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The successful Greek debt exchange should ensure that the second bail-out package is formally signed off before long, but it leaves Greek government debt still at an unsustainably high level. … Debt deal not the end of Greece’s …
9th March 2012
The ECB struck a downbeat tone at its policy meeting today. But having recently provided massive long-term loans to the banking sector, it is not prepared to offer more support before it has taken time to judge the impact of its actions. Instead, it put …
8th March 2012
Prime office capital values in Munich in 2011 outperformed the other main German cities, thanks mainly to a sharp rise in office rents. But while this rise might have raised the scope for office rents in Munich now to undergo a period of relative …
January’s rise in German industrial production reduced the immediate risk of a recession, but did little to change the underlying picture of a very sharp slowdown in the sector. … German Industrial Production …
Inflation will climb further in most major economies over the coming months, reflecting both higher energy prices and higher food prices. The peaks should still be lower than those in 2008 as long as the price of oil does not continue to rise. Headline …
7th March 2012
The prospect of stronger growth in the euro-zone economy has been dented by a slew of bad news on the consumer sector. Not only did household spending contract by 0.4% in the last quarter of 2011 - pushing the annual growth rate back into negative …
One interpretation of the sharp jump in investment activity in Spain at the end of last year is that overseas investors stepped up their interest in distressed property in anticipation that values may be close to, if not at, a floor. Yet if the economy …
6th March 2012
The second euro-zone GDP release for Q4 revealed that the 0.3% decline was due to falls in household spending, investment and exports. While GDP might stabilise in Q1, we suspect that this broad-based weakness is a sign of things to come. … Euro-zone …
A high participation rate in the Greek debt exchange would reduce the chances of an imminent disorderly default. But even if all bondholders take part, Greece’s public debt burden will remain unsustainably high. And if the deal unravels, it could have …
5th March 2012
Having agreed to forego profits on its Greek government bonds and pumped billions more into the banking system over the past month, the ECB is unlikely to announce any major policy changes at its Governing Council Meeting on 8th March. President Draghi …
1st March 2012
The latest euro-zone data revealed an unpalatable combination of stubborn inflation and rising unemployment at the start of the year, suggesting that the recent improvement in sentiment towards the economy may not last for long. … Euro-zone Flash CPI & …
Q4’s Swedish GDP figures brought the strongest evidence yet that the problems in the euro-zone are taking their toll on Europe’s healthiest economies. We continue to think that the Riksbank will lower interest rates by more than its existing forecasts …
29th February 2012
This morning’s news that Swedish GDP contracted by 1.1%q/q in Q4 last year suggests that our forecast for Stockholm industrial rents to fall by 1% this year may now prove to be too optimistic. Whether that is true or not, the outperformance of Stockholm …
The additional monetary stimulus from the world’s major central banks undoubtedly contributed to the recovery in asset prices, including commodities as well as equities, after the global recession. However, the boost would probably have been much smaller …
The ECB’s second long-term refinancing operation (LTRO) conducted this morning should alleviate the risk of a renewed credit crunch, not just in the euro-zone, but in the UK too. However, UK bank funding markets still look strained and we continue to …
The ECB’s second three-year loan operation will provide further vital support for the euro-zone’s beleaguered banking sector. But hopes that the funds will also solve the fiscal crisis and breathe life into the ailing euro-zone economy are likely to be …
For now at least, Portugal, Italy and Ireland all appear to be meeting their budget deficit targets. But the Spanish deficit narrowed by much less than expected in 2011 and further slippage appears likely this year. … Euro-zone Fiscal Monitor …
28th February 2012
The strong increase in take-up in the Dublin office market in 2011 is not as encouraging as it first seems. For one thing, survey evidence and labour market data suggest that the strength of underlying occupier demand is still deteriorating. As a result, …
February’s rise in German CPI inflation reflected a rise in energy inflation, which is unlikely to be sustained. But for now, relatively high inflation is one reason to expect consumer spending to remain subdued despite the resilience of the labour …
The recent rise in German consumer confidence looks very encouraging at face value. But with wage and employment growth already slowing, we doubt that it will be sustained. And in the meantime, fears over the impact of bail-outs on the German public …
February’s EC business and consumer survey echoed other indicators in pointing to a slight improvement in sentiment in the euro-zone. But there are few signs of the strong economic growth needed to address the fiscal crisis in the periphery. … Euro-zone …
After forcing yet more austerity on Greece in return for the new rescue package agreed last week, some European leaders finally appeared to adopt a more positive focus, by presenting “A Plan for Growth for Europe”. But the proposed reforms, aimed at freer …
27th February 2012
Greece’s bail-out reduces the risk of an imminent default, but a closer look at the economic and fiscal projections that the package is based on adds to evidence that the deal is a fudge. The only way a further default and Greek euro-zone exit can be …
24th February 2012
2011 was a relatively strong year for Emerging European commercial property markets. But falls in yields and increases in rents became smaller and less widespread in the final quarter of the year. As a result, the performance gap between the East and the …
The detailed German GDP release for Q4 revealed that the 0.2% quarterly contraction reflected falls in both exports and consumer spending. While survey data point to a slight improvement in Q1, we doubt that this will be sustained. … German GDP …
February’s rise in the German Ifo index adds to evidence that the economy might avoid falling into recession in Q1, but this still looks set to be a tough year. … German Ifo Survey …
23rd February 2012
This morning’s “flash” release of euro-zone PMI data poured cold water on hopes that Q4’s quarterly economic contraction would be a one-off. Indeed, it looks as though the euro-zone is now in a technical recession, suggesting that occupier demand for …
22nd February 2012
The first estimates of the manufacturing PMIs for February improved in both China and the euro-zone, but remain at levels consistent with further falls in the prices of industrial metals. The detail on new orders is even less encouraging. … Improvements …
February’s fall in the euro-zone PMI puts a bit of a dent in hopes that Q4’s economic contraction will prove to be a one off. … Euro-zone Flash PMIs …
The new rescue deal for Greece should buy the euro-zone a bit of time. But we think that the package is based on unrealistic economic assumptions and will be no more successful than the first deal. Accordingly, Greece or the troika may still decide to …
21st February 2012
The advanced economies have started the year strongly, led by the US, but the recovery is not secure. Growth could still be derailed by fiscal policy tightening, ongoing debt deleveraging, further near-term strength in oil prices and, above all, a renewed …
20th February 2012
Recent economic indicators from Spain suggest that it is currently faring rather better than the other troubled southern euro-zone economies. But Spain’s economic fundamentals look grim. We expect the recession there to be much longer and more damaging …
Q4’s GDP figures revealed that France was one of the few euro-zone economies to expand at the end of last year. But prospects for French exports are marred by fairly weak competitiveness and a reliance on trade within the euro-zone while the previous …
The Swedish Riksbank indicated that it expects its latest 25 basis point interest rate cut to be the last in the cycle. But we expect the adverse knock-on effects from an intensification of the euro-zone debt crisis to prompt the Bank to reduce interest …
16th February 2012
The global fall-out from a long-anticipated Greek government default alone should be small and manageable, even if it takes the form of a “disorderly” default without the agreement of private creditors or the other euro-zone members. Nonetheless, there …
The direct economic and financial ramifications of a disorderly Greek default may not be very much worse than those of the planned “voluntary” debt restructuring. But the broader implications for the euro-zone crisis and future of the single currency …
The final quarter of 2011 brought the strongest evidence yet that the downward phase in euro-zone commercial property yields has not only come to an end, but has started to go into reverse. Falling economic output even in the region’s strongest economies …
Portugal has made some progress in reining in its huge budget deficit, but it appears inevitable that it will need another rescue package. While there is a good chance that any new deal will not be contingent on some form of debt restructuring, we think …
15th February 2012
The provisional Q4 euro-zone GDP figures confirmed that the economy contracted at the end of last year, albeit by a bit less than had been feared. The 0.3% quarterly fall was slightly better than the consensus forecast of -0.4%, but the first decline in …
While some of the euro-zone activity indicators have nudged up this month, money and credit growth have weakened further. The annual growth rate of the broad money supply fell to an 11-month low of 1.6% in December. Admittedly, the ECB’s generous …
14th February 2012
This report is only available as a PDF. Click to download. … Euro-zone Industrial Production (Dec.), & German ZEW (Feb.) …
The immense difficulties in finalising a second rescue package and debt restructuring for Greece have pushed the country right to the brink once more. Even if the policymakers manage again to step back from disaster, the prospect of further such episodes …
13th February 2012
We think that Dutch commercial property values will fall this year and next as the economy slides back into recession. But one view, emanating from the Netherlands Central Bank (DNB) last week, is that structural weaknesses in the market also pose …
10th February 2012
The ECB today approved further measures to address the danger of a credit crunch in the euro-zone. However, it continues to resist taking more direct action to tackle the region’s fiscal crisis. … ECB focuses on credit crunch …
9th February 2012
The US is not that exposed to the crisis in Europe. Despite the prospect of a very deep euro-zone recession arising from some form of euro break-up, we estimate that US GDP growth will be just 0.5 percentage points lower both this year and next than …
8th February 2012
Greek policymakers may soon agree on a new austerity and structural reform programme, reducing the chances of a disorderly default in March. Nonetheless, any deal is unlikely to prevent Greece’s economic and fiscal problems from worsening. … Austerity …
7th February 2012
December’s drop in German industrial production was a serious blow to hopes that the economy might be recovering. The 2.9% monthly fall was far weaker than the consensus forecast of no change and came as a particular disappointment after yesterday’s data …
While the news on the euro-zone economy has improved a bit in the last month or two, 2012 could still turn out to be crunch year for the currency union. Fiscal progress in the peripheral economies has continued to be hindered by a lack of growth and a …
6th February 2012
