Filtered by Region: Europe Use setting Europe
Despite the softness in economic activity, occupier demand generally held up in Q3. And while there are signs that the cyclical slowdown in the euro-zone is starting to hit CEE markets, given their historically low vacancy rates, we think that rents could …
15th November 2019
Views from the ground in Stockholm One of the issues that came up a lot in our client meetings in Stockholm this week (see here ) was the appropriate mix between fiscal and monetary policy in Sweden. In a speech on Wednesday, Martin Flodén added to the …
Q3’s 0.2% quarterly expansion in the euro-zone economy, which was confirmed this week in Eurostat’s second estimate of GDP , was almost certainly driven entirely by domestic demand. We will not have a Q3 GDP breakdown for the euro-zone by either …
Germany avoids a technical recession, for now While the second estimate of Q3 GDP for the euro-zone was unchanged, and Germany narrowly avoided a technical recession, we think that the cyclical downturn in the region still has further to run. Our forecast …
14th November 2019
Riksbank to tighten policy despite low inflation Despite October’s increase in CPIF inflation, underlying inflation in Sweden remains below target and serves as proof that the economy is not ready for the Riksbank’s planned rate hike in December. While …
13th November 2019
The latest activity and confidence indicators point to continued near-stagnation in the Italian economy. While household consumption is likely to keep growing, prospects for investment and exports are bleak. Italy’s GDP has increased by 0.1% q/q in each …
12th November 2019
Norwegian economy to stay in a class of its own This morning’s release of Q3 GDP data from Norway confirms that the economy is faring much better than its Nordic peers. The economy looks set to lose some pace in the coming months but we do not think it …
The prospect of further political stalemate in Spain, following yesterday’s inconclusive election result, does not alter the short-term economic outlook. But it does mean that there is little chance of a fiscal stimulus, or of making progress in reforming …
11th November 2019
Musical chairs at the Riksbank The announcement this morning by the Riksbank that Anna Breman will fill the vacant seat on the Executive Board ends the period of uncertainty since the news of Kerstin af Jochnick’s departure was made public in July. It was …
8th November 2019
Spanish poll unlikely to break deadlock All the signs are that Spain’s fourth election in as many years, which takes place this Sunday, will result in another hung parliament, and that Prime Minister Pedro Sánchez will continue to struggle to cobble …
Manufacturing recession to continue The decline in industrial production in September confirms that German manufacturers are still firmly in a recession. We expect this to continue well into next year, causing the economy as a whole to contract. The 0.6% …
7th November 2019
Although the euro-zone economy grew by more than expected in Q3, helped by solid growth in France and Spain, the overall picture remains fairly gloomy. Euro-zone GDP expanded by only 0.2% q/q, and survey data, such as the Composite PMI, suggest that it …
6th November 2019
Heading towards a weak end to the year September’s euro-zone retail sales data suggest household consumption made a positive contribution to GDP growth in Q3. Meanwhile, the upward revision to October’s euro-zone Composite PMI still leaves it pointing to …
Spain’s fourth general election in as many years looks likely to result in further political stasis, but we doubt that this will have a detrimental effect on the economy. Nevertheless, weaker consumer spending and investment are likely to cause GDP growth …
5th November 2019
Office-to-residential conversions in the Nordic capitals have started to lose their appeal given the pick-up in office capital values and softening in house prices. However, we don’t think that this poses a major risk to our forecast for relatively strong …
1st November 2019
Deflation rears its head again in Switzerland… Perhaps fittingly in the week of Halloween, data released this morning showed that deflation came back to haunt the SNB in October. (See here .) With the KOF Economic Barometer confirming that the economy …
It seems fitting that “Count Draghila” ended his term at the ECB on Halloween. And as Christine Lagarde takes over, the euro-zone’s immediate prospects are not nearly as frightening as they were when Mr Draghi took the helm in 2011. In fact, some of the …
Return of deflation to ring alarm bells at the SNB The confirmation this morning that Swiss inflation fell back into negative territory in October for the first time since November 2016 will reignite deflationary fears at the SNB and strengthen its …
Italian stagnation to continue Italy’s economy eked out only a small expansion in Q3, and it looks set to continue performing very poorly over the coming years. We think that it will fail to grow at all in 2020. The 0.1% q/q increase in Italy’s GDP in Q3 …
31st October 2019
Economy to continue slowing The slightly better-than-expected euro-zone Q3 GDP figure does not alter the fact that the region is expanding at only a very modest pace. What’s more, forward-looking indicators, along with the deteriorating global backdrop, …
Rebound in sentiment still consistent with weak GDP growth October’s rise in the Swiss KOF Economic Barometer was not enough to offset the previous month’s drop and the series still suggests that activity will remain subdued into 2020. Given the …
30th October 2019
While the risk of a no deal Brexit has diminished, lingering uncertainty and structural headwinds are likely to put downward pressure on prime retail rents in Dublin over the next two years. After holding up relatively well compared to its euro-zone …
29th October 2019
Weak October data bode ill for Q4 This week saw the release of a raft of data which suggested that the euro-zone economy remained very weak at the start of Q4 after a probable stagnation in Q3. Although the Composite PMI edged up in October, this came as …
25th October 2019
As valuations have improved this year and investors have become willing to accept lower yields, demand for quality Paris assets has ballooned, most likely driving a record year for French investment. This has begun to push prime yields lower and we now …
23rd October 2019
Statistics Sweden sound a health warning The news that the Swedish unemployment (UP) rate was unchanged at its highest level since June 2015 in September (7.4%) initially caused the krona to fall against the euro on Thursday morning. However, the currency …
18th October 2019
Draft budgets not quite what they appear At first glance the budget proposals submitted to the European Commission (EC) this week might raise hopes for a big fiscal stimulus next year. But we think they should be taken with a pinch of salt. Admittedly, …
Clashes on Governing Council will cast a shadow over Draghi’s farewell party. No chance of policy action next week, but we think policy will be loosened next year. Forthcoming review to change inflation target and possibly communication strategy. Mario …
17th October 2019
In keeping with our bearish view on the euro-zone, our forecasts for GDP growth in Switzerland and the Nordic economies over the coming years are generally well below consensus. Switzerland is most exposed to the industrial woes in Germany, and we expect …
16th October 2019
Overview – Economic growth has slowed to a crawl and is likely to remain anaemic until well into next year, even in the absence of a fresh external shock. Germany is probably in a recession already and we think it will not recover for a long while yet; …
15th October 2019
Swedish activity data flatter to deceive On the face of it, the stronger than expected activity data from Sweden for August released this week lend support to the Riksbank’s forecast that it will hike rates over the next six months or so. Production in …
11th October 2019
Demand for Swedish property has been on a tear this year, even as the economy has faltered. This likely reflects investor expectations that growth will be supported by even looser monetary policy over the next few years. In this environment, competition …
Still scope for agreement on more ECB stimulus The account of September’s ECB meeting supports our view that when the Bank is eventually forced to loosen policy again, it will opt to cut interest rates and increase its corporate bond buying. The divisions …
The yield of 10-year government bonds in Portugal has fallen below that of their counterparts in Spain this week after Portugal’s Socialist Party retained power in Sunday’s legislative elections. While we think that the yield spread will stay low by past …
Underlying inflation to stay subdued in Sweden The persistent weakness of underlying inflation in Sweden serves as further proof, if needed, that the Riksbank will have to shift to a more dovish stance over the next six months or so. As a result, the …
10th October 2019
Calls for any fiscal stimulus to support the Swedish economy are likely to fall on deaf ears, so the burden will continue to be entirely on the Riksbank. A combination of a dovish shift by the Bank and a further escalation in global trade tensions will …
9th October 2019
While Paris prime retail rents rose in 2018, we doubt this marks the start of a prolonged upward trend. With tourist flows set to stagnate due to a weak global economy, rents will not rise by much before 2023, but the continued attraction of Europe’s …
There have been one or two positive signs in the past week or so, such as the increase in German industrial production in August. But the overall picture remains gloomy. Indeed, at face value the Composite PMI, which is one of the most reliable timely …
8th October 2019
Increase in August not a turning point The 0.3% increase in German industrial production comes as a relief, and a bit of a surprise, compared to the consensus forecast of 0.0% and our own expectation of a 1.0% fall, and given the poor factory orders data …
What’s Swedish for ‘disastrous’? The plunge in Sweden’s manufacturing PMI in September, from 51.8 to just 46.3, was bad enough on its own. (See here .) But taken together with the sharp fall in the services PMI (data released yesterday), the overall …
4th October 2019
The trade war takes to the skies The WTO’s decision this week to grant the US permission to raise tariffs on the EU over Airbus subsidies increases the risk that the bloc is drawn into Mr Trump’s trade war. Tariffs of 10% on large civil aircraft, and 25% …
There has been a dramatic expansion in the co-working office sector globally over the last five years. As these operators use a different approach to traditional landlords, this brings new risks to office markets, though we feel it is probably too soon to …
2nd October 2019
We estimate that the direct and indirect effects of the slump in vehicle production account for around half of the downturn in German industrial production since the beginning of last year. A sustained recovery will not take place until the sector is back …
1st October 2019
Suggestions that the recent rise in interbank rates was caused by the ECB’s new tiered interest rate system are wide of the mark. Instead, the increase reflects investors’ re-evaluation of the outlook for policy rates. They now anticipate a single 10 …
30th September 2019
The latest business surveys from Switzerland indicate that the woes in Germany are posing an increasing drag on activity. We have therefore revised our forecasts for Swiss GDP growth down to just 0.5% this year and next, which puts us well below the …
Labour market cooling Euro-zone employment growth looks set to slow over the rest of this year, and remain subdued in 2020. So we expect wage growth to weaken too, eventually prompting the ECB to loosen policy again. The decline in the euro-zone’s …
The giveaways to households and firms announced by French finance minister Bruno Le Maire yesterday do not alter the fact that there will be a tightening in France’s fiscal stance in 2020. Indeed, the French government has not got the will (nor the scope …
27th September 2019
A further downgrade to the euro-zone growth outlook means that additional monetary loosening is on the cards. While this doesn’t substantially shift our expectations for property yields over the next few years, it will keep the supply of capital strong …
ECB divisions increasingly in the open The resignation of Sabine Lautenschläger this week, and continued media coverage of September’s Governing Council decisions, have once more put the spotlight on divisions within the ECB. We think these may get worse …
Ifo still consistent with German recession The small increase in the headline Ifo Business Climate Index for September leaves it at a very low level and does not alter the fact that Germany seems to have entered recession in Q3. Moreover, the expectations …
24th September 2019
