Filtered by Region: Europe Use setting Europe
While a stronger dollar is generally regarded as a headwind for EMs, we think it will only be a minor one for most major EMs, particularly compared with the headwinds from weakness in China, spillovers from the war in Ukraine, and domestic monetary …
6th May 2022
Central banks in Czechia and Poland caught investors by surprise today as the Czech central bank (CNB) unexpectedly re-accelerated the pace of its tightening cycle with a 75bp hike while Poland’s central bank (NBP) slowed the pace of tightening with a …
5th May 2022
With economic concerns worsening in the euro-zone, we expect that the Danish economy will not be immune. And we think that the shifts in the interest rate outlook in particular will have the most significant impact on Copenhagen office performance. Our …
The Monetary Policy Committee (MPC) struck a more dovish tone today while raising interest rates from 0.75% to a 13-year high of 1.00% and saying that it won’t make a decision until after August on whether to shrink its balance sheet quicker by selling …
Poland’s government has shown no signs of meeting President Putin’s demand to get gas flows restored, but we think the economy is relatively well placed to deal with a loss of Russian supplies. As things stand, we do not expect any energy rationing and we …
We think that the surprising stability of the Turkish lira so far this year will not last much longer and we forecast it to weaken against the dollar over the coming months, from ~14.8/$ now to 18/$ by end-2022. This would be a fall of around 20% and, …
As was widely expected, the Norges Bank left interest rates on hold at +0.75% today and all but confirmed that “the policy rate will […] be raised in June”. After June, we forecast two more rate hikes in 2022 and one per quarter next year, which would …
The EU proposal to end imports of Russian crude oil and petroleum products by the end of the year has long been in the works. If approved, we expect Russia’s oil exports to fall by around 20% this year, which in turn would keep oil prices over $100 per …
4th May 2022
The prospect of tighter monetary policy in the euro-zone has raised the threat of a bigger sell-off in the region’s bond markets. If this happens, we think the ECB would ultimately intervene to prevent any lasting damage. But we doubt that it will agree …
While the low level of prime industrial yields compared to history leaves the sector vulnerable to rising interest rates, a fair value analysis that incorporates our expectations for rental growth suggests that office yields could come under more upward …
Uncharacteristically, euro-zone GDP rose while US GDP fell in Q1. But the weak outturn in the US partly reflected temporary factors and domestic spending remained much stronger than in the euro-zone. We expect normal service to be resumed in the rest of …
3rd May 2022
The timeliest surveys show that supply problems faced by euro-zone companies have eased a little this year, but remain intense. This will continue to weigh on production and keep inflation high. Since the start of the year there have been signs that the …
Russia’s central bank (CBR) cut its policy rate by another 300bp to 14.0% today and the communications suggest that the CBR is now more focused on boosting credit growth than it has been in the past. This shift in the CBR’s policy framework is likely to …
29th April 2022
While Q1 investment data showed further strength, the impact of the war in Ukraine on investor sentiment, economic growth and interest rates support our view that pan-European (excl. UK) investment activity will slow further ahead. There was little impact …
The cap on the wholesale natural gas price for the Iberian market will result in a bigger fall in energy inflation in Spain than we had previously expected. It might also dampen underlying price pressures, but the big picture is that core inflation will …
28th April 2022
As we had expected, the Riksbank finally bowed to economic logic in its April meeting by raising the repo rate, to +0.25%, and announcing that it will begin to shrink its balance sheet this year. While the Bank has spoken in the past of the need to tread …
A weaker economic outlook and larger increases in interest rates this year and next mean that we now think euro-zone all-property yields will reach their trough by the end of this year and will come under more upward pressure than previously expected. In …
Russia’s decision to suspend gas deliveries to Poland and Bulgaria from today because of a payments dispute will only strengthen the EU’s resolve to end its dependency on Russian gas, keeping gas prices historically high for months to come. The move also …
27th April 2022
Our new forecast that interest rates will be raised from 0.75% now to a peak of 3.00% next year is more hawkish than the peak priced into the financial markets (2.50%) and the peak expected by the consensus of economists (2.00%). That’s because we think …
Our new, higher, interest rate forecasts mean that we now expect house prices to fall marginally in 2023 and 2024. While there are risks on both sides, our base case is that prices drop by 5% overall, reversing a fifth of the surge in house prices since …
In our latest European Economic Outlook , we set out three non-consensus forecasts for the euro-zone. First, we think inflation will overshoot expectations this year. Second, the hit that this will deliver to spending power means that the economy is …
25th April 2022
The re-election of French President Emmanuel Macron gives him five more years to improve France’s economic potential and its public finances, with pension reform and the green transition central to his plans. But Le Pen’s greater vote share suggests he …
This Update presents our revised forecasts for the yields of developed market (DM) long-term government bonds, in light of recent market moves and changes to our expectations for monetary policy. We argued last month that the increase in DM government …
22nd April 2022
Past delays in development projects mean that office completions will exceed demand in Budapest this year and next. As such, having held broadly steady in 2021, office vacancy is set to rise again and put downward pressure on rents over the next couple of …
We think the recent upturn in office market performance is largely down to the one-off release of pent-up demand and remain downbeat about future prospects. With occupancy still languishing and remote working firmly established, we think that the risks to …
21st April 2022
A win for Marine Le Pen would need to be followed by a strong showing for her party in June’s legislative elections if she is to implement most of her programme. A government of national unity or “cohabitation” would clip her wings, at least on domestic …
20th April 2022
Despite facing very strong demand housebuilders appear reluctant to commit to new sites. This is because a shortage of materials is delaying completions, while rising interest rates and the end of the Help to Buy Equity Loan scheme mean demand is …
19th April 2022
Today’s ECB statement and press conference indicate that policymakers expect to end their net asset purchases early in Q3 and raise interest rates soon after that. With inflationary pressures still rising, we think they will lift the deposit rate sooner, …
14th April 2022
While economic growth is forecast to slow, limited supply and further strong growth in e-commerce-related demand mean Belgium industrial rental growth is expected to outperform its pre-pandemic average as well as most other euro-zone markets. Industrial …
Most EMs are not heavily dependent on Russia or Ukraine for their domestic food supplies, but there are key pockets of vulnerability due to large wheat, corn and vegetable seed/oil exports to Turkey, most of the Middle East and North Africa and parts of …
13th April 2022
The Bank of Israel kick-started its tightening cycle today with a 25bp interest rate hike to 0.35% and we think it will deliver further hikes at its upcoming meetings, taking rates to around 2.00% in the first half of next year. This is currently more …
11th April 2022
A solid result for incumbent Emmanuel Macron in yesterday’s first round of the French presidential election has helped to allay fears of a Le Pen presidency. But the latest polls still point to a very tight race and the momentum is still with Marine Le …
While prime industrial rental growth in the German markets is expected to slow in the next couple of years, it will remain above its past averages. But the risks are to the upside given the rise in land and construction costs, which are likely to further …
Earnings expectations for listed euro-zone companies look, as a whole, a bit optimistic to us given the economic impact of the Russia-Ukraine war and Western sanctions. This feeds into our view that the region’s benchmark equity indices will, in general, …
8th April 2022
A full embargo on Russian energy would force Germany to ration gas supplies to its most gas-intensive companies. This would have unpredictable knock-on effects which would cause a recession. While the short-term fallout for the wider economy would be …
We think that a rebound in employment will help prime office rental growth in Barcelona and Madrid to outperform the euro-zone this year. But this is likely to be short-lived, as the shift to remote working weighs more heavily on office demand in Spain …
While the prospect of a euro-zone break-up looks more remote than during the 2017 French presidential campaign, the possibility of Marine Le Pen taking power is still a major risk to euro-zone financial markets. As we discussed here and here , the recent …
7th April 2022
Rising interest rates have put the outlook for property prices back under the spotlight. But, with lending practices much more restrained in this cycle and the market level loan-to-value ratio well below 50%, we don’t feel overly concerned at the prospect …
Timely indicators suggest that Russian manufacturing contracted by around 20% y/y in March and that consumer spending fell by 10% y/y at the start of April. Russia’s economic downturn looks set to deepen in the coming months as the effects of sanctions, …
Pandemic-related effects and higher energy prices have played a significant part in pushing up inflation in the euro-zone, but domestically-generated “underlying” price pressures have increased too. That should make policymakers more confident that …
6th April 2022
The National Bank of Poland (NBP) unexpectedly delivered its largest interest rate hike in 22 years today (100bp, to 4.50%) to get on top of the deteriorating inflation outlook and we think there’s little argument against further hikes to come. We now …
While yield curves have inverted in a number of emerging markets (and look likely to do so in several others in the coming months), they don’t have a good track record in predicting recessions in the emerging world. In most EMs, we think that growth will …
The chances of right-wing nationalist Marine Le Pen winning the French presidency later this month appear to have risen sharply over the past couple of weeks. A victory for Le Pen would almost certainly worsen the public finances and place a question mark …
5th April 2022
With cyclical pandemic effects fading, the backdrop has improved for Dutch retail. However, having been hardest hit in 2020-21, the structural legacy of COVID-19 and higher economic barriers to conversion mean that the outlook is also weaker for retail in …
4th April 2022
Despite strong house price growth across the country over the past two years, including in regions that had lagged behind, valuations are most stretched in the usual places. As a result, house prices are still most vulnerable to rising interest rates in …
Even though the ejection of Russia from the MSCI EM EMEA Index has changed its country and sector composition, we doubt that this will meaningfully change how it tends to behave. Our forecasts for lower commodity prices and mediocre global growth suggest …
1st April 2022
The rental growth premium enjoyed by Central London shops has disappeared in the pandemic. And we don’t expect it to reopen, as lower footfall in the capital, the slow recovery in tourist arrivals and higher vacancy rates weigh on rental growth. All …
The Czech National Bank (CNB) slowed the pace of its tightening cycle for the third consecutive month today with a 50bp rate hike to 5.00%, but hawkish communications after the meeting suggest that the CNB is not finished yet. We now expect a 50bp hike at …
31st March 2022
Fidesz is looking the most likely to retain power in Hungary’s election this weekend, which will pave the way for four more years of tensions with the EU over the rule of law and raise the likelihood that EU fund inflows are withheld. From a macro …
Weakening GDP growth in the euro-zone’s trading partners – and a slump in Russia’s economy – mean that the currency union’s exports look set to grow very slowly this year. The early evidence shows that the war in Ukraine has led to a drop in export …
