by 0.4% q/q. That was partly due to a very strong outturn in Ireland, where data …
Russia’s economy may be starting to break ... The latest economic data released out of Russia have given clear signals that growth has slowed sharply, with GDP having potentially contracted outright in q/q terms in Q1. We had expected a slowdown to …
What do Trump tariffs mean for green tech? Much ink has been spilled over the macro and market impacts of various US tariff announcements over the past month. (See here .) From a climate perspective, these tariffs will only add to existing trade barriers …
30th April 2025
The US steps up its peace deal efforts The US has been pushing harder over the past week to achieve a peace deal that Russia is willing to accept. But the more concessions that are offered to Putin, the less willing Ukraine is likely to be on board with a …
25th April 2025
Business surveys for April suggest that US tariffs have not done much damage in the euro-zone so far. The euro-zone Composite PMI edged down rather than collapsing and the Ifo Business Climate Index for Germany, which is the most vulnerable of the larger …
The fall in market interest rate expectations since ‘Liberation Day’ is striking. On 31 st March, investors were pricing in just two more 25 basis points (bps) interest rate cuts this year from 4.50% now to 4.00%. Now they are fully pricing in three more …
More cuts to come from the ECB This week’s decision by the ECB to cut interest rates came as no surprise, and the Bank’s overall messaging reinforces our view – which is shared by investors – that the Bank will keep cutting. (You can read our response …
17th April 2025
CBRT hikes rates amid significant capital outflows Turkey’s central bank (CBRT) delivered a hawkish surprise in raising its one-week repo rate to 46.00% today. While this won't tighten monetary conditions, it does formalise the tightening delivered …
The news on inflation this week was pretty good even before any influence from the US tariffs chaos has been felt. Although average earnings growth stayed close to 6.0% in February, pay growth on the more timely PAYE measure slowed to 5.4%. (See here .) …
Pause on reciprocal tariffs reduces risks for CEE President Trump’s 90-day pause on “reciprocal” tariffs has reduced the scale of downside risks to the global economy, and our new working assumption is that US tariffs on most economies stay at the 10% …
11th April 2025
The extraordinary tariff chaos over the past week and associated fallout in the financial markets (see our coverage here ) have increased the chances that the damage to the UK from the US trade war will be larger and that inflation and interest rates will …
This week’s historic changes in US trade policy and the associated market fallout point in the direction of a weaker euro-zone economy, lower inflation and looser monetary policy. While US tariff policy has become extraordinarily volatile, we are assuming …
If the US tariffs on imports from the EU announced this week are kept in place, our current assessment is that this will lower GDP growth across Central and Eastern Europe (CEE) by 0.3-0.4%-pts on average over the coming year. Judging by the sharp …
4th April 2025
President Trump’s decision to hit the EU with a 20% tariff on all imports has roiled European markets – the Euro Stoxx is down more than 7% since the announcement – and pose a growing risk to the global and European economies. Our forecast before the …
With President Trump announcing reciprocal tariffs of 34% and 20% on all US imports from China and the European Union respectively this week, the news that UK goods exports to the US will be subject to the minimum 10% “baseline” tariff from 5 th April …
The recent scrapping of the carbon tax in Canada shows that the political pushback against climate policy is certainly not just confined to the United States. But to paraphrase Mark Twain, rumours of the death of climate policy are greatly exaggerated; …
31st March 2025
With all the major business surveys for March now published, it is clear that while sentiment in the euro-zone has jumped, activity is still growing slowly at best. The more sentiment-driven ZEW and Sentix indices recorded big increases but the Composite …
28th March 2025
Tariffs – UK still not very exposed The announcement of US reciprocal tariffs on 2 nd April will dominate next week. The UK has mostly flown under the radar of Trump’s tariffs and its economy is naturally less exposed than others – our Trade War Dashboard …
Autos now in the crosshairs The Trump administration’s announcement of a 25% import tariff on autos and some auto parts will have a particularly large impact on Hungary and Slovakia. Our detailed response on Thursday to the tariff news can be found here . …
A pause for thought? The Bank of England was never going to do anything but continue the cut-hold-cut-hold pattern and keep interest rates unchanged at 4.50% this week. But the Monetary Policy Committee’s (MPC) hawkish tone suggests it is preparing to …
21st March 2025
Heightened military threat… but stronger GDP The rise in optimism about the euro-zone economy over the past few weeks has been remarkable. The ZEW index of investor sentiment in Germany saw one of the biggest increases on record in March. (See Chart 1.) …
Erdogan alarms investors The arrest of a leading opposition politician in Turkey on Wednesday triggered a major sell-off in the country’s stock market and currency. Events are in flux at the moment, but there are three takeaways. The first is that the …
Prime Minister Starmer’s announcements this week to abolish both NHS England and the Payment Systems Regulator are the government’s latest initiatives aimed at boosting productivity and, in turn, improving the UK’s medium-term economic prospects. It’s …
14th March 2025
Ceasefire proposal met with resistance by Putin The US proposal for a 30-day ceasefire in Ukraine has been met with a mixed response in Russia, with President Putin saying that he “supports the idea” but that it needs “serious reworking”. The ceasefire …
Europe’s plans to increase its defence expenditure are still evolving but based on what we know so far, we estimate that it will rise by around 0.5% of GDP between 2024 and 2026 for the euro-zone as a whole, lifting GDP by 0.2-0.3% over two years. The …
The dollar has suffered one of its largest weekly falls on record in the wake of President Trump’s latest tariff flip-flip , continued jitters around the health of the US economy and, most importantly, Germany’s historic fiscal policy shift . We have …
7th March 2025
The agreement reached this week by the German government’s likely next coalition parties to reform the national fiscal rule suggest they will implement a significant fiscal stimulus over the next two years, which we think could lift German GDP growth by …
What a week! Germany’s fiscal announcement on Monday evening amounts to a potentially huge increase in public sector demand and bond issuance (see here ) and could result in the widest sustained deficit since reunification. The market reacted accordingly, …
The UK government’s decision to raise defence spending from 2.3% of GDP to 2.5% of GDP by 2027 was upstaged this week. It may have been enough to impress President Trump, but incoming German Chancellor Merz has raised the bar. The German response differs …
President Putin this week described Moscow’s initial contact with the Trump administration as “inspiring a certain degree of hope”, and we think that the recent thawing in US-Russia relations has increased the probability of the war in Ukraine coming to …
28th February 2025
CBAM caught in the EU’s regulatory slimdown The European Commission (EC) announced its ‘Simplification Omnibus’ this week, which scaled back firms’ reporting requirements with the aim of lowering costs and improving competitiveness. From a climate …
It has not even been a week since the German election and the presumptive next Chancellor, Friedrich Merz, is already dealing with a fiscal dilemma. Specifically, how to finance the increase in defence and public infrastructure spending that Germany …
Metals, minerals, and oil are in Trump’s sights There were three key commodity-related developments from the White House this week. First, the US and Ukraine have agreed to jointly develop Ukraine’s energy and mineral reserves. We wrote about the key …
Things change quickly with Trump as President. Only two weeks ago, the title of our UK Economics Weekly was “Trump’s tariffs tirade becomes more troubling for the UK” as it looked as though the UK’s goods exports to the US would be hit with a 25% …
Europe scrambles amid warming US-Russia ties The plans announced by the US and Russia to improve relations and seek an end to the war in Ukraine have sent shockwaves across Europe and caught many off guard. The possibility that a peace deal is negotiated …
21st February 2025
Another week, another tariff threat President Trump announced earlier this week that he plans to impose tariffs on imports of vehicles, pharmaceuticals and semiconductor chips on the 2 nd of April, initially at 25% but potentially “very substantially …
The news on inflation this week was worrying, raising the risk that CPI inflation will remain higher for longer and interest rates will be cut more slowly than we expect and/or not as far. (See here .) Data released this week revealed that wage growth was …
Trump rings bell for next phase of trade war… While the EU was not in the firing line in President Trump’s first round of tariffs in January, he did make it clear that the EU was still ”in for tariffs”. So the 25% universal tariff on steel and aluminium …
14th February 2025
Enthusiasm abound after Trump and Putin talk The phone call between Presidents Trump and Putin this week and comments by US Secretary of Defence Pete Hegseth caught many by surprise, particularly in Ukraine and Europe. The US and Russia have now agreed to …
The potential tariffs that UK exporters could soon face for sending goods to the US became bigger this week. On Monday, Trump said that US imports of steel and aluminium from all countries would face tariffs of 25% from 12 th March. Then on Thursday he …
Trump-Putin call could ease upside risks for energy President Trump was at the centre of another whirlwind week in commodity markets, with his “lengthy and highly productive” phone call with President Putin giving energy traders in particular plenty to …
The overall message from the Bank of England this week was decidedly dovish, raising the risk that interest rates will be cut further and faster than our forecast of a fall from 4.50% to 3.50% by early 2026. But as we unpacked in our reaction to the …
7th February 2025
Hawks fly in CEE, but further rate divergence likely The communications from policymakers following central bank meetings in Poland and Czechia this week struck a hawkish tone. After leaving rates on hold , Poland’s central bank Governor Glapinski focused …
Note: Join us as we discuss how Donald Trump's moves to build out his policy agenda will affect energy, soft commodities, and metals markets in a Drop-in on Thursday 13th February 15:00 GMT/10:00 EST . Register here for the 20-minute online briefing. …
While there is currently a lot of focus on r* at the ECB (which we wrote about earlier today ), the outlook for wage growth may prove to be more important in guiding monetary policy. And the ECB’s wage tracker, released on Wednesday, suggests that wage …
