Author Archive

Europe has a lot to lose from trade wars

Any estimate of the economic costs of protectionist measures, let alone trade wars, is subject to uncertainty given the complexity of global supply chains. A common assumption is that new tariffs on exports will produce small direct effects on GDP growth but more significant indirect effects in the event of escalating trade conflicts, including on […]

Europe chart of the week – Employment

Euro area employment grew for the 18th consecutive quarter in Q4 2017 (+0.3% q-o-q), and is now 1.5% above its pre-crisis (2008) level. By contrast, hours worked per person employed decreased during the same period, remaining 4% below their pre-crisis level. The two data series have followed divergent trends since the start of the economic […]

Euro area: Flash PMI surveys pass their peak

Flash PMI indices eased in February, but remain consistent with continuing solid growth in the euro area. The flash composite purchasing managers’ index (PMI) for the euro area fell to 57.5 in February from 58.8 in January, below consensus expectations. Activity in both services and manufacturing cooled in February. While the average composite PMI is […]

Euro area Q4 GDP growth: Strong, but not stronger

According to Eurostat’s preliminary estimate, euro area real GDP rose by 0.6% q-o-q in Q4 (2.3% q-o-q annualised; 2.7% y-o-y), in line with consensus expectations but slightly less than its upwardly-revised 0.7% q-o-q increase in Q3. The euro area economy expanded by 2.5% in 2017 overall, its fastest annual growth since 2007. The flash Q4 […]

Euro area business activity expanding at its fastest pace in nearly 12 years

The flash composite Purchasing Managers’ index for the euro area increased to 58.6 in January from 58.1 in December, above consensus expectations (57.9).  The services sector index rose, offsetting the decline in the manufacturing index. Companies also expressed growing optimism about this year’s outlook, with business expectations up to an eight-month high. The modest drop […]

Light at the end of the Greek tunnel

Eight years after it first requested financial assistance from its European and international partners in April 2010, Greece has never been so close to a ‘clean exit’ from its bailout programme(s). The economy has shown more convincing signs of improvement, with real GDP recovering since mid-2016 and fall in unemployment accelerating in 2017. Macro imbalances […]

Euro area forecast to grow 2.3% in 2018

Taking account of stronger growth momentum, the carryover effect and upward revisions to past data, we have upgraded our euro area annual GDP growth forecasts to 2.3% both in 2017 and 2018. Our forecasts remain consistent with a very gradual slowdown in the quarterly pace of GDP growth, to 2% by end-2018. We view the […]

Euro area: solid growth, but inflation still under par

  According to preliminary Eurostat estimates, euro area real GDP increased by 0.6% q-o-q in Q3, slowing marginally from an upwardly-revised 0.7% in Q2. A breakdown by expenditure components will not be released until 14 November, but domestic demand was likely the key driver in the euro area’s solid momentum. At a country level, France […]

Broad-based rebound in euro area credit demand

The ECB’s October Bank Lending Survey (BLS) indicated that credit standards were broadly unchanged in Q3, while some modest easing was expected in Q4. The brightest spot is loan demand, which is expected to rebound for all types of loans moving forward. Net demand for bank loans to enterprises increased further in Q3, in line […]

Euroscepticism is making less of a splash

A Catalan crisis, a Dutch eurosceptic-leaning government coalition, the return of Austrian populists, difficult German coalition talks… Eurosceptics have had plenty of opportunities to make a comeback, and yet the market continues to trade each event as largely idiosyncratic in nature. Explanations abound for the resilience of peripheral markets to political risks, including a stronger […]

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