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The media focus this week has continued to be on EU-US trade negotiations as the pause on Liberation Day tariffs was extended beyond the 9 th of July deadline and President Trump threatened to send a letter raising tariffs on the EU again. But in the …
11th July 2025
Auto exporters in China have adapted to the EU’s tariffs on EVs by lowering export prices and focusing on vehicles that are not subject to tariffs. Even if trade restrictions were to remain in place, the extent of China’s cost advantage means that …
10th July 2025
There are risks to the Irish economy from potential US tax policy changes but we think they are not as large as they first appear. The country’s large pharmaceutical sector should be fairly resilient if hit with US tariffs. And the government’s fiscal …
We think the euro-zone economy will not grow at all in Q2 and Q3 as the first-quarter boost from tariff front-running will not be repeated. Looking through the tariff disruption, growth will be sluggish as consumer confidence is low and investment likely …
8th July 2025
Jump in inflation will discourage Riksbank from further cuts Both headline and core inflation rose in June by much more than Riksbank officials had forecast at its meeting last month, supporting our view that the Riksbank will keep the policy rate at 2% …
7th July 2025
Output still resilient to tariffs The better-than-expected German industrial production figures for May are partly due to continued tariff front-running in the pharmaceuticals sector, but output in other sectors is also proving more resilient to tariffs …
A rate cut at the ECB’s meeting on 24 th July seemed off the table only a few weeks ago, as energy prices had spiked due to the Israel-Iran conflict and ECB President Lagarde had stressed after June’s meeting that the Bank was in a “good position” on …
4th July 2025
High income growth and immigration are likely to continue to drive increases in house prices in Spain over the coming years. Demand will be further boosted by the recent fall in mortgage interest rates. Meanwhile, investment in dwellings is likely to grow …
3rd July 2025
Whatever transpires in EU-US trade talks next week – deal, no-deal or an extension – tensions over transatlantic trade relations are likely to persist throughout President Trump’s second administration. What will happen to the baseline tariff? With the …
This page had been updated with additional analysis. Inflation rises, but will remain very weak this year Headline inflation rose slightly in Switzerland in June, but we expect it will remain around zero, or just below, for the rest of the year. …
Inflation at the target and likely to remain quite stable The small increase in headline inflation in the euro-zone in June will not change the debate among ECB policymakers about whether there should be one more interest rate cut in the current cycle. …
1st July 2025
June inflation figures will please ECB National data published so far suggest that both euro-zone headline and core inflation were little changed and close to 2% in June. That will please ECB officials, who we expect to cut rates one more time in this …
30th June 2025
Euro powering ahead The catalyst for this week’s further appreciation of the euro was nothing to do with Europe: instead, it reflected President Trump’s renewed attacks on the Fed and suggestions that he will appoint the next Fed Chair earlier than …
27th June 2025
Activity weak and some signs of tariff drag The ESI for June suggests that US tariffs may be starting to drag on euro-zone activity and that the economy remains weak. Meanwhile, Middle-east tensions do not appear to have raised perceived uncertainty. The …
If it is implemented in full and funded through borrowing, the target for NATO members to raise defence spending to 3.5% of GDP by 2035 could push debt burdens up by 10% of GDP or more over the next decade. This would add to fiscal risks in some …
25th June 2025
Germany’s budget plans for 2025-29 confirm that the much anticipated big fiscal stimulus is coming and leave us comfortable with our view that GDP growth will pick up significantly from next year and the deficit will rise to as much as 4% of GDP. The …
German economy resilient to tariffs so far, but activity still weak The rise in the Ifo BCI in June suggests that activity in Germany has not yet been meaningfully hit by US tariffs. But output remains weak and we think a proper recovery will only …
24th June 2025
Overview – The euro-zone’s strong first-quarter growth rate was a result of tariff front-running and will be reversed in Q2 and be followed by weak growth in the second half of the year. Further ahead, we think the euro-zone will grow more slowly than …
23rd June 2025
Economy stagnating, no sign yet of higher energy costs raising prices June’s flash PMI survey for the euro-zone was consistent with the economy flat-lining. The recent jump in energy costs has not yet fed through to output prices, but the uncertainty …
Given the further escalation of the Israel-Iran conflict in the past few days, this Weekly considers its possible implications for euro-zone inflation and monetary policy. These will depend mainly on how the conflict will affect energy prices , which we …
20th June 2025
Surprise cut by Norges Bank but no rush to cut again Norges Bank’s surprise decision to cut its policy rate to 4.25% today – the first in this cycle – is not a sign that policymakers are suddenly in a rush for much looser monetary policy. We expect a very …
19th June 2025
SNB will cut rates again later this year The SNB decision to cut by just 25bp today means that it has avoided negative rates for the time being. But we think that continued deflation over the coming months will prompt policymakers to cut again at their …
Oil prices could feasibly surge to $130-150pb were hostilities between Israel and Iran to escalate in a way that resulted in major disruption to Middle Eastern energy exports and/or shipping through the Strait of Hormuz. However, so long as the conflict …
18th June 2025
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Riksbank cuts, but will probably not cut again While the Riksbank cut its policy rate by 25bp this morning and suggested there was a reasonable chance of a further cut this year, the outlook is uncertain and underlying economic conditions aren’t quite as …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
17th 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 …
13th June 2025
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
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 …
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% …
11th June 2025
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
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 …
6th June 2025
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 …
Euro-zone GDP and Employment (Q1 2025) Front-running boost will be unwound in second quarter The upward revision to euro-zone Q1 GDP growth to 0.6% q/q from 0.3% is largely due to a surge in pharmaceutical exports which we already know is being reversed …
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 …
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 …
5th June 2025
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 …
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 …
3rd June 2025
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 …
30th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
Strong, but not unanimous support for June cut. Opinion is divided on what to do next. An early exit by Lagarde would not cause sudden shift in policy. A 25bp interest rate cut next week, taking the deposit rate to 2.0%, looks very likely. But divisions …
29th May 2025
Yesterday’s US court ruling has added yet more uncertainty to the EU-US trade relationship and at face value has weakened President Trump’s position. But the risk of tariffs remains very real not least because sectoral tariffs, which are unaffected by the …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. The ECB’s forthcoming assessment of its 2021 strategy review won’t …
28th May 2025
For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral …
27th May 2025
Economy weak, inflation expectations eased May’s euro-zone business and consumer survey from the European Commission shows a small improvement in sentiment, but the data are still consistent with the economy struggling. And the price expectations indices …
ECB account reveals disagreement The account of last month’s ECB meeting, published on Thursday, showed diverging views on the risks to inflation and the appropriate monetary policy stance. It noted that “a few” members of the Governing Council “could …
23rd May 2025
