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Germany’s budget plans for 2025-29 confirm that the much anticipated big fiscal stimulus is coming and leave us comfortable with our view that GDP growth will pick up significantly from next year and the deficit will rise to as much as 4% of GDP. The …
25th June 2025
Despite solid take-up the industrial vacancy rate has risen to a 10-year high, which reflects occupiers shifting into new buildings at the expense of the secondhand market. We expect that dynamic to continue and a further small rise in vacancy will push …
The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the …
24th June 2025
This Update answers five key questions about a potential “closure” of the Strait of Hormuz and the potential impacts on global energy markets from any attempt to close the waterway. As it stands, it is arguably not in Iran’s best interests to close the …
23rd June 2025
A combination of factors, including surging energy and wage costs and an increased regulatory burden, have pushed multifamily operational costs to over 40% of rent, cutting income returns. But with energy costs set to drop and a looser labour market …
19th June 2025
We’re discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST today. (Register here .) And a t our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their …
Oil prices could feasibly surge to $130-150pb were hostilities between Israel and Iran to escalate in a way that resulted in major disruption to Middle Eastern energy exports and/or shipping through the Strait of Hormuz. However, so long as the conflict …
18th June 2025
This Update outlines potential outcomes of the Iran-Israel conflict and teases out the implications for the region, the global economy and commodity and financial markets. One point that emerges is that an escalation of the conflict still leaves multiple …
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Two developments in borrower and lending behaviour mean that housing activity and prices can be higher than before the pandemic for any given mortgage rate. That’s why we expect housing transactions to recover to their pre-pandemic levels and house prices …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
17th June 2025
The Israel-Iran conflict has continued to escalate. This Update summarises how our views on the macro impact have evolved over the past few days and answers the most frequently asked client questions that we have received. What have we learnt in the past …
16th June 2025
While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
13th June 2025
The Deputy Prime Minister has urged the Chancellor to close the commercial property stamp duty ‘loophole’, which could lead to an average increase in tax on property transactions of 2.0 to 2.5%-pts. If well signposted, that is likely to lead to a surge in …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The upcoming fiscal stimulus in Germany will boost core inflation a bit, but we think the effect will be small and that the core rate will average just over 2% in 2026 and 2027. The stimulus will have only a very small direct impact on consumer prices and …
12th June 2025
EM sovereign debt risks remain much higher than in the pre-pandemic period. There are positive stories of declining risk in those EMs undergoing reforms (e.g. Argentina) and low fiscal risks in the majority of EMs, but sovereign debt dynamics appear …
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
Having lagged over the past year, the improving economic backdrop should support office demand in Bucharest and Budapest in the coming few years. However, while we think high vacancy rates will limit rent growth in Budapest, we expect more upward pressure …
Soft housing rebound While May’s RICS survey suggests the worst of the housing market’s recent weakness is in the rear view mirror, it points to only a modest recovery. Unless there is a more significant rebound in demand in the next few months, house …
The 2025 Spending Review is the tightest (outside of the austerity years in the early 2010s) since 2000 and the tough decisions for Chancellor, Rachel Reeves, won’t end here. The government’s U-turns on benefit and welfare spending and higher borrowing …
11th June 2025
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
Recent presidential elections in Poland, Romania and Korea have led to significant moves in their financial markets. But from a macro perspective, what also matters is the composition of the legislature and the challenges the economy faces. Those …
10th June 2025
Wage growth looks set to slow from 4.5% last year to around 3% by the end of 2025, leaving it within touching distance of the 2.5% rate we think is consistent with the ECB’s inflation target. Euro-zone wage growth has been on a steady downward trend since …
6th June 2025
After a lean couple of years, the outlook for commercial property construction is brightening. While the economic outlook is fairly weak, vacancy rates in some subsectors such as prime offices and residential are low which will support rental growth. …
The ECB’s decision to cut the deposit rate by 25bp to 2.0% was in line with expectations and the messaging in the press conference suggests that a pause at the next meeting in July is most likely. We think the Bank will lower interest rates once more this …
5th June 2025
Trade policy uncertainty has damaged investment intentions in the US, Canada, Mexico and South East Asia. But intentions elsewhere have held up better and investment growth itself has yet to falter. We suspect that ongoing uncertainty will act as a drag …
4th June 2025
According to the measures of wage growth that we consider the most useful and the fundamentals of the recent easing in the demand for labour relative to the supply, it is only a matter of time before wage growth slows to rates that are more consistent …
While tariff risks remain, the recent improvement in demand and weaker supply pipeline suggest the Dublin office market has reached a turning point. However, we don’t expect prime rental growth to rebound by as much as most expect given the high level of …
The suggestion that the Chancellor may be considering cutting 50,000 civil service job cuts wouldn’t weigh on employment growth much over the next few years. Only if the government were to cut public sector employment towards its post-austerity and …
2nd June 2025
We’re nudging up our forecasts for equities in most non-US developed markets, partly in response to our upwardly revised projections for the S&P 500 . But we still think they’ll lag equities in the US, if perhaps less significantly than they did earlier …
30th May 2025
U-turns on benefit and welfare spending, increased pressure to ramp up defence spending and higher borrowing costs have left the Chancellor, Rachel Reeves, in a sticky position. If she wishes to avoid a political backlash and/or an adverse reaction in the …
29th May 2025
The surplus in the EU carbon market dampened incentives to decarbonise in 2024, and the likelihood that the surplus is maintained until 2027 will keep a lid on carbon prices in the near term. Further ahead, a sharp contraction in the supply of carbon …
Emerging Markets Capital Flows Monitor (May 2025) …
Leading indicators suggest most of the recent weakness in housing demand and prices is due to the temporary influence of the change in stamp duty rather than any longer-lasting influence of the softer outlook for the UK economy. This lends support to our …
Yesterday’s US court ruling has added yet more uncertainty to the EU-US trade relationship and at face value has weakened President Trump’s position. But the risk of tariffs remains very real not least because sectoral tariffs, which are unaffected by the …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
Debate around whether or not India’s economy has surpassed Japan’s in size is raging, but the big picture is that India was always going to overtake Japan – and also Germany – given its positive demographics and scope for continued productivity gains. So …
28th May 2025
For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral …
27th May 2025
Russia’s invasion of Ukraine caused grain prices to surge to record levels in 2022, but a peace deal won’t lead to large falls in prices. This is mainly because Ukrainian grain production has already largely recovered from the war-related disruption. …
European residential property outperformed all-property for the third consecutive year in 2024 and our updated forecasts suggest that this will continue over the coming five years. Returns were especially strong in the Netherlands, but going forward we …
German office rents made stronger than expected gains in 2025 Q1. But not all markets were moving in line, with Frankfurt’s buoyancy a stark contrast to other cities. While that suggests risks remain on the upside in the near term, we still expect overall …
20th May 2025
By seeking to extend the “polluter pays” principle to building owners and road users, the ‘sequel’ to the EU’s Emissions Trading Scheme was always likely to run into public and political opposition. The risk for the EU is that any concessions to make ETS2 …
19th May 2025
April’s surprisingly large jump in services inflation appears to have been entirely an Easter timing effect that will reverse in May. Meanwhile, there are some near-term upside risks to headline inflation from higher food prices, but we still expect the …
The unexpected victory for centrist candidate, Nicusor Dan, in the second round of Romania’s presidential election on Sunday marks a major comeback against the far-right, and will ease concerns about the country veering from its pro-EU stance. That said, …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. European markets have had a strong start to the year, and we are …
15th May 2025
The strong lead for far-right candidate George Simion in Romania’s presidential election, and the collapse of the coalition government last week, led to the largest one-week fall in the leu since 2009. We estimate that the exchange rate is still …
14th May 2025
There is broad agreement amongst forecasters that prime rental growth will slow over the next couple of years. However, we think the slowdown could be sharper than the consensus expects, especially if affordability constraints start to bite. The May IPF …
Recent actions by the Trump administration have raised doubts about the dollar’s safe-haven credentials, and could contribute to a further decline in its share of global FX reserves. At the same time, European governments, led by Germany, are set to …
13th May 2025
