Filtered by Region: Europe Use setting Europe
The Bank of England’s hawkish tone at its policy meeting on Thursday has inevitably led to questions about whether interest rates will be cut again this year and whether the Bank’s rate-cutting cycle will soon end. (See here .) In some ways, the Bank’s …
8th August 2025
NBR unlikely to cut until (at least) mid-2026 The National Bank of Romania (NBR) left its policy rate on hold today, at 6.50%, as expected, and its communications suggest a restart of the easing cycle remains some way off. We expect rates to remain on …
EU protected from higher chip and pharma tariffs President Trump this week threatened a 100% tariff on semiconductor imports produced by firms that do not plan to invest in the US. We wrote about the global implications here . But in principle, the EU has …
Trump-Putin meeting in the spotlight Expectations that the touted Trump-Putin meeting could lead to a breakthrough in talks to halt fighting in Ukraine are likely to be fairly low. After all, little progress has been made towards ending the war so far. …
The surprisingly hawkish tone struck by the Bank of England today has increased the chances it will slow down the pace of rate cuts from one per quarter. But our view remains that Bank Rate will be cut further than investors anticipate, driving the …
7th 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 …
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%, …
Property valuations were unchanged in Q2, with both property and alternative asset yields steady over the quarter. We still think the 10-year gilt yield will see a gradual fall over the next couple of years. That will improve valuations and argues against …
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 …
Further rate cuts unlikely this year The Czech National Bank (CNB) left its policy rate on hold again today, at 3.50%, and in contrast to most other analysts, we think that further monetary easing is unlikely this year. The decision to leave the policy …
For an updated and more detailed version of this analysis, click here . Rates cut to 4.00%, but BoE appears in no rush to cut again soon Although the Bank of England cut interest rates today by 25 basis points (bps), from 4.25% to 4.00%, it showed some …
Economic growth has been fairly resilient to tariffs so far and, as long as tariffs stay around the 15% agreed in the EU-US trade deal, the hit to activity should be small. But growth will be sluggish this year as low confidence and slowing income growth …
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 …
Revisions erase German industrial resilience The sharp drop in German industrial production in June and the big downward revision to the figures for May mean that, rather than holding up well in the face of tariffs as the data previously suggested, German …
This page has been updated with additional analysis since first publication. House prices recovering, but the rebound won’t meet consensus expectations The rise in Halifax house prices in July provides another indication that the housing market is …
Relatively high inflation will encourage Riksbank to keep rates on hold The increase in Sweden’s CPIF inflation rate to its highest level since the start of 2024 is likely to encourage the Riksbank’s officials to keep the policy rate on hold at their …
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 …
Retail sales likely to remain sluggish Euro-zone retail sales edged up in June but remained slightly below the peak reached early in the pandemic and well below the pre-pandemic trend (See Chart 1). Looking forward, we expect spending growth to remain …
Despite the unexpected rise in CPI inflation in June, we still think the weakness in the labour market means it’s only a matter of time before wage growth and inflation slow to rates consistent with the 2% inflation target. We think the Bank of England …
Construction activity drops to a post-COVID low The headline CIPS construction PMI dropped back in July to 44.3, the lowest since May 2020 when COVID lockdowns impacted activity. The drop was driven by the housing component, which after jumping to 50.7 in …
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
Disinflation paves the way for easing cycle to continue in large steps The larger-than-expected fall in Turkish inflation in July, to 33.5% y/y, will encourage the central bank to continue its easing cycle next month. For now, we maintain our forecast for …
4th August 2025
Tariff agreement reduces downside risks for CEE US President Trump and EU Commission President von der Leyen closed a trade deal this week which will impose a 15% tariff on most EU goods to the US. This was broadly in line with what we had expected, and …
1st August 2025
The surveys published this week have sent vastly different signals on the health of the economy in Q3. The backward-looking balance of the CBI’s Growth Indicator fell to a record-low in July (the series began in October 2003), barring the Global Financial …
Tariffs are now firmly back in the driver’s seat when it comes to commodity prices, with this week bringing fresh news on reciprocal, metals and energy tariffs. Arguably the most straightforward to digest was the confirmation of 50% copper tariffs. While …
Although European equities declined significantly this week, it seems unlikely that this is due to the US-EU trade agreement that was announced last Sunday and confirmed in the US Executive Order towards the end of the week. After all, the deal was in …
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 …
Inflation at the target, ECB in no rush to cut again Headline inflation remained at the target in July and core inflation was only a touch higher. Both were broadly in line with the ECB’s forecasts. So there was little in the data to suggest that the Bank …
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 …
Industry continuing to struggle across Emerging Europe The weak July manufacturing PMIs out of Emerging Europe suggest that industry remains a drag on regional growth, and we expect that incoming tariffs will keep external demand conditions subdued over …
This page has been updated with additional analysis since first publication. Recovering, but not off to the races The bigger-than-expected rebound in the Nationwide measure of house prices in July shows that the recovery in the housing market after the …
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 …
A 25 basis point (bps) rate cut at August’s meeting, from 4.25% to 4.00%, is nailed on Risk of second-round effects means the MPC won’t speed up the pace of rate cuts But we still think rates will fall further than most expect, to 3.00% in 2026 The …
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
Faster growth in earnings per share (EPS) is the main reason why equities in the US have fared better in local-currency (LC) terms than those in the euro-zone since the Global Financial Crisis (GFC). With than in mind, today’s GDP releases for the US and …
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, …
Sentiment weakens, but points to robust growth The EC’s Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional GDP growth maintained a moderate pace, at 2.0-2.5% y/y, at the start of Q3. The prices components of the …
Economy resilient to tariffs so far, but growth will be weak in H2 The slowdown in euro-zone GDP growth in Q2 came as no surprise as the boost from tariff front-running waned. We expect growth to remain weak in the second half of the year. The 0.1% …
Euro-zone GDP to have slowed sharply in Q2 National data available so far suggests that euro-zone GDP growth slowed from 0.6% q/q in Q1 to either 0.1% or 0.0% in Q2, in part due to the reversal of tariff front-running. (Our projection was 0.2%.) GDP …
Central Europe holding up fairly well amid US tariffs The Q2 GDP data released out of Hungary and Czechia confirmed that both economies have held up reasonably well since the introduction of US tariffs in April. With the EU-US trade deal likely to deal …
This publication has been updated to reflect changes to our forecasts after the June housing transactions release on 31st July 2025 and the July Nationwide house price release on 1st August 2025. Overview – The stuttering jobs market and the softening …
29th July 2025
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 …
Our View: The EU-US trade agreement, which will impose a 15% tariff on most EU goods exports to the US, will deal only a small hit to GDP growth across Central and Eastern Europe. With inflation pressures in parts of the region likely to remain strong …
Net lending to property rises to 17-year high Net lending to commercial property is showing no signs of slowing down, with a total of £2bn advanced in June. And in the three months to June, net lending totalled £5.6bn, the highest amount since 2008. Both …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Households becoming …
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 …
