Filtered by Region: Europe Use setting Europe
Central Europe recovering, Russia faltering The rise in the manufacturing PMIs in Central Europe in March adds to evidence that the region is recovering from its recent soft patch. In contrast, the drop in Russia’s PMI suggests the economy may be starting …
1st April 2025
This page has been updated with additional analysis since first publication. House prices continue to lose momentum The stagnation in Nationwide house prices in March suggests any boost from buyers rushing to complete home purchases ahead of the rise in …
While the recent outperformance of euro-zone stocks relative to US ones may have a bit further to run, we doubt European equities would hold up in absolute terms if US stocks fell much further. The renewed sell-off in the US stock market has added to its …
31st March 2025
Our View: The economies of Central and Eastern Europe appear to have ended Q1 on a positive note, and Germany’s fiscal U-turn has improved prospects for regional export demand – we have recently revised up our GDP growth forecasts slightly for this year …
Likely fall in services inflation points to April cut National inflation figures released so far suggest that euro-zone headline inflation edged down in March. Services inflation probably also fell, which will please ECB officials. The fall in German …
Overview – We’ve become more concerned about the outlook for the economy due to the drags from higher businesses taxes and the more uncertain global backdrop being bigger than we thought and the boost from government spending being smaller. Our forecasts …
The US would have to exert a lot of pressure to coerce most major countries into putting large tariffs on goods from China . Curtailing trade with China would have an economic cost and even countries that have closer economic ties with the US would still …
The recent scrapping of the carbon tax in Canada shows that the political pushback against climate policy is certainly not just confined to the United States. But to paraphrase Mark Twain, rumours of the death of climate policy are greatly exaggerated; …
The President is calling it “Liberation Day”, but nobody knows exactly what the White House will come up with when the long-awaited reciprocal tariffs plan is finally unveiled on 2nd April – including, it seems, the administration itself. Initial …
This page has been updated with additional analysis since first publication. Tentative signs households may be starting to spend a bit more freely February’s money and lending figures provide some green shoots of households starting to save less and spend …
Net lending to property rises to close to a 5-year high Net lending to property continued its recent run of strength in February, with total lending of £1.58bn up from £917m in January and the highest monthly figure since May 2020. As usual the rise was …
The UK may have one of the most shielded economies against US tariffs. But stagflation and fiscal risks at home provide strong headwinds for its bond market. The UK is likely to get to the other side of US tariffs unscathed compared to other economies . …
28th March 2025
With all the major business surveys for March now published, it is clear that while sentiment in the euro-zone has jumped, activity is still growing slowly at best. The more sentiment-driven ZEW and Sentix indices recorded big increases but the Composite …
Tariffs – UK still not very exposed The announcement of US reciprocal tariffs on 2 nd April will dominate next week. The UK has mostly flown under the radar of Trump’s tariffs and its economy is naturally less exposed than others – our Trade War Dashboard …
Autos now in the crosshairs The Trump administration’s announcement of a 25% import tariff on autos and some auto parts will have a particularly large impact on Hungary and Slovakia. Our detailed response on Thursday to the tariff news can be found here . …
Net immigration to the euro-zone has been very high in recent years, and the risks are skewed towards it exceeding the European Commission’s projection of 0.3% per year over the long term. The historical trend suggests it could average 0.4%-0.5% while a …
This publication has been updated with additional analysis Growth still weak, but price pressures remain The EC survey for March shows a deterioration in business and consumer sentiment in the euro-zone, consistent with GDP doing little more than stagnate …
Given our view that the rise in yields outside Germany will not match the recent increase in Bund yields anytime soon, we are revising down our forecasts for euro-zone spreads. That said, we still expect spreads in France, Italy, and Belgium to widen due …
This page has been updated with additional analysis since first publication. Bumper rise in retail sales suggests households may be spending more freely Today’s deluge of data confirmed that the economy was weak even before the full effects of higher …
Overview – We’ve raised our GDP growth forecasts across most of the region for this year and think that Central and Eastern European (CEE) economies will pick up pace going into 2026, despite the headwind from US tariffs. An end to the war in Ukraine …
27th March 2025
Emerging Markets Capital Flows Monitor (Mar. 2025) …
Table of Key Forecasts Global Overview – We expect the world economy to grow a touch slower in the next couple of years than it did in 2024. Trump’s policies will drag on US growth, policy support will not prevent a slowdown in China’s economy, and looser …
Overview – Following upward revisions to our forecasts for policy rates and bond yields, we have raised our forecasts for prime property yields in Europe and now expect increases of around 20-25bps by the end of 2026. Meanwhile, despite a slightly …
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
Data released this morning showed that euro-zone money and lending growth continued to accelerate in February, supporting the case of those at the ECB who would prefer to pause interest rate cuts in April. The narrow M1 measure of the money supply – which …
Norges Bank to cut very cautiously, if at all This morning’s decision by Norges Bank not to follow through with the rate cut that it signalled in January was no surprise. The Bank also revised its interest rate projection up. We forecast two interest rate …
Table of Key Forecasts Overview – EM GDP growth picked up towards the end of last year, but the outlook is increasingly challenging – and not just because of US import tariffs. Weaker capital inflows, lower commodity prices and tight policy will all drag …
26th March 2025
Easing cycle paused, and space for additional rate cuts narrows The Czech National Bank (CNB) left its policy rate on hold today, at 3.75%, and we think that the scope for further interest rate cuts this year has become more limited. We had previously …
Physical retail demand has not only been shaped by online shopping, but also by shifting working patterns which have redistributed where we spend our money since COVID-19. Nevertheless, we expect a more even retail performance with the worst-hit …
For updated and more detailed analysis see here . Markets may be concerned about unfinished fiscal business Despite saying the “world is changing”, the Chancellor, Rachel Reeves, today just tinkered with fiscal policy. This left the impression that bigger …
This page has been updated with additional analysis since first publication. Temporary dip in inflation may not help the BoE or Chancellor much The dip in CPI inflation from 3.0% in January to 2.8% in February (CE & consensus 2.9%, BoE 2.8%) is a bit of a …
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
25th March 2025
MNB on hold, high inflation to tie new governors hands The Hungarian central bank (MNB) left its base rate unchanged today, at 6.50%, and we think its easing cycle will remain on pause throughout 2025 as inflation remains stuck above target. Analysts have …
The protests that have swept several EMs in recent weeks are likely to have a longer-lasting economic impact in countries with weak balance sheets and/or where they lead to a major shift in policy. It’s too early to conclude that any of the affected EMs …
This publication has been updated with additional analysis. Sentiment improving but activity still weak still weak The Ifo Business Climate Index (BCI) and other surveys for March confirm that the prospect of fiscal stimulus is boosting sentiment in …
Over the past month or so, economic data have generally surprised to the downside in the US, whereas they have done the opposite in the euro-zone. This may be one reason for the intervening shift in the performance of their stock markets. Admittedly, much …
24th March 2025
Overview – While tariffs and geopolitics complicate the near-term outlook for many commodities, the backdrop generally remains one of weak fundamentals; our end-2026 price forecasts for energy and industrial metals are well below consensus. Gold is a …
Residential has been the Netherlands’ strongest performing commercial property sector since the GFC, with bumper rent growth a key contributor to that outperformance. Looking ahead, slower wage growth and inflation will bring an end to the recent boom in …
This page has been updated with additional analysis since first publication. Stubbornly high UK price pressures will add to BoE’s worries With the downside risks on activity shrinking and high price pressures being sustained, the Bank of England is …
Weak data to bolster calls for monetary easing The weaker-than-expected February retail sales data out of Poland suggests that the economy may have slowed a bit more sharply than we had been anticipating this quarter. While this won’t prompt the central …
This publication has been updated with additional analysis. Germany recovering but euro-zone still weak February’s Flash Composite PMI provides more evidence that, after expanding by only 0.1% in Q4, the euro-zone economy remains all but stagnant in Q1. …
The prospect of looser fiscal policy in Germany isn’t the only significant reason MSCI’s Europe Index has outperformed its USA Index since Donald Trump returned to the White House. The ‘big-tech’ sectors’ fall from grace in the US has also been very …
21st March 2025
A pause for thought? The Bank of England was never going to do anything but continue the cut-hold-cut-hold pattern and keep interest rates unchanged at 4.50% this week. But the Monetary Policy Committee’s (MPC) hawkish tone suggests it is preparing to …
Gilt yields should fall back this year, but with property looking somewhat overvalued we doubt that will trigger much in the way of yield compression. That means the recovery in all-property returns will be weak by past standards. Thanks to stronger …
Heightened military threat… but stronger GDP The rise in optimism about the euro-zone economy over the past few weeks has been remarkable. The ZEW index of investor sentiment in Germany saw one of the biggest increases on record in March. (See Chart 1.) …
Overview – The euro-zone will get a boost from Germany’s decision to ditch its fiscal rules and ramp up defence spending, as well as the relaxation of the EU’s budget rules. But governments other than Germany won’t loosen policy very much, and the …
Erdogan alarms investors The arrest of a leading opposition politician in Turkey on Wednesday triggered a major sell-off in the country’s stock market and currency. Events are in flux at the moment, but there are three takeaways. The first is that the …
CBR sounds slightly less hawkish at it leaves rates on hold The decision by the Central Bank of Russia (CBR) to leave its policy rate on hold at 21.00% today was accompanied by somewhat less hawkish communications. While we doubt the CBR will cut interest …
This page has been updated with additional analysis since first publication. Gloomy news ahead of next week’s spring fiscal event Although it will have no impact on the fiscal update next week, the significant overshoot in borrowing in February highlights …
Norges Bank signalled in January that a rate cut was likely at its meeting next week, but we now think it will leave the policy rate unchanged at 4.5%. While we still suspect that it will lower interest rates a couple of times this year, the case for much …
20th March 2025
