Europe Economics Focus TARGET2 imbalances set to balloon TARGET2 imbalances are set to rise to record levels over the year ahead on the back of the ECB’s planned wave of asset purchases. While this may be dismissed by some as a benign and technical side... 11th June 2020 · 13 mins read
Europe Data Response Euro-zone GDP (Q1, breakdown) The sharp fall in GDP in Q1, confirmed by data released this morning, will pale in comparison to the contraction in Q2. We think it will then take several years for the economy to return to its pre... 9th June 2020 · 2 mins read
Europe Economics Weekly Activity still depressed, policymakers step up support Data published this week added to evidence that economic activity in the euro-zone is slowly resuming after a catastrophic April, but that it remains well below “normal” levels. Against this backdrop... 5th June 2020 · 6 mins read
Europe Chart Pack Policymakers getting their act together The latest high frequency data show that economic activity has picked up a bit in the past few weeks. Consumers have been returning to the shops and restaurants. But some sectors such as tourism and... 5th June 2020 · 13 mins read
Europe Economics Update ECB meets high expectations for now The ECB’s decision to increase the size and duration of the PEPP should sustain the positive sentiment towards the euro-zone in the near term and reinforce the sense that, for now, European... 4th June 2020 · 3 mins read
Europe Data Response Euro-zone Retail Sales (Apr.) April’s euro-zone retail sales data confirm that household consumption growth took a beating at the start of the second quarter. There should be a sharp, though partial, rebound in May as lockdowns... 4th June 2020 · 3 mins read
Europe Economics Update Weak external demand to weigh on recoveries Disruption to supply chains and depressed demand mean that euro-zone goods exports will slump this year, hitting open economies such as the Netherlands and Germany the most. But the hit to services... 3rd June 2020 · 4 mins read
Europe Data Response Euro-zone and Germany Unemployment (Apr./May) The remarkably small increase in unemployment in the euro-zone reflects the success of the government job subsidy schemes and an exodus from the labour force in Italy. We suspect that the unemployment... 3rd June 2020 · 2 mins read
Europe Data Response Euro-zone Final PMIs (May) The final Composite PMIs add to the evidence that economic activity picked up in May, but it remains well below normal. They also point to substantial downward pressure on inflation. 3rd June 2020 · 2 mins read
Europe Economics Update Breakdown of ECB bond purchases reassuring The ECB has been purchasing a disproportionate share of Italian government bonds, but they are less heavily skewed towards Italy than we had anticipated. This in turn means that there may be less risk... 2nd June 2020 · 2 mins read
Europe Economics Update ECB needs to keep an eye on inflation expectations Inflation expectations are not always a good leading indicator of inflation. However, the decline in most measures of inflation expectations in the past two months may be a cause for concern at the... 1st June 2020 · 2 mins read
Europe Economics Weekly EU borrowing plans helpful, but not a panacea The publication of the EC’s blueprint for joint borrowing has been hailed by some as a “Hamilton moment”, referring to the 1790 decision by the first US Treasury Secretary to take on the debt of the... 29th May 2020 · 7 mins read
Europe Data Response Euro-zone Flash CPI (May) The further fall in euro-zone inflation in May took the headline rate to within a whisker of zero and downward pressure on prices is set to persist while demand remains exceptionally weak and... 29th May 2020 · 2 mins read
Europe Economics Update Monetary Indicators Monitor (Apr.) Bank lending to firms jumped again in April, suggesting that government loan guarantees and cheap ECB funding for banks are having the desired effects. But the central bank’s work is far from done. We... 29th May 2020 · 4 mins read
ECB Watch Another half trillion of bond purchases Policymakers have signalled their intention to further expand the Pandemic Emergency Purchase Programme at the monetary policy meeting next Thursday. At a minimum, we think they will add a further... 28th May 2020 · 7 mins read
Europe Economics Update Some thoughts on the lasting damage from the crisis The euro-zone is not suffering from excessive leverage among banks and households, or slow and counter-productive responses from policymakers, which held back its recovery from the last two crises... 28th May 2020 · 6 mins read
