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Data released today show that euro-zone household consumption rose strongly in Q3. But slowing real income growth means that we expect spending growth to be subdued in the coming quarters. Meanwhile, investment and exports were weak in Q3 and the outlook …
6th December 2024
This page has been updated with additional analysis since first publication. Post-Budget relief rally more than offsets higher mortgage rates The leap in Halifax house prices in November mirrors the jump in the Nationwide measure and suggests that some …
In contrast to market pricing, we think that the SNB will be cautious and cut its policy rate by just 25bps, to 0.75%, next week as the Bank sticks to a gradual approach to loosening monetary policy. That said, the SNB is likely to lower its inflation …
5th December 2024
Consensus on ECB Governing Council points to 25bp cut next week But we expect policymakers to step up the pace of cuts next year… …and think the deposit rate will be just 1.5% by the middle of the 2025 While there is a strong case for the ECB to …
We think that the shift in the shape of consumer spending over the past few years away from spending on goods towards spending on services is here to stay. While the recent strength in spending on housing rents may not persist, over the next couple of …
Retail sales lose momentum October’s decline in euro-zone retail sales followed a good third quarter for retailers. We suspect that the strength in sales in Q3 was just a one off and that growth will be subdued in the coming quarters. The 0.5% m/m fall in …
Jump in commercial activity supports a rise in the headline balance The headline CIPS construction PMI increased to 55.2 in November, from 54.3 in October, indicating an expansion of construction activity. The rise was entirely driven by the commercial …
Riksbank will be unfazed by rise in inflation While all three key measures of inflation in Sweden rose in November, this does not change the underlying story that inflation is around its target level and is likely to stay there over the next year. CPIF …
NBP leaves rates on hold, little scope for easing in 2025 The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and a rise in inflation over the coming months means that the monetary easing cycle won’t resume until the …
4th December 2024
Paris retail rents surged in Q3 raising hopes for a sustained revival. But this jump probably reflects a temporary boost from the Olympics and momentum is expected to fade next year. Despite this, we think the French capital will slightly exceed euro-zone …
The probable imminent collapse of the French government is not having much impact on bond markets elsewhere in the euro-zone. And we think contagion risks will remain limited, as long as the monetary union itself is not called into question. One of the …
3rd December 2024
While energy market fundamentals point to oil prices falling a bit further and prices of European natural gas and Asian LNG remaining higher than before the Russia-Ukraine war, the uncertain geopolitical backdrop is a major wildcard for energy markets. Of …
An interactive guide to the fiscal sustainability challenges faced by euro-zone economies. This content was last updated on 20th January 2025. If you have subscriber access to this data, you can download it via the menu options in the top right of …
Note: We’ll be discussing the French budget crisis in a Drop-In on Tuesday, 3rd December at 1000 ET/1500 GMT . Click here to register for the 20-minute online briefing. France is unlikely to have a government with a mandate to tighten fiscal policy …
This page has been updated since publication with additional analysis. Rise in inflation will prove temporary The uptick in Swiss inflation in November is likely to prove short-lived and should not prevent the SNB from cutting interest rates again in …
Rate cut in December may be jumping the gun The smaller-than-expected decline in Turkish inflation in November, to 47.1% y/y, suggests to us that a monetary easing cycle probably won’t start later this month as many analysts seem to be expecting. We …
The French government is on the brink of collapse, the country’s fiscal situation continues to deteriorate and its bonds are trading like their Greek counterparts. Is this the next euro-zone debt crisis? Andrew Kenningham, our Chief Europe Economist, and …
2nd December 2024
What’s the outlook for struggling German auto manufacturers? How big a threat do Donald Trump and Chinese imports present? What are the macroeconomic implications of this industry’s travails? Chief Europe Economist Andrew Kenningham held an online …
Unemployment rate set to rise next year With the unemployment rate unchanged at 6.3% in October, the euro-zone labour market appears to be holding up reasonably well. However, this looks set to change in the coming months as the outlook for economic …
Central Europe continues to struggle The PMIs fell deeper into contractionary territory in Poland and Czechia last month, adding to the disappointing run of activity data out of Central Europe. In contrast, the PMIs rose in Turkey and Russia. And an …
Centre-left comes out on top, but fragmented coalition likely The centre-left Social Democrats (PSD) – the largest party in Romania’s current coalition – look set to win the most votes in the parliamentary election which took place on Sunday, but strong …
This page has been updated with additional analysis since first publication. Shrugging off higher mortgage rates November’s surprisingly large rise in the Nationwide house price index suggests the housing market is picking up momentum despite recent rises …
We have been forecasting the ECB to cut interest rates by 50bp in December for some time, and we think the case for such a move remains strong. The latest surveys suggest that the economy is hardly growing. November’s Composite PMI points to the economy …
29th November 2024
In an economy where the government is boosting its spending and investment, we need to be extra cautious when interpreting the activity data. This is because there are lots of frequent indicators on private sector activity, but fewer indicators on public …
The ruble’s rollercoaster ride Donald Trump’s election victory has made some form of an end to the war in Ukraine more likely. (For more, see here .) His appointment this week of Keith Kellogg as his Russia-Ukraine envoy also points in this direction. Mr. …
Note: We'll be discussing US climate policy under Trump, Elon Musk, and the future of the Inflation Reduction Act in a Drop-in on Wednesday 4th December 15:00 GMT/10:00 EST . Register here for the 20-minute online briefing. States take the lead on …
The spread between 10-year French and German government bond yields has risen again, and we forecast that it will continue to trend up next year. The spread between the yields of 10-year French OATs and German Bunds has surged in recent days, reaching a …
This page has been updated with additional analysis since first publication. Inflation data make 50bp December cut less likely The continued strength of euro-zone services inflation in November reduces the chance that the ECB will cut interest rates by …
Net lending to property on a firm upward trend Net lending to property totalled £1.16bn in October, marking the third consecutive month of net lending exceeding £1bn. Indeed, at £3.93bn in the three months to October, lending was at its highest since May …
This page has been updated with additional analysis since first publication. Pre-Budget jitters clearly influenced households’ financial decisions October’s money and lending figures suggest that Budget worries prompted households to become more cautious …
Rebalancing underway The 0.2% q/q contraction in the Turkish economy in Q3 suggests that policymakers’ efforts to weaken demand and tame high inflation are taking effect. We still think that it would be premature for the central bank to start an easing …
The weak run of activity data out of Emerging Europe continued over the past month and, while the region is more insulated from Trump’s tariff threats than some other EMs, the risks to our already below-consensus growth forecasts have shifted further to …
28th November 2024
National inflation data for November released today suggest that euro-zone inflation has edged up this month, but we think this is just a blip. We still expect inflation to drop below target next year and the ECB to cut interest rates by more than …
This week we held a series of roundtable discussions with clients in our London office about the outlook for European commercial property. This Update outlines our thoughts on some of the most interesting questions raised, covering the likely winners in …
It now seems increasingly likely that, as we had been expecting, Germany will loosen its strict fiscal rule after the upcoming general election. However, hopes of a big fiscal stimulus are likely to be disappointed as any reform will be modest and …
Lower than expected German HICP inflation The inflation data for Germany and Spain do not significantly alter our forecast for euro-zone inflation which will be published tomorrow. We are forecasting a 50bp rate cut by the ECB in December but recent …
The Chancellor, Rachel Reeves, has confidently claimed that she will not be “coming back with more taxes”, but developments since the Budget have already whittled away her fiscal ‘headroom’. Further tax hikes are not inevitable, but they are more likely …
This page has been updated with additional analysis since first publication. EC Survey consistent with economy stagnating The EC survey was little changed in November and is still consistent with weak growth at best, while the price components suggest …
The latest IPF Consensus Survey was broadly unchanged from the previous forecast round. Total returns at the all-property level are forecast to be 7.7% p.a. over 2024-28, up from 7.6% p.a. previously. That contrasts to downward revisions in our forecasts, …
27th November 2024
EM GDP growth ticked up in Q3 but is likely to fall short of expectations over the coming quarters as stimulus in China disappoints and still-tight monetary policy takes it toll. For most EMs, a universal 10% tariff on US imports – our working assumption …
One of the many problems that the next German government will have to contend with is the struggling car sector. Unfortunately, the sector’s challenges are only likely to intensify given the prospect of sluggish European demand, rising competition from …
The economic impact of the Israel-Hezbollah ceasefire hinges on whether the deal holds and whether it sets the stage for a broader de-escalation of the regional conflict. If it does, that would allow Lebanon’s shattered economy to recover and ease fiscal …
Even if the government’s easing of planning rules were to mean that at least 300,000 new home approvals in England were granted a year, the number of construction workers would need to rise significantly. We estimate about 500,000 extra construction …
26th November 2024
Economy bounces back at the start of Q4 The stronger-than-expected Polish activity data for October suggest that the contraction in the economy in Q3 wasn’t the start of a renewed trend. With fiscal policy set to remain loose over the coming year and …
BoI on hold as upside inflation risks remain The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, and the accompanying communications suggest that the risk of a return to interest rate hikes has receded over the past month. Even …
25th November 2024
Donald Trump’s latest threat to impose massive tariffs on China, Mexico and Canada are a reminder that this is a very real threat to the global economic outlook. In this special briefing, our senior economist team answered questions from the audience as …
Shock victory for far-right candidate raises risks for Romania The surprise lead for an independent far-right candidate, Călin Georgescu, in the first round of Romania’s presidential election raises the risk of an abrupt shift towards more populist …
