Filtered by Region: Europe Use setting Europe
Recent data on the Italian external sector has painted a worrying picture of the outlook for exporters. With the domestic economy in no position to pick up the slack, we think that the consensus view that Italy will stagnate next year looks far too …
18th November 2008
The latest information on pay negotiations in Germany supports our view that any pick-up in wages growth in the coming months will be modest and short-lived. While this is bad news for German consumers in the near term, at least it should encourage the …
12th November 2008
Following today’s decision to cut interest rates by 50bp to 3.25%, President Trichet’s comments confirmed that the ECB is not about to slash rates as aggressively as the Bank of England. Nonetheless, with the ECB’s earlier inflation worries paling into …
6th November 2008
Despite today’s downward revisions, the French Government’s projections for GDP growth and the public finances still look much too optimistic. The fact that the Government seems prepared to allow public borrowing to rise markedly as the economy weakens is …
The euro-zone economic outlook has gone from bad to worse. The sharpest ever drop in the previously reliable EC Economic Sentiment Indicator in October left it pointing to annual falls in GDP of around 0.5%. Activity might not plunge as rapidly as this …
4th November 2008
The latest data from the industrial sector provide the clearest signs yet that the global economic slowdown, coupled with Italy’s fundamental lack of competitiveness, is taking a heavy toll on the Italian economy. … Italian recession to be worse than the …
3rd November 2008
The outlook for the European economy has continued to deteriorate as the global financial crisis has intensified and the international environment has worsened. At the same time, domestic housing markets have weakened and business confidence has slumped. …
30th October 2008
Severe strains in financial markets and a rapid deterioration in economic conditions have finally prompted a turnaround in the ECB’s previously hawkish stance. This supports our long-held view that interest rates will fall further than markets have been …
The Norges Bank today cut interest rates for the second time this month and signalled that further cuts are to come. But we continue to expect stronger economic fundamentals to ensure that rates fall less sharply than in most other developed economies …
29th October 2008
To date, only a few major economies have been afflicted by large scale falls in house prices. But all that will change in 2009. Housing is significantly overvalued across much of Europe, as well as in Australia and Canada. Our analysis suggests that there …
The Norges Bank today cut interest rates for the second time this month and signalled that furthercuts are to come. But we continue to expect stronger economic fundamentals to ensure that rates fallless sharply than in most other developed economies next …
The franc’s latest appreciation to a record high against the euro appears to reflect the weakness of the euro-zone economy more than Swiss domestic factors. But the franc’s strength is yet another reason to expect the Swiss economy to weaken significantly …
28th October 2008
The decision by the Swedish Riksbank to cut interest rates to 3.75%, the second 50 basis points cut this month, clearly shows that the Bank’s full attention is now on preventing a major economic slowdown. Given that the bank had hiked rates as recently as …
23rd October 2008
The recent acceleration in the dollar’s appreciation against other major currencies (with the notable exception of the yen) reflects a combination of factors, none of which is likely to reverse any time soon. We are therefore revising our dollar forecasts …
22nd October 2008
Iceland appears to be on the verge of gaining financial assistance from the IMF, Japan and the Nordic region. While this may be the first step in bringing the economy back from the brink of meltdown, it will not prevent a severe recession. … Icelandic …
21st October 2008
Inflation pressures across the world are set to fade rapidly over the coming months. Indeed, with oil prices plummeting, food prices set to fall and much weaker levels of demand and activity likely to create large amounts of spare capacity, some economies …
16th October 2008
One consequence of the global economic downturn will be a severe deterioration in labour market conditions. In the euro-zone, we expect unemployment to rise from 11.3 million to 14.5 million by the end of next year, pushing the unemployment rate up from …
The Norges Bank’s decision to cut interest rates for the first time in more than four years was driven by the recent events in global financial markets. But with the outlook for economic activity deteriorating and inflation worries easing, further …
15th October 2008
The latest Spanish house price data provide further evidence that the housing market is set for a hard landing. We expect house price falls of around one third over the next few years to push the economy into a prolonged recession. … Spanish housing …
The Norges Bank’s decision to cut interest rates for the first time in more than four years was drivenby the recent events in global financial markets. But with the outlook for economic activitydeteriorating and inflation worries easing, further interest …
The announcement of a co-ordinated framework to kick-start interbank lending in the euro-zone and boost banks’ tier one capital has helped equity markets and the euro to rally. But we doubt that these plans will prevent the economy from continuing to …
13th October 2008
Today’s co-ordinated interest rate cuts by European central banks clearly demonstrate a determination to provide short-term stability to financial markets. As economic conditions continue to deteriorate in the coming months, we expect further aggressive …
8th October 2008
We have cut our forecasts for GDP growth and interest rates in the euro-zone alongside those in other areas. But we still believe that the region’s relative lack of major economic imbalances point to a somewhat shallower and shorter downturn than those …
7th October 2008
The Icelandic authorities are fighting tooth and nail to restore confidence in the ailing economy and crumbling banking system. But it seems inevitable that the economy is set for a prolonged slowdown, with a significant deterioration in the public …
The German banking sector guarantee provides further confirmation that governments will do all that they can to protect households’ deposits. Although such measures should help to gradually restore confidence in banks, they could clearly do some serious …
6th October 2008
A much more dovish tone from President Trichet today suggests that the Bank will cut interest rates before the year is out. Markets are coming around to our long-held view that rates will reach 3% next year, but there is a very good chance that they fall …
2nd October 2008
The euro-zone activity outlook has weakened further, but September’s dramatic financial market and banking sector developments have obviously grabbed the limelight. With a number of euro-zone governments stepping in to rescue ailing banks, it is clear …
Another wave of euro-zone government bailouts and a bank guarantee by the Irish government show that the credit crunch is beginning to take a greater hold on the region, raising the risk of a more prolonged economic downturn. … The implications of the …
30th September 2008
Yesterday’s €11.2bn government bailout of Fortis Bank, the largest euro-zone bank rescue sinc the credit crunch began, is the starkest evidence yet that the region’s banking system is not immune to the problems which have recently hit the US and UK. … …
29th September 2008
Recent ECB communications have maintained a stubbornly hawkish tone, despite extreme tension in financial markets and growing evidence of weak activity. This month’s press statement is unlikely to hint at near-term interest rate cuts and will probably …
25th September 2008
Ireland’s second quarter GDP figures confirmed the inevitable – that the collapse in the property sector has driven the wider economy into a recession. With house prices set to fall considerably further, the outlook is unambiguously grim. … Irish boom …
The downturn in the euro-zone economy largely reflects the temporary squeeze from high inflation rather than a fundamental adjustment triggered by the credit crunch as is the case in the US and UK. Accordingly, we still expect the region to perform …
23rd September 2008
The Swiss National Bank left its target range for three-month interest rates unchanged at a mid-point of 2.75%. But with the economic slowdown set to intensify and inflation on course to return to target early next year, the Bank looks set to cut interest …
18th September 2008
Interest rate expectations in the euro-zone have fallen sharply along with those elsewhere in recent weeks and are now pricing in a strong chance of an ECB rate cut this year. While we think that talk of interest rate cuts this year is premature, we still …
17th September 2008
The latest changes to the leadership of Germany’s Social Democratic Party (SPD) probably bode well for long-term structural reform of the economy. But they also further reduce the chance of near-term tax cuts to support the ailing consumer sector. … …
8th September 2008
The European Central Bank’s hawkish tone at today’s press conference confirmed that interest rate cuts are not yet on the agenda. But we still expect slowing activity and falling energy inflation to pave the way for a pretty aggressive policy loosening …
4th September 2008
The decision by the Riksbank to raise interest rates from 4.50% to 4.75% clearly shows that it remains concerned about the emergence of ”second-round inflation” effects. But while the Bank did signal that the current economic slowdown should ensure that …
Thursday’s ECB press conference provides the Bank with a chance to provide greater details about any proposed changes to its collateral requirements for lending in its open market operations. While we expect any changes to be minor and have a fairly …
3rd September 2008
Euro-zone consumer price inflation has finally begun to fall, slipping from 4.0% to 3.8% in August. If the oil price remains at current levels, falling energy inflation alone should knock at least 1.5 percentage points off the headline rate over the next …
Mounting evidence of a sharp slowdown in eurozone economic activity has caused the chances of another interest rate hike to evaporate. But the ECB is still deeply concerned about upside risks to inflation and will maintain a fairly hawkish tone at …
28th August 2008
Upbeat comments from Swiss National Bank Chairman Jean-Pierre Roth in this morning’s press are atodds with our own view. While it is true that some aspects of the Swiss economy appear robust fornow, we still expect a sharp downturn in financial services …
19th August 2008
The recent weakening in the outlook for the euro-zone economy – the destination for around half of the UK’s exports – suggests that there is a risk that activity in the UK will be even weaker than the Bank of England expects. … Weaker euro-zone economy to …
14th August 2008
The recent run of terrible economic news from Spain and the sharp falls in house prices in a number of other developed economies have led us to revise down our forecast for Spanish house prices. We now expect prices to fall by around 25% over the next …
13th August 2008
Recent data on the French household sector have flattened hopes that healthy consumer spending growth would prevent a sharp economic slowdown. With inflation soaring, consumer confidence at a record low and the housing market at risk of collapse, French …
12th August 2008
Recent news from Greece has provided some encouraging signs that it is escaping the economic slowdown which now appears to be engulfing the other Club-Med economies. … Sun not about to set on …
11th August 2008
Comments from the European Central Bank have retained a relatively hawkish tone, suggesting that it will be some time before the Bank is prepared to bolster the flagging economy with interest rate cuts. But with the region already at risk of recession and …
7th August 2008
The latest data from the euro-zone suggest that the economy is at risk of entering a technical recession. Leaked information revealing that the German economy contracted by around 1.0% q/q in Q2, together with weak monthly figures from the other major …
6th August 2008
