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OPEC+ watches on closely Israeli strikes on Iran and fears over the potential nature of Iranian retaliation sent Brent crude prices from ~$67pb to a peak of $78pb this week. While prices have since fallen back to $75pb at the time of writing, they are …
13th June 2025
Short-term gain, long-term pain April’s data suggest that the boost to the euro-zone economy from exporters front-running US tariffs came to an end at the start of the second quarter. Euro-zone industrial production and exports were very strong in Q1 as …
While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
The Deputy Prime Minister has urged the Chancellor to close the commercial property stamp duty ‘loophole’, which could lead to an average increase in tax on property transactions of 2.0 to 2.5%-pts. If well signposted, that is likely to lead to a surge in …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The upcoming fiscal stimulus in Germany will boost core inflation a bit, but we think the effect will be small and that the core rate will average just over 2% in 2026 and 2027. The stimulus will have only a very small direct impact on consumer prices and …
12th June 2025
Falling employment and easing wage growth suggest MPC won’t slow pace of cuts Growing chance that rates fall below 3.50% Limited influence of rate cuts pose questions over speed of QT The Bank of England will almost certainly leave interest rates at 4.25% …
EM sovereign debt risks remain much higher than in the pre-pandemic period. There are positive stories of declining risk in those EMs undergoing reforms (e.g. Argentina) and low fiscal risks in the majority of EMs, but sovereign debt dynamics appear …
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
Having lagged over the past year, the improving economic backdrop should support office demand in Bucharest and Budapest in the coming few years. However, while we think high vacancy rates will limit rent growth in Budapest, we expect more upward pressure …
This page has been updated with additional analysis since first publication. Economy coming back down to earth The fall in GDP in April supports our view that the strength of the economy in Q1 was a red herring and that GDP growth will be more subdued …
Soft housing rebound While May’s RICS survey suggests the worst of the housing market’s recent weakness is in the rear view mirror, it points to only a modest recovery. Unless there is a more significant rebound in demand in the next few months, house …
The 2025 Spending Review is the tightest (outside of the austerity years in the early 2010s) since 2000 and the tough decisions for Chancellor, Rachel Reeves, won’t end here. The government’s U-turns on benefit and welfare spending and higher borrowing …
11th June 2025
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
Euro-zone GDP rose strongly in Q1 but the economy will struggle in the rest of this year as tariff front-running ends and higher US tariffs start to weigh more heavily on activity. Increased defence and infrastructure spending will then support GDP growth …
10th June 2025
Recent presidential elections in Poland, Romania and Korea have led to significant moves in their financial markets. But from a macro perspective, what also matters is the composition of the legislature and the challenges the economy faces. Those …
This page has been updated with additional analysis since first publication. Looser labour market driving softer wage pressures With payrolls plunging, the unemployment rate climbing and wage growth easing, today’s labour market release leaves us more …
It’s big, but it’s far from beautiful. In fact, the sheer size of the ‘One Big Beautiful Bill Act’ that’s currently working its way through Congress is part of what makes it so unwieldy – and so unattractive. Size matters As we’ll argue in a report coming …
9th June 2025
The European Commission gave its approval for Bulgaria join the euro-zone this week, which clears the way for the country to adopt the euro on 1 st January 2026. Bulgaria’s accession had been delayed over the past couple of years in large part due to …
6th June 2025
Fiscal policy back in focus With confidence-sapping fiscal “black holes” and rises in business taxes dominating much of her first year in office, the Chancellor, Rachel Reeves, will finally get to splash the cash by announcing a series of infrastructure …
Tariff scenarios compared Along with its slightly hawkish communications, which we commented on here , the ECB published estimates this week of how US tariffs could affect the economy. In short, they think tariffs of 10% or more would reduce GDP …
CBR delivers dovish surprise as overheating pressures ease The decision by the Central Bank of Russia (CBR) to cut its policy rate by 100bp today, to 20.00%, came as a dovish surprise, and we now think the policy rate will now end this year at 17.00% …
Wage growth looks set to slow from 4.5% last year to around 3% by the end of 2025, leaving it within touching distance of the 2.5% rate we think is consistent with the ECB’s inflation target. Euro-zone wage growth has been on a steady downward trend since …
After a lean couple of years, the outlook for commercial property construction is brightening. While the economic outlook is fairly weak, vacancy rates in some subsectors such as prime offices and residential are low which will support rental growth. …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for fiscal policy and the economy shortly after the Chancellor’s Spending Review is released in a 20-minute online Drop-In at 3pm BST on Wednesday …
Tariff front-running already reversing German industrial production and export figures for April suggest that the boost to activity from US tariff front running is already reversing and that underlying industrial activity remains weak. With US tariffs …
While the ECB cut its policy rate today, as widely expected, President Lagarde’s accompanying comments tilted hawkish and have given interest rate expectations and the euro a boost. Our view remains that the ECB will deliver at least one more rate cut …
5th June 2025
The ECB’s decision to cut the deposit rate by 25bp to 2.0% was in line with expectations and the messaging in the press conference suggests that a pause at the next meeting in July is most likely. We think the Bank will lower interest rates once more this …
ECB likely to cut further The ECB’s decision to cut the deposit rate by 25bp to 2.0% and give no clear signals about the future path of monetary policy was in line with expectations. We forecast one more rate cut in the second half of the year with risks …
Updated Q1 Ireland data to prompt massive revision to euro-zone outturn We think that the huge upward revision to Ireland’s Q1 GDP data this morning, to show a rapid expansion that was in large part driven by tariff front-running, will lead to euro-zone …
Construction activity improves as tariff uncertainty falls back The headline CIPS construction PMI rose for the third consecutive month in May, although the rise from 46.6 to 47.9 still suggests that construction activity is contracting. Within the …
Trade policy uncertainty has damaged investment intentions in the US, Canada, Mexico and South East Asia. But intentions elsewhere have held up better and investment growth itself has yet to falter. We suspect that ongoing uncertainty will act as a drag …
4th June 2025
According to the measures of wage growth that we consider the most useful and the fundamentals of the recent easing in the demand for labour relative to the supply, it is only a matter of time before wage growth slows to rates that are more consistent …
Rates left on hold, but easing cycle to resume before long The National Bank of Poland (NBP) left its policy rate on hold today, at 5.25%, but this is only likely to mark a short pause in the easing cycle. We think that interest rates will be cut again at …
We'll be discussing the outlook for UK fiscal policy and the wider economy shortly after the Chancellor's Spending Review is released in a 20-minute online Drop-In at 3pm BST on Wednesday 11th June. (Register here .) The strong start to the year shouldn’t …
Note: we will be discussing oil, industrial metals tariffs, and more in an online briefing on Wednesday 4th June at 3pm BST. You can register here . Pressure picks up in commodity markets OPEC+’s announcement that it will continue to add oil to the market …
While tariff risks remain, the recent improvement in demand and weaker supply pipeline suggest the Dublin office market has reached a turning point. However, we don’t expect prime rental growth to rebound by as much as most expect given the high level of …
Below-target inflation in the euro-zone and deflation in Switzerland bring back memories of the 2010s, but the drivers of low inflation are fundamentally different this time and we don’t see much scope for government bond yields to fall. Data released …
3rd June 2025
Services inflation down and further declines to come May’s steep decline in services inflation, to its lowest level in more than three years, confirms that the previous month’s jump was just an Easter-related blip and that the downward trend in services …
Downside inflation surprise re-opens the door to monetary easing The larger-than-expected fall in Turkish inflation in May, to 35.4%, will increase the CBRT’s confidence that it can restart its easing cycle soon. While we had thought the easing cycle …
The suggestion that the Chancellor may be considering cutting 50,000 civil service job cuts wouldn’t weigh on employment growth much over the next few years. Only if the government were to cut public sector employment towards its post-austerity and …
2nd June 2025
Tariffs may be beginning to take their toll on CEE industry The fall in the manufacturing PMIs out of Central and Eastern Europe (CEE) last month suggest that US tariffs may be holding back the region’s industrial sectors. Elsewhere, inflation pressures …
This page has been updated with additional analysis since first publication. Further signs consumers are starting to spend a bit more freely April’s money and lending figures provided little indication that the US trade war and the deteriorating jobs …
Opposition victory will continue to block government reform drive The victory for Karol Nawrocki, the candidate of the nationalist opposition party (PiS), in Poland’s presidential election will continue to stymie the government’s efforts to push through …
This page has been updated with additional analysis since first publication. Soft patch for prices already over May’s 0.5% m/m increase in Nationwide house prices adds to the evidence that the recent soft patch for the housing market was a temporary blip …
We have consistently argued that the influence of Trump’s tariffs on the UK economy would be modest. As a result, the impact on UK GDP of the eventual outcome of the US court ruling on the legality of the 10% universal tariff will probably also be small. …
30th May 2025
The polls ahead of the second-round run off of Poland’s presidential election on Sunday point to a very tight race, with the two remaining candidates sharing virtually equal levels of support. The president of Poland has little direct input into domestic …
The latest twists and turns in the US tariff saga once again dominated the week. We responded to the court ruling that suspended Trump’s tariffs here . The news that tariffs have now been reinstated doesn’t alter our main conclusions. The latest legal …
“One Big Beautiful Bill” (but not for clean energy) The passage of President Trump’s fiscal package – termed the “ One Big Beautiful Bill ” – through the House of Representatives is another step back for climate action in the US. Indeed, the bill would …
