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Solid tourism flows and a pick-up in consumer spending growth mean we believe both Rome and Milan prime retail rents will continue to outpace the euro-zone average over the next couple of years. While Milan prime retail rents held steady in Q2, rents in …
12th August 2025
Decent rental growth expectations and a narrowing risk premium imply that industrial is only marginally overvalued, despite an historically narrow gap between industrial yields and alternative asset yields. In turn, that implies industrial yields can …
Our new CE UK Unemployment Proxy extracts the overall signal from a range of measures of labour market slack and suggests that the labour market has loosened further than the Labour Force Survey (LFS) unemployment rate implies. Given the well-known issues …
The announcement that Presidents Trump and Putin will meet in Alaska on Friday has increased the possibility of a scenario in which the Ukraine war ends on terms favourable to Russia. That could ultimately result in an easing of some sanctions, providing …
11th August 2025
German carmakers’ recent disappointing earnings reports are as much about their continued struggles in China as US tariffs. And though sales in Europe have been more encouraging recently, that is unlikely to last. Overall, the prospects for the German …
7th August 2025
Next week, we expect Norges Bank to leave the policy rate unchanged at 4.25% but reiterate that it is likely to loosen policy later this year. We forecast two 25bp cuts by year-end. At its last meeting, Norges Bank cut its policy rate by 25bp, to 4.25%, …
Although the Bank of England cut interest rates today by 25 basis points (bps), from 4.25% to 4.00%, it showed some signs that it may cut rates slower and/or not as far as our forecast of a decline to 3.00% in 2026. We are sticking to our view that …
Swedish residential total returns have underperformed the European average over the past three years, but a bright rental outlook in particular means we think returns will slightly outperform Europe over the next five years. Residential investment has …
If the extra 25% tariff that President Trump has announced on imports from India remains in place, India’s attractiveness as an emerging manufacturing hub will be hugely undermined. Global oil prices would probably rise if India responded by curtailing …
6th August 2025
With Swiss President Karin Keller-Sutter in the US trying to head off the 39% tariff, this note answers some key questions on the topic. Overall, we think Switzerland has limited room to offer concessions to the US and may well have to accept a less …
India could in principle find suppliers other than Russia to meet its energy needs relatively easily with little economic impact. Indeed, Indian oil refiners are reportedly reducing their purchases from Russia. But we doubt that India would make a …
5th August 2025
We think the surprisingly high tariff rate on Switzerland of 39% that the US announced yesterday is likely be negotiated down in future and, importantly, pharmaceutical goods still appear to be exempt for the time being. However, if this tariff were to …
1st August 2025
President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 17%, from 2.3% last year. That is a little higher than we assumed and so presents modest downside risks to our forecast for global GDP growth and a …
The latest RICS survey indicated that the recovery in occupier and investor demand in the euro-zone was muted in Q2. While the reduction in tariff uncertainty should support demand further ahead, the survey is consistent with our view that euro-zone …
31st July 2025
UK spending pledges still insufficient for net-zero The UK’s seventh round of Contracts for Difference (CfD) auctions is set to open next month and, ahead of that, the government has announced increases to the maximum guaranteed price, or strike price. By …
This quarterly Financial Risk Monitor includes commentary and analysis of our latest EM risk indicators. We’ll be discussing EM risk in a 20-minute online Drop-In at 10am EST/3pm BST on Wednesday 6th August. (Register here .) Currency risks stabilise …
The RICS survey showed that occupier demand was still weak in Q2, with firms reluctant to expand in the face of higher costs and an uncertain economic outlook. In line with that, rental and capital value expectations are subdued, with the former pointing …
Emerging Markets Capital Flows Monitor (Jul. 2025) …
30th July 2025
Households are still saving an unusually large share of their incomes and the latest surveys suggest that the saving rate will remain high in the near term, weighing on consumption. And while we suspect that the saving rate will decline sooner or later, …
The continued rise in EM sovereign FX debt sales this year suggests that EM governments have accepted the need to issue at higher yields, but are doing so at shorter maturities than in the past. And despite some high-profile issuances, there’s no clear …
29th July 2025
The recovery in euro-zone investment paused in Q2 against a backdrop of trade policy and economic uncertainty. While the trade deal means some of that uncertainty has reduced, we expect that the recovery in investment in H2 will still be gradual given …
There have been renewed calls for a wealth tax recently as a means of narrowing budget deficits. However, experience suggests that most countries would struggle to raise more than around 0.1% of GDP from such a tax. Moreover, the countries which are most …
28th July 2025
The trade agreement confirmed yesterday by Presidents Trump and von der Leyen could result in the average tariff on US imports from the EU rising from 1.2% last year to about 17%. We think this will reduce EU GDP by about 0.2%. While the deal has avoided …
With the euro-zone economy holding up relatively well in the face of tariff uncertainty, inflation likely to stay close to the target and President Lagarde adopting a slightly more hawkish stance at today’s press conference, we think the ECB will leave …
24th July 2025
Although a forecast global real estate return of sub-6% p.a. over the next decade appears disappointing, compared to other assets it stacks up well. We expect sub-4% total returns for both global government bonds and equities over our 10-year forecast. …
Recent surveys of real estate lenders point to a continued improvement in the European commercial real estate lending environment. However, with refinancing still dominating lending activity, this is unlikely to provide a material boost to investment this …
23rd July 2025
The Q2 Bank Lending Survey, published this morning by the ECB, suggests that the economy is still growing at a decent pace. But this is entirely due to improving prospects for the housing sector. The survey suggests that business investment will remain …
22nd July 2025
We think France’s government borrowing costs will rise above those of Italy before long. This may seem surprising in light of Italy’s higher debt burden and lower trend growth rate, but it reflects the fact that France’s debt dynamics are worse and its …
21st July 2025
Low vacancy and limited new completions this year will see Rotterdam rent growth continue to outperform Amsterdam over 2025, before supply picks up substantially in 2026. That will bring rent growth rates in the two markets back into line later in the …
18th July 2025
Regulators will be pleased with the increase in the number of takeover bids in the European banking sector over the past couple of years as they would like the EU to have fewer but larger and more competitive banks. However, interventions by several …
The current narrow spread between property yields and financing costs, combined with bullish lender capital value expectations, might be seen as an indication that a credit cycle is brewing and capital values are about to take-off. But other market …
Measures of fiscal risk premia have generally eased across Central and Eastern Europe (CEE) over the past few months, but the region’s public debt dynamics remain a point of concern. Budget deficits are wide and pressure for higher government spending – …
17th July 2025
Headline inflation in the euro-zone was at the 2% target in June, with the core rate a little higher. We forecast core inflation to decline to 2% by the end of the year, and if oil prices fall as we expect, headline inflation could be as low as 1.5% by …
Data published today showed euro-zone exports fell for a second successive month in May but there was evidence of continued front- running in sectors that have not yet been hit by tariffs. And even in sectors which have been hit by tariffs, exports were …
16th July 2025
Experience from Ireland suggests that a ban on upward-only rent reviews will weigh on future rental growth and widen property yield spreads to risk-free rates. While the overall impact is unlikely to be large, if the proposed ban in England and Wales goes …
15th July 2025
European natural gas stores are low and efforts to refill them will support prices over the rest of this year. Further ahead, increased supply should bring prices down to a below consensus €25 per MWh in 2026. Since hitting a post-energy crisis high of …
If President Trump follows through on his threat to impose secondary tariffs on buyers of Russian energy, leading to a sharp drop in Russian energy flows, it would invariably lead to higher global energy prices. The impact would probably be greater on …
14th July 2025
While the interest-rate-differential-defying strength of EUR/USD may be partly explained by increased currency hedging, it also reflects shifting expectations for economic growth. We think those will be dashed, even if the US doesn’t end up imposing a …
Aggregate EM inflation is now at its lowest level in four years, with notable declines this year across Asia. We still think the outlook will be characterised by higher inflation in Latin America and Central Europe than in Asia, but we’ve become less …
10th July 2025
Auto exporters in China have adapted to the EU’s tariffs on EVs by lowering export prices and focusing on vehicles that are not subject to tariffs. Even if trade restrictions were to remain in place, the extent of China’s cost advantage means that …
Poor performance in the US and APAC property markets is set to drag on the global recovery over the next few years. While strong economic fundamentals argue for a material improvement in total returns in the US in the longer term, APAC won’t be as …
Big rebound in demand, but housing market unlikely to recovery quickly While June’s RICS survey suggests most of the recent weakness in the housing market was due to the temporary influence of the change in stamp duty, it doesn’t yet point to a marked …
We anticipate further yield falls for prime Portugal retail assets over the rest of the year. And with robust economic fundamentals and a solid rental outlook, we forecast Portugal to be one of the best retail performers in the euro-zone over 2025-29, …
9th July 2025
The continued weakness in the housing market over the first six months of this year and the cracking labour market means we now expect the recovery in house prices to start later and be slower. But bigger falls in mortgage rates than we previously thought …
8th July 2025
High income growth and immigration are likely to continue to drive increases in house prices in Spain over the coming years. Demand will be further boosted by the recent fall in mortgage interest rates. Meanwhile, investment in dwellings is likely to grow …
3rd July 2025
Whatever transpires in EU-US trade talks next week – deal, no-deal or an extension – tensions over transatlantic trade relations are likely to persist throughout President Trump’s second administration. What will happen to the baseline tariff? With the …
We still think gilts will rally over the rest of this year even if fiscal concerns don’t entirely abate, as the Bank of England cuts interest rates by more than investors seem to expect. But concerns about debt levels and a dovish central bank could be a …
Real household disposable income growth is now slowing, but we still expect household consumption will accelerate to around 1.8% y/y on average over 2025-27 as households start to run down the savings they have built up. That will help all-retail rents …
2nd July 2025
The EM manufacturing PMI recovered in June, led by China, which regained some momentum, and India, which continued to outperform. That said, the surveys remained at subdued levels in most EMs. And the second half of the year will prove difficult for EM …
1st July 2025
Somewhat paradoxically, climate-driven shifts in tourist patterns could help to smooth the seasonal peaks seen in summer destinations, and some countries – particularly in northern Europe – will become more attractive places to visit. However, there is a …
