Filtered by Subscriptions: Europe Economics Use setting Europe Economics
Improvement, but surveys still point to recession The flash PMIs for December provide more evidence that businesses in some parts of the euro-zone have become a bit less gloomy about their current situation – but they still point to a combination of …
16th December 2022
More ECB rate hikes to come Today’s 50bp rate hike came alongside hawkish comments which are consistent with our view that the deposit rate will peak at 3%, significantly higher than the consensus forecast and a touch above what was priced into the …
15th December 2022
SNB hikes by 50bp, hints at more to come The SNB’s 50bp rate hike, to 1.00%, was in line with expectations but, more importantly, the Bank also raised its medium-term inflation forecast slightly, hinting that policymakers believe future hikes may be …
Norges Bank tightening nearly over, but pivot a long way off Today’s 25bp rate increase by the Norges Bank, to 2.75%, takes it very close to the end of its tightening cycle. But we think the Bank is a long way from pivoting to loosening policy. The …
German industrial output resilient but still set for contraction German industrial production once again held up better than expected in October. But this resilience was driven partly by a recovery in construction which tends to be volatile. We expect …
7th December 2022
Peak headline inflation won’t stop ECB hiking Euro-zone headline inflation may now be past its peak but with core inflation unchanged in November and likely to stay well above 2% throughout next year, we expect the ECB to press on with another 50bp or …
30th November 2022
Small improvement in sentiment and fall in headline inflation The small increase in the EC Economic Sentiment Indicator (ESI) for November suggests that prospects for the euro-zone economy are no longer deteriorating. While we still expect a recession, it …
29th November 2022
ECB account gives little away on next steps There are no significant clues in the account of the ECB’s October meeting about the pace and extent to which the Bank will raise interest rates in December and next year. A 50bp hike seems most likely next …
24th November 2022
Small improvement in business climate won’t prevent recession The increase in the Ifo Business Climate Index in November does not change the big picture that the German economy is likely to contract in Q4. November’s uptick in the Business Climate Index …
Tightening cycle not yet finished This morning’s 75bp increase in the Riksbank’s policy rate was in line with the consensus and market expectations while the press statement is consistent with our view that policymakers will raise rates to a peak of …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4, with the downturn in the services sector intensifying. The price indices suggest that inflation will soon peak, …
23rd November 2022
German industry still set for a tough winter German industrial production rose significantly in September but we doubt this is a sign of things to come. With industry facing headwinds from high energy costs, rising interest rates and cooling demand, we …
7th November 2022
Slowing before entering recession The modest economic growth recorded by both France and Spain in Q3 was broadly in line with expectations and represents a significant slowdown from the second quarter. We expect both economies to go into recession in the …
28th October 2022
ECB’s work is far from done The ECB is very likely to follow today’s 75bp rate hike with further aggressive increases in the coming months, even if we are right that the forthcoming recession will be deeper than most expect. The decision to maintain the …
27th October 2022
Yet more evidence of recession The Ifo Business Climate Index held up better than expected in October but was still extremely low. With other business surveys also persistently weak, we think Germany will experience the deepest recession among euro-zone …
25th October 2022
PMIs show recession and high inflation The flash PMIs for October provide yet more evidence that the euro-zone is sliding into quite a deep recession but that inflationary pressures remain intense. The decline in the flash euro-zone Composite PMI from …
24th October 2022
Industrial contraction to drag Germany into recession The larger-than-expected drop in German industrial production in August was driven mainly by some volatile components and suggests industrial output may have held up better than we had anticipated in …
7th October 2022
Account shows hawks still ruling the roost The account of the September ECB meeting confirms that there was a strong consensus in favour of rapid policy normalisation. Since the September meeting, inflation has again increased more than expected, …
6th October 2022
Inflation hits double digits and upside risks remain The jump in the euro-zone’s headline inflation rate in September into double digits will be of grave concern to the ECB. Despite the weak economic outlook we expect the Bank to prioritise inflation and …
30th September 2022
Slump in Ifo signals Germany in recession The further big fall in the Ifo Business Climate Index (BCI) in September adds to the gloom surrounding the German economy as worries about energy prices and declining household real incomes dent business …
26th September 2022
Right-wing victory not immediate concern, but long-term risks remain The widely-anticipated right-wing coalition victory in Italy’s general election does not pose an immediate risk to bond markets. However, the fact that the country will be governed by a …
PMIs point to recession and still strong price pressures September’s PMI surveys are consistent with a small decline in euro-zone GDP in Q3. And the increases in the prices indices suggest that inflation is not yet at a turning point. The further fall in …
23rd September 2022
More tightening to come Even after today’s widely-expected 50bp rate increase by the Norges Bank, taking the policy rate to a 10-year high of 2.25%, the Bank has not finished tightening yet. The policy statement accompanying the rate hike said that “the …
22nd September 2022
SNB adds to the crop of bumper rate rises The Swiss National Bank continued its tightening cycle today, delivering a 75bp rate hike as we expected. Further rate rises are likely at the next couple of meetings, but we think that investors have got ahead of …
No respite in sight for German industry German industrial output fell a bit less than anticipated in July but that was mainly due to a rebound in construction activity and there were signs that manufacturing production is starting to be hit hard by the …
7th September 2022
Inflation to hit 10% before year end The further increases in headline and core inflation in August, and likelihood that they will keep rising, will add to the pressure on the ECB to step up the pace of tightening. The balance of probabilities is shifting …
31st August 2022
Recession now a certainty Although the Ifo Business Climate Index edged down only trivially in August it remained at a very low level consistent with the economy contracting. After expanding by a mere 0.1% q/q in Q2, we think the German economy is heading …
25th August 2022
PMIs signal recession has begun August’s flash PMIs suggest that the euro-zone economy is now contracting. While price pressures have become less intense in the past few months as global supply chain problems have eased, soaring gas prices and strong …
23rd August 2022