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Experience from Ireland suggests that a ban on upward-only rent reviews will weigh on future rental growth and widen property yield spreads to risk-free rates. While the overall impact is unlikely to be large, if the proposed ban in England and Wales goes …
15th July 2025
European natural gas stores are low and efforts to refill them will support prices over the rest of this year. Further ahead, increased supply should bring prices down to a below consensus €25 per MWh in 2026. Since hitting a post-energy crisis high of …
Industry still resilient to US tariffs The increase in euro-zone industrial production in May confirms that the sector has been resilient to US tariffs so far and that may remain the case in the near term if, as we expect, Trump’s threat of a 30% tariff …
If President Trump follows through on his threat to impose secondary tariffs on buyers of Russian energy, leading to a sharp drop in Russian energy flows, it would invariably lead to higher global energy prices. The impact would probably be greater on …
14th July 2025
While the interest-rate-differential-defying strength of EUR/USD may be partly explained by increased currency hedging, it also reflects shifting expectations for economic growth. We think those will be dashed, even if the US doesn’t end up imposing a …
The US dollar is ending the week a touch stronger as President Trump continues to ratchet up his tariff threats again and US interest rate expectations edge higher. As widely expected, the 9 th July deadline for the “pause” on the US’ reciprocal tariffs …
11th July 2025
Fiscal tightening to cause inflation spike in Romania Romania’s fiscal tightening measures will add to the country’s inflation problem in the near term, and we’ve significantly revised up our CPI forecast over the next year. While inflation may be lower …
The further fall in GDP in May provided yet another excuse to talk down the UK economy. But there is some evidence that we are past the worst and the situation will improve from here (or, at the least, become less bad). Coming after the 0.3% m/m fall in …
The media focus this week has continued to be on EU-US trade negotiations as the pause on Liberation Day tariffs was extended beyond the 9 th of July deadline and President Trump threatened to send a letter raising tariffs on the EU again. But in the …
This page has been updated with additional analysis since first publication. Hangover continues, but signs of a recovery building The hangover from the burst of activity in Q1 ahead of rises in US tariffs and UK stamp charges continued in May with GDP …
Aggregate EM inflation is now at its lowest level in four years, with notable declines this year across Asia. We still think the outlook will be characterised by higher inflation in Latin America and Central Europe than in Asia, but we’ve become less …
10th July 2025
Auto exporters in China have adapted to the EU’s tariffs on EVs by lowering export prices and focusing on vehicles that are not subject to tariffs. Even if trade restrictions were to remain in place, the extent of China’s cost advantage means that …
Poor performance in the US and APAC property markets is set to drag on the global recovery over the next few years. While strong economic fundamentals argue for a material improvement in total returns in the US in the longer term, APAC won’t be as …
There are risks to the Irish economy from potential US tax policy changes but we think they are not as large as they first appear. The country’s large pharmaceutical sector should be fairly resilient if hit with US tariffs. And the government’s fiscal …
Big rebound in demand, but housing market unlikely to recovery quickly While June’s RICS survey suggests most of the recent weakness in the housing market was due to the temporary influence of the change in stamp duty, it doesn’t yet point to a marked …
We anticipate further yield falls for prime Portugal retail assets over the rest of the year. And with robust economic fundamentals and a solid rental outlook, we forecast Portugal to be one of the best retail performers in the euro-zone over 2025-29, …
9th July 2025
NBR leaves rates on hold with inflation poised to rebound The communications accompanying the decision by the National Bank of Romania (NBR) to leave its policy rate on hold, at 6.50%, suggest policymakers are concerned about the inflationary impacts of …
8th July 2025
We think the euro-zone economy will not grow at all in Q2 and Q3 as the first-quarter boost from tariff front-running will not be repeated. Looking through the tariff disruption, growth will be sluggish as consumer confidence is low and investment likely …
The continued weakness in the housing market over the first six months of this year and the cracking labour market means we now expect the recovery in house prices to start later and be slower. But bigger falls in mortgage rates than we previously thought …
This publication has been updated to reflect changes to our forecasts after the May GDP release on 11th July 2025. Overview – The falls in employment triggered by the Chancellor’s rises in National Insurance Contributions for employers and the minimum …
7th July 2025
BoI leaves rates on hold, but cuts coming a little sooner The slightly more dovish communications accompanying the decision by the Bank of Israel (BoI) to leave its policy rate on hold today, at 4.50%, and the easing in geopolitical risks, suggest that …
This page has been updated with additional analysis since first publication. House prices still struggling to regain momentum The stagnation in the Halifax house price index in June suggests that the housing market remains slow to recover from both the …
Jump in inflation will discourage Riksbank from further cuts Both headline and core inflation rose in June by much more than Riksbank officials had forecast at its meeting last month, supporting our view that the Riksbank will keep the policy rate at 2% …
Output still resilient to tariffs The better-than-expected German industrial production figures for May are partly due to continued tariff front-running in the pharmaceuticals sector, but output in other sectors is also proving more resilient to tariffs …
Muddled guidance in Poland, but further cuts likely The decision by the National Bank of Poland (NBP) to cut interest rates by 25bp at its meeting on Wednesday was a dovish surprise to most analysts who had expected policy to be left unchanged, although …
4th July 2025
On the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing joins David Wilder to unpack the key developments in global macro and markets, including: What to expect as the ‘Liberation Day’ tariff pause …
A rate cut at the ECB’s meeting on 24 th July seemed off the table only a few weeks ago, as energy prices had spiked due to the Israel-Iran conflict and ECB President Lagarde had stressed after June’s meeting that the Bank was in a “good position” on …
Today (Friday 4 th July) marks the one-year anniversary of the government’s election victory. But on Wednesday this week it looked like there was a chance that the Chancellor, Rachel Reeves, wasn’t going reach the milestone after the Prime Minister …
Construction activity improves on back of housing market The headline CIPS construction PMI rose for the fourth consecutive month in June to 48.8, a six-month high. The increase was driven by the housing component, which jumped from 45.1 in May to 50.7 in …
The big 0.8% m/m fall in Nationwide house prices in June suggests that the housing market is still struggling to recover from both the stamp duty-induced lull and the weak economy. While some leading indicators suggest that a turnaround in the housing …
3rd July 2025
High income growth and immigration are likely to continue to drive increases in house prices in Spain over the coming years. Demand will be further boosted by the recent fall in mortgage interest rates. Meanwhile, investment in dwellings is likely to grow …
Whatever transpires in EU-US trade talks next week – deal, no-deal or an extension – tensions over transatlantic trade relations are likely to persist throughout President Trump’s second administration. What will happen to the baseline tariff? With the …
The government has implemented some good policies in its first year, but it has undermined the resulting one-off boost to real GDP in the coming years with a few missteps. And the possible permanent boost to GDP growth in the medium-term is small and far …
We still think gilts will rally over the rest of this year even if fiscal concerns don’t entirely abate, as the Bank of England cuts interest rates by more than investors seem to expect. But concerns about debt levels and a dovish central bank could be a …
Soft inflation print points to July rate cut The larger-than-expected fall in Turkish inflation in June, to 35.0%, supports our view that the central bank will restart its easing later this month. We maintain our forecast for the one-week repo rate to be …
This page had been updated with additional analysis. Inflation rises, but will remain very weak this year Headline inflation rose slightly in Switzerland in June, but we expect it will remain around zero, or just below, for the rest of the year. …
How are signs of tariffs-induced inflation shaping Fed deliberations? Are White House attacks a consideration on when to move next on rates? For the ECB, could still-hot services inflation slow or even bring an early end to its easing cycle? And how will …
2nd July 2025
Real household disposable income growth is now slowing, but we still expect household consumption will accelerate to around 1.8% y/y on average over 2025-27 as households start to run down the savings they have built up. That will help all-retail rents …
NBP cuts by 25bp, with two further cuts likely this year The decision by the National Bank of Poland (NBP) to cut its policy rate by 25bp today, to 5.00%, was a dovish surprise to most analysts (although not ourselves). With inflation likely to fall back …
The gradual recovery in property values underway in Europe is unlikely to be pushed off track by tariff developments this year, but we think values still have further to fall in the US and APAC as they adjust to the higher interest rate environment. …
The EM manufacturing PMI recovered in June, led by China, which regained some momentum, and India, which continued to outperform. That said, the surveys remained at subdued levels in most EMs. And the second half of the year will prove difficult for EM …
1st July 2025
Somewhat paradoxically, climate-driven shifts in tourist patterns could help to smooth the seasonal peaks seen in summer destinations, and some countries – particularly in northern Europe – will become more attractive places to visit. However, there is a …
Inflation at the target and likely to remain quite stable The small increase in headline inflation in the euro-zone in June will not change the debate among ECB policymakers about whether there should be one more interest rate cut in the current cycle. …
Warning signs for industry at the end of Q2 The weak batch of June manufacturing PMIs out of Emerging Europe – and in particular some of the forward-looking components of the surveys – paint a downbeat view for industrial activity across the region. That …
We’ll be discussing how the government has influenced the UK economy in its first year in office in a 20-minute online Drop-In on at 3pm BST Thursday 3 rd July. (Register here . ) This page has been updated with additional analysis since first …
Table of Key Forecasts Global Overview – We expect global GDP growth to slow a touch in the next couple of years, as President Trump’s policies weigh on US activity and fiscal policy provides less of a prop to growth in China. India will be a relative …
30th June 2025
Capital inflows into EMs held up well in June despite the escalation of conflict in the Middle East. Were higher US tariffs to come into force after President Trump’s 90-day reciprocal tariff reprieve ends, that could spur a bigger move in outflows. But …
‘Chart of the week’ has to go to our China team, whose effort below was a centrepiece of discussions in our latest client roundtables. It shows exports from China to the US, Europe and the rest of the world up to May. (See Chart 1.) Two key shifts stand …
June inflation figures will please ECB National data published so far suggest that both euro-zone headline and core inflation were little changed and close to 2% in June. That will please ECB officials, who we expect to cut rates one more time in this …
Net lending to property gains momentum Net lending to property had another strong month in May, with the total of £2.15bn the largest amount in five years. That was primarily due to a rise in lending to standing developments, which surged to £2bn from …
