Europe Economics Update GDP to drop by 25% during lockdowns The imposition of strict social distancing controls across the continent means that economic activity in the euro-zone is likely to slump even further than we had assumed two weeks ago. For the... 2nd April 2020 · 5 mins read
Europe Economics Update Will short-time work schemes save euro-zone jobs? Euro-zone unemployment will rise sharply in the coming months but short-time working schemes will help to prevent it from skyrocketing. While this will incur significant fiscal costs, the support to... 2nd April 2020 · 5 mins read
Global Markets Update ECB likely to drive peripheral spreads lower this year We forecast that the credit spreads of euro-zone peripheral bonds will fall back further this year and remain low in 2021 thanks to unwavering support from the ECB. But public finances will be... 2nd April 2020 · 3 mins read
Europe Data Response Euro-zone Flash CPI (Mar.) & Ger. Unemp. (Mar.) The inflation rate in the euro-zone took a leg down in March, largely due to the slump in oil prices. With the economy taking on the verge of an unprecedented nose-dive, we expect headline inflation... 31st March 2020 · 2 mins read
Europe Economics Update Business surveys under-estimating the slump in GDP The business surveys for March point to declines in activity at least as deep as during the global financial crisis. None of them will be perfect guides to GDP though. If anything, the economy seems... 30th March 2020 · 3 mins read
Europe Data Response EC Survey (Mar.) On the face of it, March’s Economic Sentiment Indicator (ESI) is not as downbeat as some of the other surveys. But we think that it understates the drop in activity, and worse is likely to come in... 30th March 2020 · 2 mins read
Europe Economics Weekly ECB steps up, EU leaders at loggerheads Evidence is mounting that the slump in euro-zone GDP will be even steeper than the 15% drop that we had anticipated. This will put huge pressure on the public finances. The ECB has at least taken the... 27th March 2020 · 8 mins read
Europe Economics Update Euro-zone inflation set to turn negative The precipitous fall in oil prices and virus-related plunge in demand is likely to push euro-zone inflation to a record low of -1% in the summer. While the risk of deflation becoming entrenched seems... 27th March 2020 · 3 mins read
Europe Economics Update Joint fiscal support would aid EZ economic recovery Euro-zone policymakers’ plan to offer precautionary credit lines to some governments is a step in the right direction, but it is too small and not the best tool for the job. It stops well short of... 26th March 2020 · 5 mins read
Europe Economics Update ESM help welcome but more will be needed It now seems likely that euro-zone policymakers will exploit the European Stability Mechanism’s lending capacity to offer financial help to all member states to tackle the hit from the coronavirus... 25th March 2020 · 3 mins read
Europe Data Response Euro-zone Flash PMIs (Mar.) March’s slump in the euro-zone Composite PMI is so sharp that at any other time it would look like a spreadsheet error. But now it is all too believable, and April’s data could be even worse. 24th March 2020 · 2 mins read
Europe Data Response EC Consumer Confidence (Mar.) The plunge in the EC euro-zone consumer confidence index in March – its largest fall on record – leaves it consistent with household spending plummeting. Given the continued fast spread of the virus... 23rd March 2020 · 3 mins read
Europe Economics Update ESM could be a game-changer While the ECB’s extra €750bn in bond purchases has reduced financial market stress, governments also need to deliver a large fiscal response without triggering a fresh sovereign debt crisis. In our... 20th March 2020 · 6 mins read
Europe Economics Weekly ECB’s next challenge is to raise its issuer limits Following the huge expansion of its asset purchases this week, the ECB’s will still need to raise the issuer limits on its bond holdings. We think it will eventually do so, providing a credible... 20th March 2020 · 6 mins read
Europe Economics Update Additional €750bn of QE will not be ECB’s last move The ECB announced late yesterday evening a new €750bn programme of bond purchases which is intended to contain borrowing costs for southern economies. This gives it a lot more firepower which should... 19th March 2020 · 3 mins read
Europe Economics Update Fiscal costs of virus could easily top 10-15% of GDP The combination of the government responses to the coronavirus and the slump in economic activity will cause euro-zone budget balances to deteriorate by at least 10-15% of GDP this year. While this... 18th March 2020 · 6 mins read
