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The lingering concerns over whether the US manufacturing sector and overall economy are heading for recession begs the question of whether the UK’s manufacturing sector and overall economy will go the same way. The fear is that the recent period in which …
6th September 2024
Two months after the conclusion of France’s parliamentary elections, we finally know the name of the next prime minister (the fifth since 2020). The good news, at least for France’s creditors is that Michel Barnier, who is a member of the centre-right Les …
Turkish officials expecting a goldilocks rebalancing The medium-term economic programme presented by Turkey’s government this week highlights that policymakers remain committed to orthodox policies to deal with the country’s large macroeconomic …
Governing Council to cut deposit rate by 25bp again next week. Policymakers will point to a gradual easing cycle beyond that. Pace of rate cuts by the Fed will have little impact on ECB. The ECB looks certain to cut its deposit rate from 3.75% to 3.5% …
This page has been updated with additional analysis since first publication. No respite for German industry The big drop in German industrial production in July adds to the sense that the sector is facing a deep crisis and that, having contracted in Q2, …
This page has been updated with additional analysis since first publication. Modest housing market recovery continues The second consecutive monthly rise in the Halifax house price index in August supports our view that the fall in the Nationwide house …
The most recent European industrial take-up figures were slightly more encouraging. We expect activity will continue to slowly improve over the next couple of years, supported by the consumer recovery and increasing online penetration, though no return to …
5th September 2024
This page has been updated with additional analysis since first publication. Retail sales likely to rise gradually Retail sales edged up by 0.1% in July, and we expect them to rise further in the coming months, though at only a fairly modest pace. The …
Construction activity continues to expand The headline CIPS construction PMI edged back in August, but at 53.6 it remained in expansionary territory for the sixth consecutive month. Moreover, the decline was driven by the volatile civil engineering …
The latest drop in oil prices, coupled with our expectation for global demand to remain weak, will make it practically impossible for OPEC+ to increase output while keeping Brent crude prices above $80pb. Recent reports indicate the group is undecided on …
4th September 2024
NBP likely to remain on pause as inflation rebounds The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely expected by analysts, and the incoming data are supporting our view that there won’t be …
Recent estimates add to the evidence that online retail shares are growing more slowly across Europe. There has also been little sign of convergence in online shares, supporting our long-held view that online competition will be less of a drag on southern …
3rd September 2024
This page has been updated with additional analysis. Headline inflation falls, risks skewed to the downside Switzerland’s headline inflation rate fell in August to one of its lowest levels in the last three years. This will be welcome news for the SNB, …
Disinflation process has some way to go The fall in Turkish inflation, to 52.0% y/y, in August is likely to be followed by continued disinflation over the coming months. But there are signs in the breakdown that underlying inflation pressures remain …
Traffic-light coalition to stay on but state elections point to challenges ahead The big rise in populist parties in elections in two East German states at the weekend doesn’t threaten the survival of the governing coalition but it points to some …
2nd September 2024
PMIs increase, but still consistent with weak industrial activity The manufacturing PMIs increased across most of the region in August, although they generally remain at weak levels and suggest that industry has continued to struggle in Q3. In Poland and …
Rebalancing still a bumpy process The Turkish GDP figures for Q2, which showed a better-than-expected 0.1% q/q expansion in output, suggest that the rebalancing process still has some way to go. The data argue in favour of the central bank keeping …
US and euro-zone inflation data released today did little to change our view that both the Fed and the ECB will cut interest rates by 25bp in September, as investors seem to expect. But we think both central banks will ultimately cut rates by a bit less …
30th August 2024
The Prime Minister’s statement this week that “there is a budget coming in October, and it’s going to be painful…those with the broader shoulders should bear the heavier burden” has prompted yet more speculation about how much tax revenues will rise and …
Belgium's political crisis and high budget deficit have largely gone unnoticed in past couple of months while all eyes have been on France. This Update answers some key questions about its political situation and prospects for fiscal policy heading into …
With no significant hard activity data out yet, it is too early to be confident about how the economy will perform in Q3, but the initial signs are not promising. To recap the survey data so far, the euro-zone Composite PMI fell from an average of 51.6 in …
Further signs of fiscal complacency in Poland The Polish government’s draft budget for 2025 announced this week suggests that fiscal policy will be more expansionary than we had previously expected next year. While that poses an upside risk to our …
This page has been updated with additional analysis since first publication. Services inflation remains sticky We doubt that August’s unexpected increase in services inflation will stop the ECB from cutting interest rates at its next meeting in September …
Net lending continues to recover gradually Net lending to commercial property was positive for the fourth consecutive month in July, albeit by a smaller £520mn. With development lending still negative, this was driven entirely by a rise in lending …
This page has been updated with additional analysis since first publication. Steady improvement in credit is supporting the economy July’s money and lending data provide further evidence that a steady improvement in the flow and demand of credit is …
This page has been updated with additional analysis since first publication. Lower mortgage rates may soon help house prices regain momentum Despite the recent declines in mortgage rates, the small fall in the Nationwide house price index in August …
Road cleared for ECB cut in September Inflation figures for Germany and Spain suggest that euro-zone headline inflation may have fallen to the ECB’s 2% target in August and that the core rate edged down. That paves the way for a September rate cut, but …
29th August 2024
Prime office rents look set to rise by more than we had previously expected over the next few years given still low CBD vacancy, preferences for prime space and cuts to the supply pipeline in 2025-26. While we still expect rental growth to slow, our …
Modest increase in sentiment The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally edged higher in August, which suggests that the regional economic recovery has continued, albeit at a moderate pace, this …
Growth steadies at the start of Q3 The latest Russian industrial production and retail sales figures for July were a mixed bag and suggest that the economy maintained a steady pace of growth at the start of this quarter. But we still think GDP growth will …
28th August 2024
The ongoing reassessment of the monetary policy outlook in the US and Europe has (again) made the UK look like an outlier. We doubt that will last. Since the start of the summer, expected interest rates have fallen significantly in most major economies, …
City offices have underperformed their West End neighbours by a wide margin since 2022. More encouraging recent data have led us to revise up our City rental projections, but we still expect stronger gains in the West End over the forecast horizon. …
Rates on hold while geopolitical uncertainty remains The decision by the Bank of Israel (BoI) to leave its policy rate on hold again today (at 4.50%) rather than resume the easing cycle, reflects policymakers’ concerns with supply-side constraints in the …
For all the talk about AI, equities in Europe have delivered nearly as much as those in the US over the past few years. But we think that US equities will take the lead more clearly over the next year or so. Only the eventual bursting of an AI bubble …
Capital Markets Union (CMU) is regarded by many European policymakers as one of the key reforms needed to close the gap between EU and US productivity. But a full CMU is a long way off, and in any case fragmented capital markets are just one source of …
Rates left on hold, easing cycle will be more “stop-start” from here The Hungarian central bank (MNB) suggested that its decision to leave the policy rate on hold today, at 6.75%, was likely to mark a temporary pause in the easing cycle, rather than an …
27th August 2024
China retaliates to EU tariffs on EVs This week the EU announced a series of additional levies on Chinese EV imports on top of those announced a few months ago. China retaliated by making a complaint to the WTO and launching an anti-dumping investigation …
23rd August 2024
Ukraine’s surprise incursion Ukraine’s incursion into Russia continued this week. Ukraine found a weak spot in Russian defences two weeks ago and mobilised resources to exploit it. The scale of the incursion is significant, with some suggesting that …
At first glance, the 1.1% m/m increase in Adzuna job vacancies in July, the first monthly rise this year, together with the fall in the unemployment rate to 4.2% in June and the 127,000 rebound in employment between April and June, suggests the recent …
Although the EU is making progress in expanding its semiconductor production capacity, including through a new plant in Dresden, it is still a long way behind the US and Asia and is unlikely to catch up anytime soon. This will keep the EU reliant on …
Europe Commercial Property Chart Pack (Q3 2024) …
The Q2 GDP data out of Emerging Europe have generally disappointed to the downside, and leading indicators have weakened at the start of Q3. With interest rates likely to be kept high in Russia and Turkey over the coming months, we think that a further …
22nd August 2024
Overview – Commercial property yields and capital values have stabilised in recent months, which has encouraged investors to dip their toes back into the sector. But the recovery is set to be a weak one. Admittedly, we expect rental growth will be a …
Ceasefire seems a long way off Despite the US government’s efforts to push for a ceasefire agreement between Israel and Hamas this week, a deal seems some way off. The economic spillovers from the war in Gaza have been largest for the economies of Egypt, …
The scale of the fall in negotiated wage inflation in Q2 was largely due to one-off payments made in Germany in March but not repeated in Q2. However, the underlying trend in wage inflation is clearly downwards and is a good reason to expect the ECB to …
This page has been updated with additional analysis since first publication. Fading price pressures support the case for more rate cuts this year August’s composite PMI provides further evidence that some of the recent strength of activity in the first …
This page has been updated with additional analysis since first publication. August PMIs still consistent with economic slowdown The rise in the flash PMIs for August is not as good as it looks as it was largely due to a boost from the Paris Olympics and …
A soft start to Q3 The weaker-than-expected batch of Polish activity figures for July is more likely to be a blip than the start of a soft patch. We remain comfortable with our view that Poland’s economy will expand by around 3% over the year as a whole, …
We don’t think the slew of inflation-busting public sector pay deals that have been agreed by the new government will prevent wage growth from slowing next year to the rates of 3.0-3.5% we think are consistent with the 2.0% inflation target. But the big …
21st August 2024
This page has been updated with additional analysis since first publication. Limited wiggle room for the Chancellor at the Budget July’s public finances figures continued the recent run of bad news on the fiscal position, with public borrowing on track to …
