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Next week’s election in Portugal is likely to have little impact on the country’s economic prospects, not least because it looks like it will be a repeat of last year’s election results. Regardless of the outcome, we expect the public debt ratio to fall …
9th May 2025
Euro-zone GDP expanded at a decent pace in Q1 but that was partly due to temporary tariff front-running effects. And while higher defence and infrastructure spending will support euro-zone GDP growth late this year and in 2026, the boost will be smaller …
The strong showing for far-right nationalist, George Simion, in the first round of Romania’s Presidential election on Sunday has deepened the country’s political crisis, and the fallout in Romania’s financial markets could get more messy in the coming …
Five months ago, we incorporated a 10% tariff on all UK goods exports to the US in our forecast. That has turned out to be a good call. Despite this week’s UK-US trade deal, the 10% “baseline” tariff remains. (See here for our response to the US-UK trade …
Tariff damage likely to be limited This week brought further evidence that the impact of US tariffs on activity in the euro-zone has been limited so far, and may even have been positive. March’s industrial production data from Germany and Ireland showed …
$50 oil is not a pipe dream Plenty of oil market analysts, including ourselves, have slashed their price forecasts this week following the OPEC+ decision to raise output in June by more than the group had originally outlined for the second month in a row. …
The UK-US trade deal announced by President Trump and Prime Minister Starmer today won’t make a big difference to the UK economy as a whole, although it is more significant for certain sectors such as cars and steel. The upcoming UK-EU reset won’t be a …
8th May 2025
The trade data available for March and April suggest that a large number of EMs have benefitted from a front-running of tariffs in recent months, particularly those across Asia (Taiwan, Vietnam and India). That said, business surveys have weakened, …
More UK rate cuts coming, but not as quickly as investors expected The Bank of England predictably cut interest rates from 4.50% to 4.25% today and gave the impression that it will continue to cut rates at the current pace of 25 basis points (bps) every …
For an updated and more detailed version of this analysis, click here . More rate cuts coming, but not as quickly as the markets expect While cutting interest rates from 4.50% to 4.25% today, the Bank of England poured some cold water on the markets’ …
Riksbank leave rates unchanged, but signals cuts may be coming While the Riksbank left its policy rate unchanged at 2.25% today, policymakers indicated that a rate cut is likely this year given the weakness of the economy. We now think that they are …
This page has been updated with additional analysis since first publication. Tentative evidence that house price falls are over The 0.3% m/m rise in Halifax house prices (consensus forecast -0.1% m/m, CE 0.0% m/m) provides tentative evidence that the …
Rebound in German industry unlikely to last The big rise in German industrial output and orders in March confirms that conditions in the sector have stabilised in recent months. However, some of the strength might be due to tariff front running. And with …
Housing market left with no momentum The housing market should pull out of its current funk in the coming months even if the Bank of England were to suggest later today that interest rates won’t fall as fast as the financial markets expect. Meanwhile, a …
Although our base case remains that the hit to UK GDP growth from US tariffs will be relatively small, the downside risks to our below consensus forecast for GDP growth of 0.8% in 2025 have increased. And the growing likelihood that the influence of US …
7th May 2025
NBP cuts by 50bp ... but easing cycle may be more limited than most expect The decision by the National Bank of Poland (NBP) to cut its policy rate by 50bp today, to 5.25%, rather than opt for a smaller 25bp cut, suggests a slightly more dovish balance on …
Single-family homes have outperformed other residential sectors over the past four years as a race for space and stretched homebuyer affordability have supported demand, at the same time as developers have offered bulk discounts in the face of waning home …
CNB cuts by 25bp, but easing cycle may now be over The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.50%, but we think that this may mark the end of its easing cycle. Our forecast for the policy rate to remain on hold at 3.50% over the …
The gradual recovery in European investment continued in Q1 but going forward transaction totals are likely to be weak as a result of uncertainty around tariffs and the potential downside to property values. As a result, we now think euro-zone investment …
Retail sales edged down in March This publication has been updated with additional analysis Euro-zone retail sales declined in March, reversing part of the increase in February. We expect spending growth to remain weak for the rest of the year as any …
Increased uncertainty weighs on commercial construction The headline CIPS construction PMI edged up to 46.6 in April, from 46.4 in March. That left the balance below 50 and consistent with a contracting construction sector. A small rise in the housing and …
Inflation lower than expected, but the core rate to remain high for rest of year Sweden’s CPIF inflation was unchanged in April which will give the Riksbank little cause for concern going into its policy decision tomorrow. We expect it to keep the policy …
Merz significantly weakened by first round election failure The failure of CDU leader Friedrich Merz to be elected Chancellor in the first round of voting will probably not prevent him and the Grand Coalition from taking power in the coming days or weeks. …
6th May 2025
Simion’s lead leaves Romania on the verge of a big political shift Far-right candidate George Simion emerged as the clear frontrunner in the first round of Romania’s rescheduled presidential election and is now the favourite to win the second round on 18 …
5th May 2025
The manufacturing PMIs show that US trade policy weighed on sentiment across the emerging world, although the falls in the surveys arguably weren’t as bad as might have been feared. In India’s case, there may also be some tentative signs of a pickup in …
2nd May 2025
The larger-than-expected fall in the Nationwide measure of house prices in April has raised concerns about how quickly the housing market is losing momentum. After price gains of 1.1% m/m and 0.7% m/m in November and December last year, prices are down …
We think there are two key takeaways from the flurry of activity figures released this week. First, the euro-zone economy held up better than we expected in Q1. GDP expanded by 0.4% q/q. That was partly due to a very strong outturn in Ireland, where data …
A 25 basis point (bps) rate cut in May is a done deal Markets have got ahead of themselves in expecting four 25bps rate cuts in 2025 But the risks are tilting towards rates being cut further than markets expect, perhaps to 3.00% The Bank of England will …
Russia’s economy may be starting to break ... The latest economic data released out of Russia have given clear signals that growth has slowed sharply, with GDP having potentially contracted outright in q/q terms in Q1. We had expected a slowdown to …
Easter-driven rise in services inflation won’t concern ECB April’s rise in services inflation is unlikely to worry the ECB too much as it was probably driven mainly by Easter timing effects. We think services inflation will start falling again in the …
PMIs not as good as they look The manufacturing PMIs across Central and Eastern Europe (CEE) held up relatively well in the face of higher US tariffs, but forward looking components of the surveys suggest conditions may deteriorate ahead. Meanwhile, price …
It’s possible that the recent blackout on the Iberian peninsula goes down in history as a catalyst for widescale electricity grid upgrades which ultimately help to bolster the pace of the renewable rollout. But at least in developed economies, it’s …
1st May 2025
Headwinds are gathering for the Swedish economy, and we expect the Riksbank to strike a dovish tone in its statement next week. But it will probably stop short of cutting the policy rate as it waits for some of the economic uncertainty to fade. Meanwhile, …
Overview – While the more uncertain global backdrop due to the new US tariffs regime means we have become more confident in our below-consensus UK GDP forecast, the prospect of falling mortgage rates suggests UK housing demand is well insulated from US …
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 …
Net lending to property falls back Net lending to property weakened to a one year low in March, with total lending of £514m down from £1.59bn in February. The drop was driven by lending to standing investments, which fell to £530m from £1.49bn. Debt …
This page has been updated with additional analysis since first publication. Households tighten their purse strings March’s money and lending data suggest households were starting to spend more cautiously even before the full hit to consumer confidence …
We think the recent outperformance of euro-zone equities over US ones has run its course. The eight-day winning streak in the S&P 500 may break today, after the market opened down over 1% on news that the US economy unexpectedly contracted in Q1 , on …
30th April 2025
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency vulnerabilities remain near multi-year lows, large deficits leave the public finances in poor shape Higher US …
What do Trump tariffs mean for green tech? Much ink has been spilled over the macro and market impacts of various US tariff announcements over the past month. (See here .) From a climate perspective, these tariffs will only add to existing trade barriers …
Euro-zone inflation probably unchanged in April, but will fall further this year National data published so far suggest that euro-zone inflation remained at 2.2% in April, and that core inflation probably rose from 2.4% to 2.6%. (Euro-zone data due on …
Strong start to the year but tariff-induced slowdown ahead The acceleration in euro-zone GDP growth in Q1, to 0.4% q/q, suggests the economy started the year on a stronger footing than we expected and activity surveys suggested. Nevertheless, we still …
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
Hungary contracts ahead of tariff impact The Q1 GDP data released out of Hungary and Czechia showed that momentum in both economies slowed at the start of this year, with Hungary suffering a renewed contraction. The risks to our below consensus full-year …
This page has been updated with additional analysis since first publication. House price growth slows as stamp duty relief ends April’s bigger-than-expected 0.6% m/m fall in Nationwide house prices (consensus forecast 0.0% m/m, Capital Economics -0.1% …
This Update answers five key questions on Romania’s rescheduled presidential election, the first round of which takes place on Sunday 4 th May. A victory for far-right frontrunner George Simion would likely raise concerns about the country veering away …
29th April 2025
Stockholm was one of the worst performing industrial markets in western Europe last year. And despite our relatively upbeat outlook for the Swedish economy, we think the coming years will herald more of the same as high vacancy and a strong supply …
President Trump’s first 100 days in office have brought substantial shifts in US policy. The next 100 will start to reveal whether his presidency is causing a realignment of the global economy. There are two key questions: will most countries be able to …
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
The UK economy is relatively well insulated from the rise in US tariffs, and property even more so. Indeed, while the overall direct impact is likely to be small, some commercial sectors may even see a benefit, such as student accommodation. That said, …
