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With both Labour and the Conservatives this week ruling out increases in income tax, national insurance and VAT, it remains difficult to see how cuts to public services can be avoided after the election. (For all our election analyses, see here .) But …
31st May 2024
Our View: We expect equities to outperform most other assets as a bubble fuelled by AI-enthusiasm continues to inflate, supported by a backdrop of resilient economic growth and monetary easing cycles In particular, we expect US equities to continue to …
Having pre-committed to doing so, we think the ECB will cut rates next week. But given the jump in services inflation in May, we now expect a pause in July. We forecast the ECB to cut its deposit rate to 3% by year-end. Having agreed to do so at their …
The US puts up trade barriers, will Europe follow? The US announced that it is ratcheting up tariffs on Chinese-made electric vehicles, lithium-ion batteries, and solar panels. We covered the announcement and its implications across our Climate, Global, …
This page has been updated with additional analysis since first publication. Increase in inflation won’t stop ECB from cutting next week May’s increases in headline and core inflation – and jump in services inflation to a seven-month high – won’t stop the …
This page has been updated with additional analysis since first publication. Drag on activity from high interest rates continues to fade While April’s money and lending figures suggest the recent rebound in the housing market is cooling and households …
Net lending subdued on the back of rising interest rates Following two consecutive quarters of declines, net lending to property reached £891m in April. The increase was driven by a £731m rise in lending to standing investments, but development lending …
Acceleration in growth, with rebalancing under the surface The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply. This offers signs that …
Persistently high mortgage rates cause prices to stagnate Despite a small increase in the Nationwide house price index in May, the big picture is that the slight rise in mortgage rates since the start of the year has caused house prices to stagnate. The …
Overview – Capital values for most property sectors are now close to bottoming out, but with yields set for a period of stability the recovery will be modest by past standards. We expect all-property total returns to average 7.5% p.a. over 2024-28. That’s …
30th May 2024
During the coming months, we expect falling goods and energy inflation to pull down the headline inflation rate in Sweden. This should encourage policymakers to cut rates from 3.75% currently to 3.00% by the end of the year. However, we are not pencilling …
Recovery in regional sentiment takes a breather The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in May and our regional-weighted measure edged down slightly. Even so, that still leaves …
This page has been updated with additional analysis since first publication. EC Survey points to weak economic growth and easing price pressures The EC business and consumer survey for May is consistent with weak growth in euro-zone GDP, while price …
We expect the 10-year Bund yield to fall by the end of the year as the ECB loosens policy more than investors are currently discounting. Judging by the initial fall in 10-year Bund yield this morning, German state-level inflation data released earlier in …
29th May 2024
The stickiness of inflation in April has led us to shift back our forecast for the timing of the first interest rate cut from 5.25% from June to August. Even so, our view that CPI inflation will fall from 2.3% in April to below 1.5% by the end of this …
Sovereign bond yields in Russia have surged to multi-year highs this year as markets have increasingly questioned the trade-off between the war effort on the one hand and policymakers’ ability to maintain fiscal stability and control inflation on the …
While German property yields stabilised in Q1, further indications of rising distress give us confidence in our view that property values there have not yet reached the bottom. The stabilisation in German prime all-property yields in Q1 has led some to …
The latest IPF Consensus Survey showed limited change on the previous forecast round in March. There was a small upward revision to all-property rental growth expectations for 2024, but a downgrade to total return expectations, which implies yields are …
The tick up in mortgage rates since the start of the year has caused demand to soften. As a result, house prices are likely to tread water over the coming months. But our forecast that Bank Rate will be eventually be cut further than expected suggests …
German state data point to smaller-than-expected rise in euro-zone inflation CPI inflation data published by the major German states this morning suggest that both German and euro-zone HICP inflation may come in a bit lower than expected and that though …
While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes to its relatively insulated lending market in this …
28th May 2024
The dollar looks set to end the week broadly unchanged against most currencies, halting its slide over the past couple of weeks. Bond yields in the US rebounded this week, partly due to the Fed minutes published on Wednesday but have also risen in other …
24th May 2024
Still too early for nominal TRY appreciation The Turkish lira has been surprisingly stable over the past two months and Finance Minister Simsek noted this week that the currency would have actually appreciated had the central bank not been buying dollars …
Natural gas bucks the trend In a week dominated by sharp falls in oil and precious metals prices, the 12% jump in European natural gas prices has been a notable outlier. Although the front-month TTF benchmark price has slipped back in trading today, at …
It’s tempting to think that every bit of economic data released between now and the general election on 4 th July will make a difference to who will be Prime Minister on 5 th July. Inevitably, data releases will be written up as “good” or “bad” for Sunak …
Worrying or reassuring? The wage growth data published this week were not good for the inflation outlook, but they weren’t as bad as they first appeared. As a re-cap, data released by the ECB showed that negotiated wages rose by 4.7% y/y in Q1, slightly …
This interactive dashboard allows you to explore all of our forecasts and key data for European commercial property. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right …
The sharp drop in frontier market sovereign dollar bond spreads this year has caught many by surprise. We think there’s a case that the bond rally may have gone too far in Argentina, Ecuador and Tunisia. But the decline in spreads in some frontiers, …
Spanish industrial rent growth beat expectations in Q1 this year, outpacing rises elsewhere in the euro-zone. However, this was mainly due to Barcelona, where we have raised our prime rent forecast. Madrid rent gains were more sluggish and this trend is …
Outlook for retailers remains bright despite soggy start to Q2 The 2.3% m/m fall in retail sales volumes in April was much bigger than our forecast for a 0.5% m/m fall and the consensus forecast for a 0.4% m/m decline as the unusually wet weather …
Croatia has established itself as one of the fastest growing economies in the EU and we think that it will maintain GDP growth of around 3% p.a. over 2024-26. Income convergence – which has been rapid in recent years – will continue over the rest of this …
23rd May 2024
We still think inflation will fall faster than the Bank of England is expecting, but in the light of April’s CPI release we now expect the downward trend to be slower and smaller. As a result, we have shifted back our forecast for the timing of the first …
While the prospect of the Labour Party returning to government in the UK for the first time in 14 years might raise a few eyebrows in the financial markets, we wouldn’t put much store by the fact that some of its times in office since first forming a …
Putting the politics aside, the high number of migrants coming to the UK for work is the main reason why the number of people willing and able to work isn’t shrinking. The provisional data show that net inward migration to the UK was 685,000 in the year …
Rates to stay on hold throughout the year Turkey’s central bank left its main policy rate unchanged at 50.00% again today and the statement continued to emphasise the need to keep interest rates high for a prolonged period. While the consensus view is for …
We don’t think the pick-up in euro-zone negotiated wage growth in Q1 will stop the ECB from cutting interest rates in June. But the continued strength of pay pressures reduces the chance of the ECB cutting rates rapidly in the second half of the year. The …
Survey provides support for summer rate cut Today’s May flash PMI survey will have provided the Bank of England with some comfort after yesterday’s stronger-than-expected inflation data for April. Crucially, the further fall in the services output prices …
Retail sales disappoint Poland’s activity data for April revealed that retail sales growth softened a bit more than expected last month, but that the weakness in industry in March was just a temporary blip. On balance, we remain comfortable with our …
This page has been updated with additional analysis since first publication. Recovery continuing The PMIs for May suggest that the euro-zone economy continued to expand in Q2 while price pressures eased but remained high in the services sector. The ECB is …
We’ll be discussing what the election means for the economy and financial markets in a 20-minute online briefing at 9.30am BST on Thursday 23rd May. (Register here .) The general election on Thursday 4 th July, which the Prime Minister announced today, …
22nd May 2024
While stronger-than-expected inflation data from the UK have led us to push back a bit our forecast for the start of the Bank of England’s easing cycle, we still project many more rate cuts than most anticipate. This feeds into our view that Gilt yields …
Europe Commercial Property Chart Pack (Q2 2024) …
Economic growth strengthened across Emerging Europe in Q1, and leading indicators suggest that it has picked up further in most countries in Q2. With inflation likely to rise (or stay) above central banks’ targets in the second half of this year, the …
This page has been updated with additional analysis since first publication . Limited scope for tax cuts April’s public finances figures got the new 2024/25 fiscal year off to a shaky start and cast further doubt on the Chancellor’s ability to unveil big …
We’ll be discussing the outlook for UK inflation and interest rates in a 20-minute online briefing at 9.30am BST today. (Register here .) This page has been updated with additional analysis since first publication. Stickiness of services inflation makes …
Easing cycle about to enter a slower phase The decision by the Hungarian central bank (MNB) to cut its base rate by 50bp again today, to 7.25%, will be followed by more cautious monetary easing over the rest of this year. We currently forecast just 100bp …
21st May 2024
This page has been updated with additional analysis since first publication. Construction outlook is poor Euro-zone construction output rose slightly in March but we think the sector will struggle over the coming months. The 0.1% m/m rise in construction …
The next German federal election will be crucial in determining how Germany will respond to its structural economic challenges. This Update answers some key questions on what to expect from the election and its implications for economic policy and …
20th May 2024
