Filtered by Region: Europe Use setting Europe
Developments in Ukraine have once again emerged as a key driver of EU natural gas prices. But a combination of lower gas use and the sourcing of alternative supplies in Europe means that the situation is very different to that during the energy crisis. …
12th August 2024
European office occupier surveys reveal that office attendance and utilisation has continued to rise over the past year and that it could still improve a bit further. However, despite the rise in attendance, office vacancy has continued to climb and is …
Heightened US recession worries have helped unwound some of the stretched positions in high-carry EM currencies, resulting in their exchange rates moving closer to their “fair values” (judging by our models). While our base case is still for a US soft …
9th August 2024
Inflation in Norway has continued to fall more quickly than policymakers expected. But with the krone coming under renewed pressure recently, we think they will maintain a hawkish tone next week. At the last meeting, in June, Norges Bank left its policy …
Recent safe haven flows into the franc may have prompted limited FX interventions by the SNB. But we think that the policy rate will remain its main policy tool, even for dampening the franc’s strength. Indeed, we now expect the SNB to cut its policy rate …
8th August 2024
Several organisations have estimated that a universal 10% tariff on US imports, as proposed by Donald Trump, would reduce euro-zone GDP by at least 1%. We think the hit would be much less than 0.5%. We commented previously on the impact that Donald …
Increasing demand points to stronger price growth Tentative signs from July’s RICS survey add to the growing evidence that demand and prices are starting to pick up. And as lenders start to cut mortgage rates, further cuts in Bank Rate than financial …
German industrial output rebounded in June and may well expand a bit over the coming year or so. But any recovery will be weak and the sector will remain in structural decline. German industrial output rose more than expected in June. Data released today …
7th August 2024
The news that the economy may now be 2.6% bigger than its Q4 2019 pre-pandemic size, rather than 1.8%, suggests it is in better shape than we previously thought. But with the UK still suffering from balefully low productivity and labour force growth, …
The Q2 rise in euro-zone investment marks the start of the recovery, but one that will be weak and uneven across markets. Economic and political concerns means investment in Germany and France is likely to lag, while the faster pick-up to date in Italy …
Although the UK has clearly been caught up in the recent turmoil in global financial markets, we do not think a double-dip recession is on the cards. Nonetheless, the disorderly market reaction, if sustained, raises the downside risks to our GDP forecast …
6th August 2024
While the UK led the recovery in investment activity in Q4 last year, the latest data suggest the US and euro-zone are now also turning a corner. But given concerns over economic growth in all three markets alongside structurally higher long-term rates, …
While the recent financial market meltdown has pushed some euro-zone government bond spreads up, we don’t see good reasons for risk sentiment to remain so downbeat. So we expect the upward pressure on those spreads to ease soon. But we think the relief …
Tourism in the euro-zone is likely to continue growing at a decent pace over the coming quarters due to rising real wages and increased capacity. This will be a particular boon to the southern economies, which in general we think will continue to grow …
5th August 2024
The impact of the cost-of-living crisis, which has been weighing on London industrial take-up, has a bit further to run. But London is well-positioned to benefit from the rise in consumer spending we expect from 2025. Coupled with supply constraints, …
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency risks continue to ease, fiscal risks remain moderate Financial vulnerabilities have continued to ease across …
1st August 2024
The Bank of England kick-started a loosening cycle today by cutting interest rates from 5.25% to 5.00%, but the accompanying guidance and forecasts suggest it will proceed cautiously. Accordingly, we suspect the Bank will keep rates on hold in September …
CNB slows easing cycle, but rates will still fall further than many expect Czech National Bank (CNB) Governor Michl sounded fairly cautious in his guidance about the future course of the easing cycle in the post-meeting press conference. But the …
We have been sceptical of the viability of conversion of excess office space into residential units. But the latest figures indicate that, despite marginal financials, there may have been more activity than expected since the pandemic. And with office …
At the end of the pandemic, there was a view that remote working would drive a wedge between CBD and other submarket rents. The evidence of this remains uneven. But in some cities, notably Paris and London, a shift to central locations may have helped …
31st July 2024
Our view on emerging market local-currency government bonds is broadly upbeat for the next year or so. We think returns will be largest, in common-currency terms, in Emerging Asia. It’s been a mixed year so far for local-currency sovereign bonds in …
In detailed analysis last year, we concluded that equilibrium nominal interest rates would settle at between 3% and 4% in advanced economies in the next ten years. We maintain that opinion and in fact some of the forces boosting equilibrium rates seem to …
30th July 2024
Our best judgement is that in order to fund the increase in spending of £22bn outlined by the Chancellor today, Reeves will raise an additional £10bn a year (0.3% of GDP) via higher taxes and increase borrowing by about £7bn a year (0.3% of GDP). The …
29th July 2024
Tight monetary policy and low consumer confidence have pushed the euro-zone’s household saving rate up to unusually high levels. While interest rates are set to keep falling and confidence might improve, we think that a big decline in the saving rate is …
Italy has become quicker at spending NextGenerationEU (NGEU) funds over the past year but it is still likely to spend only around two-thirds of the total funds allocated to it unless the programme is extended. Italy is set to receive €194bn (around 10% of …
The rocket strike on the Israeli-occupied Golan Heights over the weekend has heightened fears of a full-blown conflict between Israel and Hezbollah in Lebanon. For Israel, this risks adding to pressure on its already strained public finances, and would …
Our team have recorded a special podcast episode all about the big themes in commercial real estate. The 12-minute episode showcases our enhanced coverage which provides a more global, comparative view of how the key markets we forecast are performing, …
25th July 2024
The Q2 RICS commercial survey added to the growing body of evidence that capital values at the all-property level have now bottomed out. But, in line with our forecasts, it also implied that the recovery will be modest by past standards with values only …
Net immigration to euro-zone countries will probably be higher than the UN assumes in its latest population forecasts. But we still think the working age population will decline over the coming decade and that is a key reason to expect GDP growth to be …
While the pound has outperformed all major G10 currencies so far this year, we still expect it to depreciate against the greenback later in the year as the Bank of England (BoE) eases monetary policy more than money markets currently discount. While it …
24th July 2024
Business surveys released this morning add to evidence that the Olympics will lift activity in France slightly in Q3. However, activity is likely to drop back again in Q4 and we still think annual GDP growth will only be around 1%. Meanwhile, we don’t …
Supermarkets struggled in 2023, as falling food sales volumes hit profits and rental growth. But the future looks brighter. As food price inflation has fallen supermarket profits have recovered and the past surge in food sales values points to stronger …
Recent surveys of real estate lenders paint a picture of a European lending market that is still seized up, as loan terms tightened and credit demand fell in H1. Lenders are optimistic that demand for credit and origination will both pick up over the …
23rd July 2024
Easing cycle continues The Hungarian central bank (MNB) cut interest rates by 25bp again today, to 6.75%, and the post-meeting press conference suggests that, while there are some MPC members who want to pause the easing cycle, the balance is a bit more …
Without wishing to downplay the ugly fiscal picture, we think the new government is overplaying the gloom. We suspect more optimistic economic forecasts and various tweaks to the fiscal rules will save the new Chancellor from hitting the electorate with …
We doubt the independent pay review bodies’ recommendations for the government to give teachers and NHS staff a 5.5% pay rise will prevent wage growth from slowing to 3.0% by the end of next year. But if the government chooses to extend this pay rise to …
After a roller-coaster ride over the past couple of years, we think euro-zone retail sales are likely to rise gradually in the coming quarters. Consumption has recovered a long way following the disruption caused by the pandemic and the energy price …
19th July 2024
Today’s decisions to leave interest rates on hold and give no clear signals about the future path of interest rates were in line with expectations. The overall tone was arguably slightly dovish, making a September cut more likely. But the risks to our …
18th July 2024
Newfound political stability in the UK contrasts with the now more uncertain political backdrop in France. A better relative outlook for economic growth and risk-free rates had already led to a narrowing in the premium on UK over French property in recent …
The Bank Lending Survey suggests that there was a pick-up in demand for bank loans in the second quarter particularly for residential mortgages and consumer credit. This is consistent with the consensus and our own view that the economy is recovering and …
16th July 2024
We think Spain’s economy will grow strongly over the next few years, substantially outperforming the euro-zone. This is partly due to strong domestic demand which has been supported by the rapid expansion of the labour force driven by high immigration. …
12th July 2024
Net capital inflows into EMs remained positive over the past month, largely reflecting continued strong inflows into EM bonds, particularly Turkey, while there were out flows post-election in Mexico and South Africa. Policy turnarounds in some EMs and …
11th July 2024
We anticipate the spread between 10-year Swiss and German government bond yields, which has widened significantly since 2022, will narrow only slightly over the next couple of years. The spread between 10-year Swiss and German government bond yields has …
The downgrading of Sweden’s SBB to selective default last week is the latest development for a property market that has faced some of the most acute debt refinancing pressure in Europe. The saga will rumble on as large debt maturities loom, but the risk …
Revival unlikely to materialise as soon as surveyors hope While demand continued to slip back in June, surveyors were optimistic it would soon pick up. Given elevated mortgage rates we suspect the market will disappoint those expectations in the near …
UK employment has faltered of late and, though growth is expected to improve, no return to the buoyancy of the recent past is in prospect. While headcount has become a weaker indicator of office floorspace needs, the jobs outlook reinforces our view of a …
10th July 2024
At first sight, the latest CPI data out of Central and Eastern Europe (CEE) might seem to provide central banks reason for comfort. But a look under the surface paints a more worrying picture: underlying core price pressures in some countries have re …
Turkey’s economy has maintained strong external price competitiveness since the pandemic (mirrored by rapid export growth). But measures of competitiveness have shown a noticeable decline in the past year and will deteriorate further against a backdrop of …
9th July 2024
The results of France’s parliamentary elections mean it should avoid the large, unfunded fiscal expansion that two of the three major political groups were advocating. But it also means France is very unlikely to be able to reduce the deficit as required …
8th July 2024
The budget deal struck by the governing coalition in Germany reduces the risk of the country being forced into early elections. But it does little to address Germany’s structural problems, in part because of the strict cap on borrowing imposed by the …
