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Despite numerous reports of firms rowing back on remote work, the evidence in the UK, US and the EU suggests that the share of jobs being done remotely has remained constant over the past couple of years. Admittedly, that may reflect relatively tight …
20th March 2025
The Riksbank left both its policy rate and its interest rate forecasts unchanged at today’s meeting, suggesting that monetary policy will be on hold for the foreseeable future. And while policymakers largely dismissed the sharp rise in inflation so far …
In the press conference following today’s SNB meeting, Chairman Martin Schlegel emphasised that inflation risks are mainly do the downside, suggesting that a further cut in June is possible. But we think today’s rate cut, taking the policy rate from 0.5% …
Our new CE UK Employment Indicator , which extracts the overall signal from a range of measures of employment, suggests that while employment growth has continued to slow in Q1 this year, it is cooling rather than collapsing. This lends support to our …
19th March 2025
Euro-zone services inflation fell to a 10-month low in February and leading indicators point to further declines in the coming months. We think this will prompt the ECB to cut interest rates at its meetings in April and June, taking the deposit rate from …
The surge in rental demand is over, but rental demand will probably remain stronger than pre-pandemic levels. That suggests the prop to rents growth in 2025 and 2026 from solid demand will fade only slowly. Fundamentally, changes in rental demand are …
13th March 2025
We expect the SNB to cut its policy rate by 25bp next week to take it to 0.25% in response to the very low inflation rate early this year. But we think that will be the last cut of the cycle, as underlying price pressures have not been as weak as we …
The strong inflation data so far this year supports our view that the Riksbank has already ended its loosening cycle and will keep its policy rate at 2.25% next week. And we expect the policy statement to focus much more on the upside risks to inflation …
Weak economy finally taking its toll on housing demand February’s RICS survey suggests the downside risks to our 2025 forecasts for housing demand and prices from the weak economy continue to grow. But bigger falls in mortgage rates than most expect over …
The policy turnarounds that have continued in Argentina, Egypt, Nigeria and Turkey have led to a sharp reduction in sovereign risk premia but have had mixed success in restoring macroeconomic stability so far. We remain most optimistic on the outlook for …
12th March 2025
Events of the past week or so have worsened the outlook for German commercial property. While more government spending could marginally boost rents, the higher outlook for interest rates will outweigh this positive, and will likely put upward pressure on …
The sharp drop in retail rents seen during the pandemic coincided with a surge in rents for distribution warehouses and, as a result, the difference between the two is at a record low. That will help physical retail stores compete with online and …
10th March 2025
The latest IPF Consensus Survey was broadly unchanged from the previous forecast round. Total returns at the all-property level are forecast to be 8.0% p.a. over 2025-29, with views ranging from a high of 9.3% p.a. and low of 7.1% p.a. That puts our …
7th March 2025
Alongside today’s decision to cut the deposit rate from 2.75% to 2.50%, the ECB adjusted its messaging to signal that the outlook for monetary policy has become less clear. We still think that the Bank will lower interest rates further but now forecast …
6th March 2025
The unravelling of US exceptionalism in stock markets since Donald Trump returned to the White House on 20 th January has been mainly driven by concerns about the US’ dominance of AI and the relative health of its economy (which has also dragged down …
In this Update , we put into context the recent surges in Bund yields, German equities, and the euro that have been triggered by expectations of a significant loosening of fiscal policy in Europe’s biggest economy. We have discussed here the economic …
Five years ago, we were downbeat about the immediate prospects for the largest city real estate markets, the so-called gateways, and that view has proved correct. But we also argued that this malaise would be short lived and strong fundamentals would be …
5th March 2025
The agreement on a reform of the national fiscal rule reached by Germany’s likely next coalition partners suggests they will implement a significant fiscal stimulus of perhaps around 1% to 2% of GDP over the next two years. This could lift GDP growth by …
The ‘race for space’ following the pandemic and shift to remote work is evident in both the UK and US, with houses becoming more expensive relative to flats. And that premium for larger homes looks set to endure. While there may be a further small …
4th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
The small uptick in the EM manufacturing PMI in February appears in part to be a result of the front-running of US tariffs, and is unlikely to be sustained. For now, the surveys continue to point to weak goods price inflation across the emerging world. …
3rd March 2025
The EU’s Clean Industrial Deal and Omnibus packages mark a shift in climate policy as pushback against the costs of climate action grows. With the EU less willing to impose costs on the private sector, there is a growing risk that it does not follow …
27th February 2025
President Trump’s attempts to reset relations with Russia have led some to suggest that he may be attempting to break apart the Sino-Russian alliance as Nixon did in the early 1970s (although in Nixon’s case, by reaching out to China). But while this may …
It is very unusual for the Bank of England to be cutting interest rates when inflation is above the 2% target and is expected to rise further. There’s a growing risk, then, that inflation fears will force the Bank to stop cutting rates. Equally, though, …
This Update answers some key questions on the recently agreed US-Ukraine minerals deal. In short, estimates of Ukraine’s mineral wealth seem to be overblown. The deal may provide more US support for Ukraine in peace talks, but Russia and Ukraine remain …
26th February 2025
The Prime Minister’s announcement that defence spending will rise from 2.3% of GDP now to 2.5% by 2027 is likely to be only the start of a more substantial and longer-lasting increase in defence spending that could be funded by cuts to public spending …
25th February 2025
We think that there is likely to be substantial additional borrowing by European governments in the coming years to fund higher defence spending. This could amount to anything from 0.3% of GDP per year to 1.5%. Most will probably be financed nationally …
Industrial property has been a clear winner over the past five years, with double-digit annual rental growth far outpacing expectations. However, as we predicted early on, supply has been responsive and, combined with a normalisation in demand, those …
The decline in euro-zone negotiated wage growth to 4.1% in Q4 last year is likely to be followed by further large falls this year. This is because tax-free one-off wage payments which lifted German wages during 2024 will not be repeated and the …
January’s inflation data show that domestic price pressures are strong but easing. We remain convinced that they will decline much further this year. Data released this morning confirmed that euro-zone headline inflation edged up from 2.4% in December to …
24th February 2025
Following yesterday’s federal election in Germany, this Update answers questions raised by clients in our on-line briefing (which can be viewed here ). What are the key takeaways from the election itself? The CDU’s leader, Friedrich Merz will be the next …
Euro-zone exports have performed poorly for several years and the outlook is poor even if the EU does not get into a trade war with the US. We suspect that US tariffs will be only a small additional drag, but there is a lot of uncertainty and the hit …
21st February 2025
Hotels have seen a considerable turnaround in the past five years given the near-existential threat that the pandemic posed to the sector. Having bottomed last year, we expect values will grow in the coming years, with a pick-up in consumer spending …
20th February 2025
Germany’s next government looks set to cut taxes and, if the parliamentary maths allow, reform the constitutional fiscal rule. It is also likely to be firmer in its support for Ukraine even as support from the US wanes and to advocate an increase in EU …
Whereas political pushback against the cost of climate action is hindering policy in North America and Europe, the tailwinds from China’s low-cost green technology exports are becoming more concentrated in emerging markets more aligned with China. The …
19th February 2025
European governments are poised to further scale up their plans for defence spending in the coming years which should benefit the equity prices of European defence companies, but the boost to GDP is likely to be small. As things stand we think the bulk of …
17th February 2025
A weaker economy than we previously thought could mean housing demand is a bit more subdued than we expect. But our forecast for mortgage rates to fall further than is widely anticipated suggests transactions will continue to recover and house prices can …
Booming demand for housing has led to huge price rises in southern Europe over the past few years and will support rapid construction growth for some time to come. Moreover, there is little risk of a bubble forming because mortgage borrowing has been …
13th February 2025
GDP growth in Russia came in stronger than most expected last year at 4.1%, but this was accompanied by significant overheating and policymakers lost control of inflation. We think the period of rapid growth will give way to a slowdown in 2025, but the …
President Trump’s push for an early peace agreement in Ukraine raises the prospect of higher defence spending in Europe and increases the chance of a fall in European natural gas prices. But it does not dramatically shift the outlook for the European …
If the Trump administration pursues a reciprocal tariff strategy rather than a 10% universal tariff, then it could result in a smaller rise in the overall effective tariff rate than we have assumed. But while most DMs would come out relatively unscathed, …
Higher mortgage rates and weak activity starting to weigh on housing demand January’s RICS survey suggests that the recent rises in mortgage rates and the downbeat economic outlook weighed on housing demand at the start of this year. But bigger falls in …
Any attempt by the EU to impose tariffs on imports of US services would be controversial and difficult to implement. It is more likely that the EU links regulation and domestic taxation of digital services to trade relations with the US – but probably by …
12th February 2025
Five years ago, the retail sector was staring at the abyss, as lockdowns and virus-related restrictions worsened what was already a crisis in demand. The turnaround since has been dramatic. But while the sector has now re-priced and is set to perform …
The latest CPI data out of Central and Eastern Europe (CEE) have been stronger than expected, and leading indicators suggest that inflation across the region may be higher than we previously anticipated this year. We have revised up our interest rate …
Prospects for Greece’s economy are brighter than for the core euro-zone economies over the next year or two, but a shortage of labour will keep growth lower than in fellow “peripheral” economies, notably Spain. It could also cause growth in Greece to slow …
The latest opinion polls suggest that a CDU-SPD coalition is the most likely outcome of the German election. Such a coalition would be less likely to pursue labour market reforms and activist industrial policies than a CDU-Green coalition. But we think it …
11th February 2025
This analysis has been edited to reflect the influence of the Q4 2024 GDP data released two days after the initial analysis was published. Higher taxes for businesses, a lingering drag from the previous interest rate hikes and softer overseas demand …
After a strong Q4, a shaky start to 2025 has highlighted the fragility of the recovery in euro-zone commercial real estate investment. We still expect transaction volumes to rise over the remainder of the year, but tight lending conditions, refinancing …
We expect equities in Germany to underperform those in other major developed markets in the coming year or so because German firms are more exposed to the increase in protectionism which appears to be gathering pace. This will probably be more important …
