Filtered by Region: Europe Use setting Europe
The jump in euro-zone negotiated wage growth in Q3, to a record high of 5.4%, was mostly due to one-off payments in Germany. Wage growth elsewhere was little changed. With headline inflation around 2% and the labour market loosening, wage growth is very …
20th November 2024
The recovery in euro-zone real estate investment has been weak in 2024, with total activity in the first three quarters little changed on 2023’s near-record-lows. However, prospects for 2025 are brighter. We think investment will rise 25% y/y as interest …
This page has been updated with additional analysis since first publication. Surprisingly big rebound suggests BoE will leave rates at 4.75% in December October’s surprisingly large rebound in CPI inflation from 1.7% to 2.3% (CE 2.1%, consensus & BoE …
Artificial intelligence (AI) is still not being used very widely outside of the ICT sector. But we remain confident that, in time, it has the potential to be used across all sectors and industries. Surveys of firms in the US and EU show that AI usage is …
19th November 2024
Services inflation in the euro-zone has been stuck around 4% for the past 12 months, but there are good reasons to expect it to decline significantly next year. We think that core inflation will continue to edge down in 2025 and the headline rate will …
Recession not enough for MNB to resume easing The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, despite the economy having just fallen back into recession. We think that the easing cycle will remain on pause over the next …
The larger and faster pace of ECB rate cuts we now expect means euro-zone government bond yields are likely to be lower in the coming years than previously forecast. This is positive for property valuations and means property yields could fall by more in …
We think that the euro will fall to parity against the US dollar next year but will strengthen against some other currencies, such as the renminbi, and on a trade-weighted basis we forecast it to be little changed. So the effect of FX moves on growth and …
18th November 2024
European natural gas prices have trended higher this year and are likely to fluctuate around €40-45 per MWh until conditions in the global LNG market loosen. That said, prices will drop back meaningfully once the wave of LNG supply arrives, with a good …
15th November 2024
Yet another week of disappointing activity data … The Q3 GDP data released out of Central and Eastern Europe (CEE) this week has only added to concerns about the health of the region’s economies. Poland’s economy contracted by 0.2% q/q , while GDP …
Today’s GDP release, which confirmed that the economy has barely grown at all since March, is clearly a blow for the government given its pledge to secure the “highest sustained growth in the G7”. This means that while the UK has now surpassed Japan and …
Déjà vu for industrial metals While it is uncertain exactly how Trump will approach tariffs during a second term, China will clearly be in the firing line and commodities could be caught in the crossfire. For context, Chart 1 shows the US’s bilateral …
The focus this week has continued to be on the consequences of the US election results for Europe. So while a lot remains unclear at this stage, it is worth reiterating what we think are the main implications. First, it seems likely that the US will …
We think that the impact of Trump’s proposed 10% universal tariff on euro-zone GDP would be very small, in part because we expect the effect to be offset by a weaker euro. So we aren’t pushing down our already below-consensus GDP growth forecasts any …
Swiss economy slows sharply, but will pick up in the coming quarters Economic growth was surprisingly slow in the third quarter as sporting event-adjusted GDP increased by just 0.2% q/q, a sharp slowdown from the 0.5% recorded in Q2. This will further …
This page has been updated with additional analysis since first publication. Q3 GDP growth muted, Q4 will be better The 0.1% m/m contraction in GDP in September meant that the economy still grew by 0.1% q/q in Q3 (consensus and CE forecasts 0.2% q/q), but …
It is increasingly clear to us that pricing in all three regions we forecast has bottomed, even if appraisals are yet to reflect that in mainland Europe and the US. And although we expect recent events – the election of Donald Trump and the recent UK …
14th November 2024
President-elect Trump’s distaste for trade deficits surely does not extend to worrying about the US’s large-scale import of carbon emissions through trade flows. The global imbalance between importers and exporters of CO 2 emissions is likely to shrink …
The UK is not as exposed to US import tariffs as many other economies and we suspect any resulting reduction in UK GDP would be very small. That said, the car and pharmaceutical sectors are the most vulnerable areas of the UK economy. And we don’t think …
We wouldn’t read much into the recent contraction in swap spreads in Germany. Despite turning negative, the 10-year euro-zone OIS/Bund spread is not far below its level before the pandemic. And it remains well above 10-year US OIS/Treasury and 10-year …
Donald Trump’s re-election has changed perceptions of how the war in Ukraine will develop, with many hoping for a quicker end to the conflict. This Update looks at how the war might evolve and the economic implications for Russia and Ukraine, for Europe …
Our forecast that Bank Rate will fall slower means that we now think mortgage rates will decline from 4.4% now 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 expect and that house price …
The strength of prime office rent growth in Europe in recent years has surprised forecasters, however there is broad agreement that rental growth will slow next year. We share that view, but are less pessimistic than most about the extent of the slowdown. …
This page has been updated with additional analysis since first publication. Faster GDP growth looks temporary The pick-up in euro-zone GDP growth to 0.4% q/q in Q3 is unlikely to be sustained. Timelier business and consumer surveys suggest that growth …
Poland’s economy stumbles in Q3 The 0.2% q/q contraction in Polish GDP in Q3 partly reflects the impact of flooding in September, the impact of which will reverse this quarter. Even so, we have become a bit more concerned about underlying weakness in the …
Improvement in housing market sentiment may be overdone October’s RICS survey points to robust house price growth but the Budget means that mortgages rates will probably fall a bit slower than we previously thought, which will restrain house prices next …
Growth slowing, but inflation pressures still strong The slowdown in Russian GDP growth in Q3, to 3.1% y/y, is likely to be followed by a further loss of momentum in growth over the coming quarters. But, alongside CPI data which show that inflationary …
13th November 2024
If Donald Trump follows through on his threat to impose a high sector-specific tariff on European cars, German firms could suffer a big reduction in exports, deepening the crisis in the sector and adding another headwind to economic growth. That would be …
The recent floods in Spain have inflicted huge personal and financial costs. But in terms of GDP, the effect is likely to be quite small as the temporary loss in activity will probably be offset by increased government expenditure. Similarly, while the …
12th November 2024
This page has been updated with additional analysis since first publication. BoE will look through rebound in pay growth Even though the rise in pay growth in September will probably be followed by a bigger gain in October, as the new 5-6% public sector …
The euro has suffered more than most in the wake of Trump’s victory and we doubt that will let up anytime soon. Given our view that tariffs will be imposed next year and the ECB will ease by more than investors expect, we forecast the euro to slide to …
11th November 2024
End to the war in Ukraine in sight? One of the most important channels through which Donald Trump’s victory in the US election could affect Emerging Europe – and the global geopolitical landscape – is if he seeks to end the war in Ukraine, as he pledged …
8th November 2024
GDP growth picked up in Q3 but timelier data suggest that the economy is poised for a weak Q4. We expect growth to remain slow next year regardless of whether President Trump raises tariffs on imports from Europe. We also think that inflation will be well …
Winston Churchill is supposed to have said that “jaw-jaw” is better than “war-war” and we think European politicians will take the same view when faced with the threat of a trade conflict next year. We set out our working assumption about how a US …
After a big couple of weeks for the UK, the US, the world and global financial markets, we have revised some of our economics forecasts. Due to the policies in the UK Budget (bigger and sooner rises in government spending than taxes, see here ), we now …
Easing cycle on pause, waiting for more clarity on fiscal policy The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, against a backdrop of stubborn above-target inflation and concerns about the loose fiscal stance ahead …
Residential’s growing share of investor portfolios speaks to the buzz around its potential to keep providing outsized returns. But will the sector continue to deliver? Join our Commercial Real Estate team for a special online briefing all about the …
UK Commercial Property Valuation Monitor (Q3 24) …
7th November 2024
Watch a recording of our post-MPC online briefing here . While cutting interest rates from 5.00% to 4.75% today, the Bank of England implied that the Budget means rates will continue to fall only gradually. We agree and due to the Budget (and not the US …
Easing cycle to continue, but risk of slower pace of cuts The Czech National Bank (CNB) cut its policy rate by 25bp again today, to 4.00%, and we still think that the conditions will be in place for the policy rate to be lowered to its estimated neutral …
The collapse of its coalition government, triggered by disagreement over fiscal policy, means Germany will probably have a CDU-led government by mid-2025. This may be more stable and functional than the outgoing coalition, but would face the same …
Watch a recording of our post-MPC online briefing here . Budget means Bank may not cut rates as fast and far While cutting interest rates from 5.00% to 4.75% today, the Bank of England implied that the Budget means rates will continue to fall only …
Today’s 50bp cut is likely to be the only one in the cycle for the Riksbank, and we expect it to cut by just 25bp at its next two meetings to take the policy rate to its “terminal” level of 2.25% in January. This is less than the four cuts that market …
This page has been updated with additional analysis since first publication. Retail sales strong in September but unlikely to keep rising rapidly Euro-zone retail sales rose in September rounding off a good quarter for retailers. We suspect that sales …
Alongside its decision to leave interest rates unchanged today, Norges Bank reiterated that it expects to remain on hold in December too. It is likely to start cutting in Q1 next year and we suspect that it will then loosen policy a little more quickly …
Riksbank increases pace of cuts, but doesn’t change its terminal rate forecast The Riksbank cut its policy rate by 50bp today to 2.75%, but the accompanying policy statement suggested that it plans only two more 25bps rate cuts to take it to a …
German industry continues to struggle The German industrial production release will be overshadowed by the break-up of Germany’s ruling coalition, which we will comment on later this morning. But the further fall in industrial output in September …
This page has been updated with additional analysis since first publication. House prices rise to record high and will accelerate next year October’s 0.2% m/m rise in Halifax house prices suggests that the recent momentum in house prices has a bit further …
