Filtered by Region: Europe Use setting Europe
A decade after the start of its first bailout programme, the Greek government has still not reined in the cost of its pension system. And the government’s recent decision to raise pensions suggests that pension costs will increase, rather than fall, in …
3rd February 2020
Mixed messages from the PMIs The mixed set of manufacturing PMIs from January adds to signs that conditions in the Swedish industrial sector have turned the corner but indicate that activity in Switzerland remains stuck in a rut. The jump in the headline …
Weak growth in Q4 not just a one-off The Q4 GDP data published this week were weaker than we or the consensus had anticipated. And the region’s poor performance was not just down to Germany and Italy, with France’s economy contracting. It’s also not clear …
31st January 2020
We still think that the ECB will loosen policy this year, albeit by a little less than we had previously pencilled in. But with interest rates and bond yields still set to remain at historic lows, property will continue to look fairly priced. As such, it …
Weak Q4 provides low base for 2020 The Q4 GDP and January consumer prices data published today support our view that euro-zone growth and inflation will be weaker this year than most expect. This underlies our forecast that the ECB will eventually be …
Euro-zone ESI points to still-weak growth at the start of 2020 Despite increasing in January, the euro-zone Economic Sentiment Indicator suggests that the economy is unlikely to have gained much momentum in Q1. Meanwhile, the unemployment rate, which fell …
30th January 2020
A positive start to the year The surge in the Swiss KOF Economic Barometer in January may yet prove to be a bit of a rogue reading. Nonetheless, it adds to signs from elsewhere in Europe that conditions for industrial firms have stabilised at the start of …
As long as the number of coronavirus cases remains low in Europe and contained elsewhere in the world, the impact of the virus on euro-zone GDP is likely to be small and temporary. It would need to be much worse than the SARS outbreak in 2003 for economic …
29th January 2020
Sluggish growth to continue In its latest World Economic Outlook, the IMF this week nudged down its forecast for euro-zone 2020 GDP growth from 1.3% to 1.2%, reflecting slightly weaker forecasts for Germany and Spain. The IMF is not the only organisation …
24th January 2020
The show must go on If it weren’t for constitutional limits on holding snap elections, Norway would be heading to the polls this year after a rift over policy led the far-right Progress Party (PP) to pull out of the current four-party coalition government …
Slow start to 2020 The unchanged reading for the euro-zone’s Composite PMI in January leaves it still consistent with fairly slow GDP growth. We think that the economy will continue to grow at a meagre pace in 2020. At 50.9, the Composite PMI was a touch …
The ECB left its policy settings unchanged today, made little change to its assessment of the economic outlook and said nothing new about the strategy review. While the markets are pricing in no policy changes this year, we still suspect that the Bank …
23rd January 2020
This morning’s decision by the Norges Bank to leave its key policy rate on hold at 1.50% was widely expected. We suspect that the Bank will leave rates on hold until 2022 though, if anything, our forecast for oil prices to rise suggests that the balance …
The ECB could decide in its strategy review to include owner-occupied housing costs in the measure of inflation which it targets. But we think it is unlikely to do so and, in any case, such a change would not make much difference to measured inflation, …
22nd January 2020
We think growth and inflation will be below consensus in Switzerland and the Nordics this year. Switzerland is most exposed to the prolonged manufacturing recession in Germany and inflation there is likely to be close to zero. Meanwhile, we think the …
After holding up despite the slowdown in economic activity, we expect jobs growth in office-based sectors to lose momentum over the next two years, weighing on occupier demand. This underpins our forecast of a slowdown in growth in euro-zone prime office …
Overview – We expect economic growth to remain sluggish this year as external demand picks up only slowly and domestic demand softens. Employment growth is slowing, which will cause household incomes and spending to weaken, and investment intentions have …
21st January 2020
While we have altered our forecasts for ECB policy this year, we are still more dovish than investors about the outlook for interest rates in the euro-zone. As such, we continue to think that government bond yields in the region will fall back and that …
Underlying inflation pressures in the euro-zone have been building over the past five years, but so slowly that it’s barely perceptible. And rather than being the start of a new trend, the jump in core inflation at the end of last year is more likely to …
20th January 2020
Although the share of global capital raised by European-focused funds has reduced in the last couple of years, there are indications that investors are starting to view real estate in Europe as increasingly attractive. This supports our view that demand …
No easy choices for Swiss policymakers The re-inclusion of Switzerland on the US Treasury’s Monitoring List of potential currency manipulators this week did not come entirely out of the blue. Having only been taken off the list in May 2019, we predicted …
17th January 2020
Phase One deal not a game changer for Europe This week brought a mixed bag of news on global trade, but the big picture is that euro-zone export growth is likely to remain slow this year. The main event was of course the Phase One deal between the US and …
There is no prospect of any change in policy at next week’s meeting… …but we are still forecasting more policy loosening later this year. Details of the scope and timetable of the strategy review may be revealed. At Christine Lagarde’s second meeting as …
16th January 2020
The account of December’s ECB meeting confirmed that the Governing Council is content to leave monetary policy unchanged for some time. But it left the option of further easing on the table – an option that we think it will take up in the second half of …
The decision by the SNB to scrap its currency ceiling five years ago coincided with it slashing interest rates to a record low to reduce the attractiveness of holding Swiss francs. Alas, this ‘deterrence effect’ is not what it used to be: whereas the gap …
Rise in industrial output won’t prevent a poor Q4 The small rise in euro-zone industrial production in November was nowhere near enough to reverse the previous month’s decline, so Q4 is likely to have been yet another weak quarter for the region’s …
15th January 2020
German economy likely to tread water this year News that the German economy expanded by 0.6% last year, down from 1.5% in 2018, suggests that it narrowly avoided another contraction in Q4. Nonetheless, we think that GDP is unlikely to expand significantly …
As the slowdown in household spending and the growth in e-commerce weighs on prime retail rents, we think that rents will fall in all Nordic cities this year. While most of continental Europe has been grappling with weakness in the retail sector, much of …
Inflation set to moderate in 2020 The fact that Swedish inflation was unchanged in December came as a surprise to nobody. But given our view that underlying price pressures will continue to moderate, we are sticking to our non-consensus forecast that …
Five years after the so-called Frankenshock, the SNB is near the end of the road for conventional monetary easing. Accordingly, the Bank may be forced to make another radical policy choice if there is a substantial appreciation in the franc in the coming …
13th January 2020
Despite Spain’s relatively strong economic outlook compared to its European peers, with real prime rents at high levels and the economy losing momentum, we think that prime retail rents will fall in 2020. After growing by around 7% in 2018, there was …
News that the headline inflation rate in the euro-zone jumped from 1.0% in November to 1.3% in December, and that the core rate (excluding energy, food, alcohol and tobacco) was unchanged, also at 1.3%, has once again raised the possibility that inflation …
10th January 2020
SNB back in the FX market If staff at the SNB had hoped to ease themselves back in gently after the Christmas break, they will have been disappointed. Data released on Monday indicate that the Bank intervened to weaken the franc last week for the first …
Hopes that the euro-zone economy will gather pace in the coming months are likely to be dashed. The latest business surveys point to growth stabilising but not recovering in the final quarter of last year. The slowdown over the past two years has been …
9th January 2020
Industrial recession has not yet ended While the increase in industrial production in November comes as a bit of a relief, it merely reversed the decline in the previous month and still means that output is likely to have fallen again in Q4 as a whole. We …
ESI still pointing to feeble end to 2019 Although the euro-zone Economic Sentiment Indicator (ESI) edged up again in December, the index still suggests that economic growth in the region was very weak at the end of last year. The small rise in the ESI …
8th January 2020
With interest rates set to stay lower for longer, we think that property yields will decline further in 2020. The exception is retail where, outside of Emerging Europe, yields are expected to rise in response to the bleak rental outlook. Nonetheless, even …
While we could have been bolder with our forecast for rental growth in Europe, in particular Nordic offices, on the whole our forecasts for 2019 proved to be correct. With 2019 now behind us, it is worth looking back to see how our predictions for the …
7th January 2020
ECB still more likely to loosen policy than tighten in 2020 December’s inflation data will provide some relief to policymakers at the ECB, but we are still sceptical that core inflation is about to start on a sustained upward trend. In our view, the …
Small pick-up in Swiss inflation not a game changer Having seen inflation fall into negative territory in the previous two months, the increase in Swiss CPI back into positive territory in December will be welcomed by policymakers. Nonetheless, with core …
Sluggish end to the year, with Germany and Italy particularly weak The euro-zone’s Composite PMI for December was revised up slightly, but taken together with the other available evidence, this still suggests that the economy grew by only 0.2% q/q in Q4. …
6th January 2020
The latest data suggest that the euro-zone economy might have avoided a further slowdown in Q4 last year, adding to the evidence that growth is “bottoming out”. However, the economy seems to have remained sluggish and we don’t think that a recovery is on …
3rd January 2020
Swiss economy still not out of the woods The latest surveys from Switzerland support our view that the economy is likely to continue growing at a fairly sluggish pace over the first half of this year. Admittedly, data published in late December showed the …
Better than 2009 The euro-zone economy is in better shape at the end of the current decade than it was ten years ago. In December 2009, we were writing Updates with titles such as “Greece heads deeper into the mire” and “Austrian banking troubles a sign …
20th December 2019
We think the euro-zone will continue to struggle in the first half of 2020 as Germany and Italy remain close to recession and inflation stays well below target, prompting the ECB to loosen policy further. Things should improve a bit in the second half of …
19th December 2019
Although the anaemic performance of the euro-zone economy is expected to weigh on occupier demand, real estate equity markets suggest that confidence in property markets has held up. We think that this will spark an improvement in investment activity next …
18th December 2019
Germany to continue struggling in early 2020 December’s Ifo Business Climate Index was a bit better than expected, but it still suggests that the German economy is struggling to grow. We expect GDP growth to remain very weak at the start of next year. The …
French President Emmanuel Macron’s emphasis on overhauling France’s ailing labour market is long overdue. But while there are signs that the changes are starting to take effect, the labour market improvement since 2015 is mostly thanks to a cyclical …
17th December 2019
What a difference a few months make; from being the worst performing G10 currency by some margin between the start of the year and late October, the Swedish krona has risen by about 3% against the euro since the Riksbank hinted that it would “most …
16th December 2019
