Author Archive

Italy: Back to polls in Q4 2019?

Last week, political tensions in Italy intensified as Matteo Salvini, the League’s leader triggered a no confidence vote against Prime Minister Giuseppe Conte. PM Conte will address the Senate on 20 August. A confidence vote will likely follow the speech, though further delays remain a possibility. Once the government dissolves, the President of the Republic […]

The case for fiscal stimulus strengthens in Germany

The German economy shrank by 0.1% quarter-on-quarter (q-o-q) in Q2. Today’s report contained some positive news, notably regarding the resilience of domestic demand. Nevertheless, the ongoing trade disputes between China and the US, China weakness, the threat of auto tariffs and the threat of a no-deal Brexit to supply chains, in addition to the auto […]

Data adds to the case for ECB action in September

The euro area economy grew by 0.2% q-o-q in Q2, down from 0.4% in Q1. While 0.2% is still a decent pace of growth, concerns about the economy in the second half of the year have increased. Recent data have shown that the industrial slump has started to leave some marks on the domestic economy. […]

Looking for evidence of SNB intervention

Data published on Monday revealed that commercial banks’ sight deposits at the Swiss National Bank (SNB) rose by CHF1.7bn last week (see chart), the largest weekly increase since May 2017. The amount suggests the SNB intervened in the FX market, probably ahead of the ECB’s meeting last Thursday. Weekly releases of commercial banks’ sight deposits […]

Semaña grande for Sánchez

April’s elections in Spain resulted in a fragmented parliament, making the formation of a government complicated. Acting prime minister Pedro Sánchez of the Socialist Party (PSOE) goes to parliament this week to seek backing for his bid to form a government, with a parliamentary vote due to take place on July 23. To be elected, […]

Euro area manufacturing is not out of the woods

After two consecutive months of contraction, euro area industrial production (IP, excluding construction) rose by 0.9% month on month (m-o-m) in May, above consensus expectations. Production of consumer goods surged in May. Output of capital goods and energy also increased. However, output of intermediate goods slipped. While the monthly print was solid, a closer look […]

A truce between Rome and Brussels

In its mid-year budget revision, the Italian government lowered its 2019 deficit target. The government pointed to better-than-expected revenues for this revision, including tax revenues that were EUR3.5bn higher than expected and an additional EUR2.7bn in other revenues (including dividends from state-owned companies). Furthermore, public spending will be lower than projected this year due to […]

How dovish can Swiss monetary policy go?

At its meeting on 13 June, the Swiss National Bank (SNB) will face an uncertain growth and inflation outlook. Economic data have been mixed and, more importantly, external risks (intensification of trade disputes, Brexit, Italian budget disagreements…) have increased. Since the last SNB meeting in March, the CHF has appreciated by 1.5% against the EUR […]

Why has euro inflation stayed so low?

The euro area headline flash Harmonised Index of Consumer Prices (HICP) dropped to 1.2% year on year in May from 1.7% the previous month.  Core inflation fell by 50bp to 0.8% y-o-y. While this reflects volatility stemming from the date of Easter this year, one can legitimately ask why inflation remains so low in the […]

European elections – a more diverse but still pro-Europe parliament

Voter turnout was up for the first time ever and at 51%, higher than in any election since 1994. The results delivered a parliament with a pro-European majority, broadly in line with opinion polls. The traditional centre-right European Popular Party (EPP) and the centre-left Socialist & Democrats (S&D) remained respectively the first and the second […]

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