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Virus numbers have risen sharply in the past month, but the second wave has different characteristics from the first. It is concentrated in younger people, so hospitals are not being put under such pressure. One consequence is that the restrictions being …
19th August 2020
Denmark’s lockdown pays off … According to the GDP indicator released on Friday, the Danish economy contracted by 7.4% q/q in Q2, broadly in line with our forecast. While this was its biggest decline since data began in the 1990s, it was a far cry from …
14th August 2020
Compared to many of the larger euro-zone countries, the coronavirus remains relatively well under control in the Nordic countries and Switzerland. With the exception of Denmark, there are at this stage no signs of a second wave. This in turn is helping to …
13th August 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday (20 th August), and we expect it to reiterate that it is in no rush to tighten policy. Having cut its key policy interest rate to a record low of zero at its …
With accommodative monetary policy anchoring bond yields, we think that yield compression in the euro-zone is set to resume next year. But the balance of risks have clearly changed post-virus. Yield rises in the face of the COVID-19 shock were inevitable. …
Sweden’s contrary policy response to the pandemic reduced the depth of its economic slump at the expense of worse public health outcomes. But the data so far suggest that its experience stands out less than one might have expected, both in terms of …
12th August 2020
Inflation to remain anchored at low levels Swedish headline inflation would have fallen further in July had it not been for temporary effects related to car rental prices. And while core inflation edged up from June, against a backdrop of falling resource …
Despite sharply lower investment in Q2, solid Q1 activity and the faster-than-expected economic recovery means we now think that total pan-Europe (ex UK) investment in 2020 will be only around 15% lower than its 2019 level. The disruption from the virus …
Taking stock of the latest coronavirus numbers With worries about a major second coronavirus wave in Europe intensifying this week, it is worth taking a step back and putting the current cases numbers in a bit of context. Three trends stand out. First, …
7th August 2020
Still a long way from normal Despite another substantial increase in June, driven by the auto sector, industrial output in Germany remained well below its pre-crisis level. The recovery should continue in the coming months, but will probably lose momentum …
We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through …
6th August 2020
The economy is set to rebound strongly in the current quarter after its 12% slump in Q2, even if there is no further increase in GDP in August and September. Indeed, some of the high frequency data suggest that economic activity is almost back to its …
Rising virus cases pose growing threat to the outlook Euro-zone retail sales reached their pre-crisis level in June and July’s final PMIs confirmed that the broader recovery continued at the start of Q3. But other parts of the economy won’t have rebounded …
5th August 2020
Swedish economy not immune, but still well placed The sharp contraction in the Swedish economy in Q2 confirms that it has not been immune to Covid, despite the government’s well-documented light-touch lockdown. Nonetheless, the economic crunch over the …
We expect office-based employment growth to be faster than total employment growth by around 0.3-0.5% ppts each year over the next decade in the US, the UK and the euro-zone. The coronavirus crisis will dampen the outlook in the short run, but the less …
4th August 2020
Huge variations in scale of Q2 contraction The Q2 GDP data published this week highlight that euro-zone member states have had very different experiences of the coronavirus crisis so far, reflecting the variation in the number of virus cases and …
31st July 2020
Mixed messages from the retail data Retail sales data from Switzerland for June, released this morning, show that consumer spending lost a bit of steam at the end of Q2 following the initial sugar-rush as restrictions were eased. Having surged by almost …
Hit the hardest and slowest to recover The record plunge in Spain’s GDP of 18.5% q/q is likely to have been one of the biggest falls of any euro-zone country in Q2, illustrating the severity of the country’s lockdown and its slow and partial recovery …
Q2 as disastrous as expected, a long recovery awaits While the catastrophic collapse in French Q2 GDP was hardly a shock given the country’s stringent lockdown, it still highlights the sheer extent of the economic damage wrought by the pandemic. High …
A more favourable economic outlook should support occupier demand and thereby prime Dutch office rents over the next few years. And while the shift to more remote working poses a risk, we think that the Netherlands might be better placed to deal with the …
A combination of official travel restrictions and caution from holidaymakers is likely to hit Spain, Greece and Portugal particularly hard. Germany should get off lightly thanks to its comparatively small tourism sector, relatively small number of foreign …
30th July 2020
Spain’s economic recovery was already set to be one of the weakest in the euro-zone but the resurgence in virus cases over the past week and subsequent re-imposition of restrictions deals a fresh blow to the outlook. A return to normality looks even …
29th July 2020
Recovery continues apace The rise in Sweden’s Economic Tendency Indicator (ETI) in July suggests the recovery there continued to gather pace at the start of Q3. That said, the rise in consumption appears to be slowing, and the external sector would suffer …
Further encouraging signs from German business The message from the Ifo Business Climate Index chimes with that from the PMIs published last week and suggests that the rebound in the German economy continued at a steady pace in July. The increase in the …
27th July 2020
The historic agreement reached this week over the EU’s €750bn Recovery Fund has given euro-zone assets a lift. The euro rose from just over $1.14 last Friday to $1.16 at the time of writing, and ten-year Italian bonds yields have fallen from 1.28% last …
24th July 2020
Nordic economies comparatively well placed In case you missed it, we published our Nordic & Swiss Economics Outlook this week. (See here .) The key message is that we forecast the Nordic economies to experience the shallowest recessions in Europe, and our …
Strong rebound might not be sustained The sharp rise in the euro-zone Composite PMI in July is an encouraging sign that the economic recovery continued at a decent pace at the start of Q3. But we suspect that activity will remain below pre-crisis levels …
Recovery in consumption losing momentum The small fall in euro-zone consumer confidence in July is consistent with the message from high frequency data that the recovery in spending may already be slowing. The slight decline in the European Commission’s …
23rd July 2020
Although banks expect to tighten lending standards, we think that the underlying situation is much better than pre-GFC and that government schemes will continue to provide support, which should limit financial strains for European property owners. Given …
The Nordic economies have weathered the Covid crisis comparatively well, and if our above-consensus forecasts for GDP growth this year prove accurate, the region will see some of the smallest falls in output in the whole of Europe. We forecast output in …
21st July 2020
Overview – The economy has partially recovered from the impact of the coronavirus containment measures imposed earlier in the year, but it will be a long time before it gets back to normal. Even if there are no new nationwide lockdowns, we suspect that …
This week, governments in France and Italy suggested more stimulus was in the offing to support their economies’ recoveries, consistent with our view that the fiscal cost of the crisis would end up being much bigger than early estimates suggested. Italy …
17th July 2020
“SNB 101” speech targeted at the US Treasury Thomas Jordan delivered the first-ever virtual IMF Central Banking Lecture on Tuesday, which is named in honour of Michel Camdessus, the longest- serving past IMF Managing Director. The video production had a …
At the press conference following today’s Governing Council meeting, ECB President Christine Lagarde dampened any suggestion that the Bank may not use the full €1.35 trillion in its emergency purchase programme. In fact, we still think it is likely to …
16th July 2020
Despite the apparent strength of the euro-zone labour market in early Q2 data and the office sector’s inherent resilience, we still expect prime rents to fall this year on the back of the weak economy and uncertainty surrounding the virus. With …
Global property markets are expected to see a lasting impact from the effects of the COVID-19 outbreak. Over the coming weeks, we will publish a series of pieces looking at the post-pandemic future across the main property types. We start this by …
15th July 2020
Nordics gathered momentum into H2 The June PMI surveys from the Nordics, released this week, add to the evidence that the region’s economies are further down the road to recovery than others in Europe. In Sweden, there was plenty to be encouraged by in …
3rd July 2020
News that German consumers went on a spending spree in May has raised hopes that the recovery will be V-shaped after all and that things will soon be back to normal. We think that only the first part of this is true. The rebound will look like a V, at …
The hit to the luxury retail market and prolonged weakness in international tourism will cause Paris prime retail rents to decline this year for the first time since 2009. Although some rental recovery is expected next year, the virus outbreak has …
2nd July 2020
While the proposed joint EU fiscal response has been hailed by some as a “Hamilton moment”, the central budget will be just one-quarter as large as a share of GDP as US federal firepower was in the 1790s. In the absence of greater tax-and-transfer powers, …
29th June 2020
Overview – The sharp reduction in economic activity over the first half of the year and prolonged uncertainty have negatively impacted investment activity and occupier demand. We expect this will flow through to rental falls and higher yields this year, …
26th June 2020
Even though working from home has meant business as usual for many office occupiers, weak activity elsewhere has still caused euro-zone office output to fall. With the economic recovery expected to be gradual, these linkages to the wider economy will …
11th June 2020
Timely activity indicators suggest that the Scandinavian economies are already on the gradual path to normality, which will provide support to occupier demand and, in turn, prime office rents this year. Scandinavian economies appear to be holding up …
10th June 2020
The broad-based jump in equity dividend yields following the virus-driven collapse in equity prices meant that property valuations deteriorated in Q1. (See Chart 1.) This impact was exacerbated in southern Europe, as well as Russia and Turkey, where the …
4th June 2020
On the face of it, the surge in unemployment in the US implies that households are being hit harder by the crisis than those in Europe. But much of this reflects differences in the way that furloughed workers are being treated in the data. Taking this and …
3rd June 2020
Markets that are most reliant on international capital will inevitably bear the brunt of the collapse in cross-border flows as investors remain very cautious in the face of COVID-19-related uncertainty. But the relative stability and liquidity of the core …
2nd June 2020
Before the virus outbreak, falls in prime retail rents were expected to be concentrated in Northern European markets. Now rental falls are likely to spread throughout Southern and Central Eastern Europe as well. The impact of the virus outbreak is highly …
14th May 2020
Now that restrictions are being lifted, governments are inevitably facing calls to ensure that firms emerging from virus-imposed stasis have sufficient demand to stay open – not least in the German car sector. However, government support for autos will …
13th May 2020
Data from Europe suggest that the relationship between working from home and office space per worker is weak. And even if working from home becomes more prevalent in the next few years, we think that the most important driver of occupier demand will be …
11th May 2020
The lack of clear movement in the Q1 commercial property data has put other indicators into focus. These paint a much bleaker picture, particularly for the retail sector. The key Q1 commercial property data have so far held up well. Indeed, prime rents in …
7th May 2020
