Filtered by Region: Europe Use setting Europe
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 …
2nd December 2024
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 …
Europe Commercial Property Valuation Monitor (Q4 2024) …
News of who’s in – and who’s out – of Donald Trump’s government, and what that means for the US and the rest of the world, continues to swirl. While Trump’s choice of Scott Bessent for Treasury Secretary is reassuringly orthodox, there is still …
This page has been updated with additional analysis since first publication. German economy still in the doldrums The fall in the Ifo Business Climate Index (BCI) in November left it even deeper into recessionary territory and is consistent with our view …
Discussion on the latest episode of The Weekly Briefing from Capital Economics attempts to avoid any mention of Donald Trump – and fails almost immediately. But Group Chief Economist Neil Shearing’s point is that there is a lot going on in the world …
22nd November 2024
November’s weaker-than-expected Flash PMIs for the euro-zone prompted investors to lower their policy rate expectations. Even so, we still expect more easing than implied in money markets, so we think Bund yields will fall a bit further. The euro-zone …
Overview – The fiscal loosening announced in October’s Budget means inflation and gilt yields are now set to be higher than previously expected over the next few years. And with the spread of gilt yields over property yields currently narrow, that implies …
While it was widely expected that CPI inflation would rise above the 2.0% target in October, the rebound from 1.7% to 2.3% was stronger than most forecasters had anticipated. And our view is that CPI inflation will rise further, to nearly 3.0% in January …
Russia’s war in Ukraine escalates Tensions between Russia and Ukraine escalated this week, with the US shifting its strategy to give Ukraine the go-ahead to use Western-provided long-range weapons on Russian territory and Russia launching an …
Earlier this week, our markets team revised our bond yield forecasts, raising our 10-year US Treasury yield forecast on the back of Trump’s election, but generally lowering our forecasts for euro-zone yields. (See here .) We now forecast the 10-year …
Our base case is that protectionist policies from the US next year will have only a small economic impact on Europe, but the fallout will vary between countries and there are risks of greater damage if the trade conflict escalates. Meanwhile, the EU will …
This page has been updated with additional analysis since first publication. Budget and Trump may have triggered slowdown in activity At face value, the fall in the composite PMI from 51.8 in October to 49.9 in November suggests that real GDP growth is …
This page has been updated with additional analysis since first publication. Slow start to the golden quarter, but the outlook is improving The bigger-than-expected 0.7% m/m fall in retail sales in October (consensus forecast -0.3% m/m) suggests that …
Spain’s economy is outperforming the euro-zone as a whole, and the difference is also evident in the labour market, which is still tightening at a decent pace. There now appears to be little slack left in Spain’s labour market and so we think an imbalance …
21st November 2024
Romania will elect a new government over the coming weeks at a time when the economy is performing poorly, inflation is running above target, and macroeconomic stability depends on policymakers pushing through much-needed fiscal consolidation. The most …
Interest rate cuts still a few months away (at least) The communications accompanying the decision by the Turkish central bank (CBRT) to leave its policy rate unchanged again today, at 50.00%, suggest that analysts’ expectations for an easing cycle to …
Europe Commercial Property Chart Pack (Q4 2024) …
We have updated this page with additional analysis since first publication. Disappointing borrowing figures highlight Chancellor’s lack of wiggle room October’s disappointing public finances figures underline the fiscal challenge that the Chancellor still …
The experience of the first Trump administration suggests that other countries will retaliate to the imposition of new US tariffs but in a way that is measured and minimises the risk of escalating tensions with Washington. The imposition of …
20th November 2024
Our new forecast that Bank Rate will fall slower and not as far means that we now think mortgage rates will decline from 4.4% in October to 3.9% by the end of 2026, rather than to 3.5%. But we still think that mortgage rates will fall by more than most …
We held a series of client meetings in the US last week which focused on the implications of Trump’s victory in the US election and the spillovers to EMs. This Update answers some of the most frequent and important questions that came up. What impact will …
