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Germany’s budget plans for 2025-29 confirm that the much anticipated big fiscal stimulus is coming and leave us comfortable with our view that GDP growth will pick up significantly from next year and the deficit will rise to as much as 4% of GDP. The …
25th June 2025
Despite solid take-up the industrial vacancy rate has risen to a 10-year high, which reflects occupiers shifting into new buildings at the expense of the secondhand market. We expect that dynamic to continue and a further small rise in vacancy will push …
Hawkish MNB won’t rush to restart easing cycle The Hungarian central bank (MNB) left its base rate on hold today at 6.50% and, in contrast to the consensus view that the easing cycle will resume this year, we think rates will remain unchanged throughout …
24th June 2025
The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the …
German economy resilient to tariffs so far, but activity still weak The rise in the Ifo BCI in June suggests that activity in Germany has not yet been meaningfully hit by US tariffs. But output remains weak and we think a proper recovery will only …
This Update answers five key questions about a potential “closure” of the Strait of Hormuz and the potential impacts on global energy markets from any attempt to close the waterway. As it stands, it is arguably not in Iran’s best interests to close the …
23rd June 2025
Overview – The euro-zone’s strong first-quarter growth rate was a result of tariff front-running and will be reversed in Q2 and be followed by weak growth in the second half of the year. Further ahead, we think the euro-zone will grow more slowly than …
At our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their peers how the government has influenced the UK economy in its first year in office. (Register here .) This page has been updated with additional …
Economy stagnating, no sign yet of higher energy costs raising prices June’s flash PMI survey for the euro-zone was consistent with the economy flat-lining. The recent jump in energy costs has not yet fed through to output prices, but the uncertainty …
Risk of further escalation continues to mount The continued Israel-Iran military strikes are likely to have a limited direct impact on Israel’s economy – so long as the conflict remains confined to a matter of weeks. But the risk of escalation is high, …
20th June 2025
Europe is taking Trump’s side on China When President Trump returned to office, his aggressive treatment of traditional allies raised the possibility that the EU and China would come together in defence of free trade. But the opposite is happening: US …
At our in-person Roundtables in London on Tuesday 1st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) Upside risk to inflation from Middle East …
Given the further escalation of the Israel-Iran conflict in the past few days, this Weekly considers its possible implications for euro-zone inflation and monetary policy. These will depend mainly on how the conflict will affect energy prices , which we …
Mapping out conflict scenarios Much of the focus this week has understandably been on oil markets. Oil prices continued to climb as the Israel-Iran conflict escalated, reaching $76pb from $73 at the start of the week. In particular, the potential for US …
We’re hosting in-person Roundtables in London on Tuesday 1st July, where clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) This page has been updated with …
At our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) This page has been updated with additional …
A combination of factors, including surging energy and wage costs and an increased regulatory burden, have pushed multifamily operational costs to over 40% of rent, cutting income returns. But with energy costs set to drop and a looser labour market …
19th June 2025
We’re discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST today. (Register here .) And a t our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their …
Dovish hold supports our view of August cut and rates falling to 3.50% or below next year The Bank of England sounded a bit more dovish while leaving interest rates at 4.25% today, despite the extra upside risks to inflation from events in the Middle …
CBRT still sounding hawkish, but cuts on the cards The statement accompanying the Turkish central bank’s decision to leave its key interest rates unchanged was hawkish, suggesting that policymakers want to push back against expectations for aggressive …
Overview – European commercial property is relatively insulated from the direct impact of US tariffs, but property markets are also not likely to see substantial benefit from more fiscal spending. In all, our forecasts are little changed from our last …
Surprise cut by Norges Bank but no rush to cut again Norges Bank’s surprise decision to cut its policy rate to 4.25% today – the first in this cycle – is not a sign that policymakers are suddenly in a rush for much looser monetary policy. We expect a very …
SNB will cut rates again later this year The SNB decision to cut by just 25bp today means that it has avoided negative rates for the time being. But we think that continued deflation over the coming months will prompt policymakers to cut again at their …
Oil prices could feasibly surge to $130-150pb were hostilities between Israel and Iran to escalate in a way that resulted in major disruption to Middle Eastern energy exports and/or shipping through the Strait of Hormuz. However, so long as the conflict …
18th June 2025
Overview – Emerging Europe is generally less vulnerable than other EM regions to higher US import tariffs, but we have still nudged down some of our GDP growth forecasts for this year. We think the region will follow diverging paths – with Czechia and …
This Update outlines potential outcomes of the Iran-Israel conflict and teases out the implications for the region, the global economy and commodity and financial markets. One point that emerges is that an escalation of the conflict still leaves multiple …
UK commercial property is on the road to recovery and lending to the sector has been strong in recent months. But with yields set to remain stable, the rise in capital values will be modest over the next few years. Thanks to stronger rental growth the …
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Two developments in borrower and lending behaviour mean that housing activity and prices can be higher than before the pandemic for any given mortgage rate. That’s why we expect housing transactions to recover to their pre-pandemic levels and house prices …
Riksbank cuts, but will probably not cut again While the Riksbank cut its policy rate by 25bp this morning and suggested there was a reasonable chance of a further cut this year, the outlook is uncertain and underlying economic conditions aren’t quite as …
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 19 th June. (Register here .) We're hosting in-person …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
17th June 2025
The Israel-Iran conflict has continued to escalate. This Update summarises how our views on the macro impact have evolved over the past few days and answers the most frequently asked client questions that we have received. What have we learnt in the past …
16th June 2025
The Israeli air strikes on Iran overnight have renewed fears of a widening of conflict in the Middle East. We covered the implications for the oil market and the global economy in a report here , and discussed the latest developments in a Drop-in …
13th June 2025
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 19th June. (Register here .) If the Chancellor, Rachel Reeves, was hoping that at the end of the week of her Spending Review we’d …
OPEC+ watches on closely Israeli strikes on Iran and fears over the potential nature of Iranian retaliation sent Brent crude prices from ~$67pb to a peak of $78pb this week. While prices have since fallen back to $75pb at the time of writing, they are …
Short-term gain, long-term pain April’s data suggest that the boost to the euro-zone economy from exporters front-running US tariffs came to an end at the start of the second quarter. Euro-zone industrial production and exports were very strong in Q1 as …
While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
The Deputy Prime Minister has urged the Chancellor to close the commercial property stamp duty ‘loophole’, which could lead to an average increase in tax on property transactions of 2.0 to 2.5%-pts. If well signposted, that is likely to lead to a surge in …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The upcoming fiscal stimulus in Germany will boost core inflation a bit, but we think the effect will be small and that the core rate will average just over 2% in 2026 and 2027. The stimulus will have only a very small direct impact on consumer prices and …
12th June 2025
Falling employment and easing wage growth suggest MPC won’t slow pace of cuts Growing chance that rates fall below 3.50% Limited influence of rate cuts pose questions over speed of QT The Bank of England will almost certainly leave interest rates at 4.25% …
EM sovereign debt risks remain much higher than in the pre-pandemic period. There are positive stories of declining risk in those EMs undergoing reforms (e.g. Argentina) and low fiscal risks in the majority of EMs, but sovereign debt dynamics appear …
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
Having lagged over the past year, the improving economic backdrop should support office demand in Bucharest and Budapest in the coming few years. However, while we think high vacancy rates will limit rent growth in Budapest, we expect more upward pressure …
This page has been updated with additional analysis since first publication. Economy coming back down to earth The fall in GDP in April supports our view that the strength of the economy in Q1 was a red herring and that GDP growth will be more subdued …
Soft housing rebound While May’s RICS survey suggests the worst of the housing market’s recent weakness is in the rear view mirror, it points to only a modest recovery. Unless there is a more significant rebound in demand in the next few months, house …
The 2025 Spending Review is the tightest (outside of the austerity years in the early 2010s) since 2000 and the tough decisions for Chancellor, Rachel Reeves, won’t end here. The government’s U-turns on benefit and welfare spending and higher borrowing …
11th June 2025
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
