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Farewell to Trudeau and his carbon tax Prime Minister Justin Trudeau's departure from office is likely to be swiftly followed by the removal of his Liberal party's signature 2019 federal carbon tax. With their "axe the tax" slogan, Canada's Conservatives …
30th January 2025
It’s clear that after cutting its deposit rate from 3% to 2.75% today, the ECB expects to reduce rates further in the coming months. We think that weak growth and inflation will mean that the Bank has to lower interest rates further than most investors …
The latest RICS survey showed further improvement in occupier and investor demand in Europe. However, with the uptick in sentiment only small, the market looks to be struggling to gain momentum, supporting our view that the recovery in capital values this …
Bank to cut interest rates by 25bps at February’s meeting, from 4.75% to 4.50% The tail risks of both faster disinflation and slower disinflation have increased Rate cuts to stay gradual, but rates to fall to 3.50% in 2026 versus market pricing of 4.00% …
ECB has much further to go The ECB’s decision to cut its deposit rate from 3% to 2.75% today came as no surprise and the accompanying statement implies that more cuts are coming, as is widely anticipated. We think the Bank will have to lower interest …
Weak economy means ECB will keep cutting The stagnation in euro-zone GDP in Q4 supports our view that the region’s economic prospects are worse than most think. We expect this to prompt the ECB to cut interest rates by more this year than is discounted in …
Net lending to property records strongest year since 2008 Net lending to property had a strong end to 2024, with the total of £1.28bn in December the highest since September. At £11.5bn for the year, commercial property net lending had its strongest year …
This page has been updated with additional analysis since first publication. Downbeat outlook isn’t heavily weighing on households’ financial decisions December’s money and lending figures suggest the downbeat economic outlook isn’t weighing on households …
Signs of improvement, but growth still likely to underwhelm in 2025 GDP data released out of Hungary and Poland today were broadly in line with expectations and suggest that both their economies returned to positive growth at the end of last year, but we …
Germany, France and Italy all weighing on euro-zone growth With national data now available for all larger euro-zone countries, it looks as if GDP growth in the region slowed to 0.1% q/q or even zero in Q4 last year. (Euro-zone GDP data are out at 10.00 …
While there has not been much market reaction to the speech that UK Chancellor Rachel Reeves delivered today on how to “kickstart economic growth” , we are still quite optimistic about the long-term prospects for UK equities. Some of the key announcements …
29th January 2025
Euro-zone money and lending growth data paint a rosier picture of the economy’s near-term prospects than the latest business surveys and suggest that the impact of ECB rate cuts is feeding through. However, that won’t stop the Bank from cutting interest …
This page has been updated with additional analysis Riksbank makes final rate cut of the cycle We think that the Riksbank will keep its policy rate at 2.25% for the foreseeable future after delivering a 25bp cut today. While there is a lot of uncertainty, …
Spain’s strong growth showing no signs of abating The 0.8% q/q increase in Spain’s GDP in Q4 2024 was a bit stronger than expected as the economy brushed off the negative effects of the flooding in Valencia. The economy is likely to continue to increase …
Although European natural gas prices will still influence EU carbon prices in the near-term, investors’ recent optimism suggests that expectations for a tighter carbon market down the line are starting to drive a wedge between carbon and gas prices. The …
28th January 2025
MNB waiting patiently to resume the easing cycle The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that the inflation backdrop will result in less easing over the rest of the year than most expect. Today’s …
German economy starts year on weak footing The Ifo Business Climate Index (BCI) remained in contractionary territory in January which supports the consensus and our own view that that Germany will eke out only a small expansion in GDP this year. The …
27th January 2025
Trump ups the ante against Russia Comments by President Trump that he would tighten US trade and sanctions policy against Russia if Putin does not agree to negotiate an end to the war in Ukraine are likely to have been received with anger in Moscow. The …
24th January 2025
In the first glimpse into how the economy has started the new year, this week’s data took another turn for the worse. First, according to the CBI Industrial Trends Survey (ITS) of the manufacturing sector, in Q1, the optimism, expected activity and …
Europe appeared to be out of President Donald Trump’s firing line this week, with the harshest comments reserved for Mexico and Canada. This contributed to the euro rising from 1.02 against the US dollar to 1.05. The currency also benefitted from the …
We forecast bond yields to fall over the rest of 2025 in Germany, the UK, and New Zealand, even though we think the relief rally in US Treasuries is over. And we anticipate yields to rise in Japan. The global sell-off in bonds seems to have paused. Bonds …
We think that next week the Riksbank will cut its policy rate for the final time this cycle, reducing it from 2.5% to 2.25%. After that, we do not see a need for policymakers to loosen policy any further as there are already emerging signs of an economic …
Week 1/208: A national emergency and Davos President Trump hit the ground running by declaring a National Energy Emergency on his first day in office. We covered the implications of this for energy markets in this in-depth report here . One of the key …
This page has been updated with additional analysis since first publication. Stagflation concerns remain at the start of 2025 Despite the small rise in the composite activity PMI from 50.4 in December last year to 50.9 in January, at face value it is …
This page has been updated with additional analysis since first publication. Growth remained sluggish in January We expect data released next week to show that the euro-zone economy grew by only 0.1% q/q in Q4, and January’s PMIs point to a similarly poor …
The news from Davos that President Trump will “ask Saudi Arabia and Opec to bring down the cost of oil” is certainly in keeping with his desire for lower gasoline prices and his clear intention to use energy as leverage over Russia to end the war in …
23rd January 2025
Renewed rises in market interest rates across the UK, US and euro-zone have prompted questions about the implications for real estate. For now, we think the upside risk to property yields is small. We still anticipate government bond yields to fall back …
Economists from our US, Europe and UK teams hosted this online briefing all about the first rate decisions of 2025 from the Federal Reserve, European Central Bank and the Bank of England. During the session, the team addressed key issues, including: How …
25bp rate cut very likely next week. We expect ECB to lower interest rates further this year than investors anticipate. US trade policy likely to have little impact on euro-zone inflation and monetary policy. The ECB looks set to cut its deposit rate …
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
Our analysis suggests that most of the recent rise in the household saving rate can be attributed to cyclical rather than structural factors, which means the saving rate will slowly fall as interest rates decline. That lends support to our view that …
Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March, almost certainly with a 25bp reduction to 4.25%. We think it will then loosen monetary policy a little more quickly than its latest …
Norges Bank to start cutting in March Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March. We think it will then loosen monetary policy a little more quickly than its latest projections …
The rise in gilt yields since the start of the year will weigh on transactions and put upward pressure on property yields over the next couple of months. But we still think risk-free interest rates will fall back later this year, which will help property …
22nd January 2025
The underperformance of the German office-based jobs sector since 2019 has been stark and the weak outlook for the economy suggests a material reversal is unlikely in the next five years. This will hold back office demand compared to the other main …
This page has been updated with additional analysis since first publication. Figures not as bad as they appear but challenges remain Against a backdrop of slowing GDP growth and high interest rates, December’s overshoot in borrowing is further …
We think a few points are worth making about the fiscal policy announcements made by the French prime minister yesterday (15th July): First, at 1.5% of GDP, the planned scale of fiscal tightening seems implausibly high. We think the government will …
21st January 2025
This page has been updated with additional analysis since first publication. UK wage growth rebounds further, but there are signs of cooling further ahead While the further rise in regular private sector pay growth in November will cause the Bank of …
We know that the economy flatlined or suffered a small contraction in Q4. But that would have been much worse if not for what appears to be a rise in government spending, which will play an important role in driving GDP growth throughout 2025 too. With …
20th January 2025
Equities in Europe have done well so far this year, but we expect them to trail those in the US over the rest of 2025, as the US imposes universal tariffs and enthusiasm about AI returns. This would also mean “big-tech” sectors returning to the front of …
17th January 2025
The Chancellor was able to breathe a sigh of relief this week after favourable CPI inflation prints for December in both the UK (see here ) and the US (see here ) led to a reversal in last week’s leap in gilt yields. In fact, the 28 basis points (bps) …
US sanctions on Russian energy cause a stir Oil prices had a strong start to the week following the news of further US sanctions against Russia's oil sector. We outlined our thoughts here but in short, the disruption from these sanctions could take time …
With commercial property capital values stabilising and credit conditions easing, the stage was set for a decent recovery in investment this year. However, the recent rise in gilt yields has cast a shadow over the outlook and a fall in UK REIT pricing …
Oil prices up, but inflation will still fall We now think that headline inflation will be a touch higher this year than we previously expected, but it will still probably average around 2% and the core rate will keep falling. So this doesn’t change our …
Services inflation in the euro-zone was stuck around 4% last year but we remain convinced that it will decline significantly in 2025. Data released today confirmed that euro-zone headline inflation rose from 2.2% in November to 2.4% in December. The core …
Israel & Hamas: an end to the war The ceasefire deal agreed between Israel and Hamas this week, if it sticks, would represent a major de-escalation in the region. It’s a multi-phase deal that will involve the exchange of hostages and prisoners, eventually …
This page has been updated with additional analysis since first publication. Disappointing Q4 not a sign of things to come December’s 0.3% m/m fall in retail sales volumes was worse than expected (consensus forecast +0.4% m/m, CE 0.0% m/m) and rounded off …
The Israeli cabinet’s decision to delay a vote on approving the ceasefire with Hamas adds a high degree of uncertainty as to whether it will take e ffect on Sunday, as intended. If a ceasefire can stick, it could lead to a sustained improvement in the …
16th January 2025
