Political crisis in Italy: a cause for concern?
Italian prime minister Giuseppe Conte has lost a small coalition partner which had – so far – granted him a majority in parliament. The political crisis in the midst of the second wave of the pandemic shines a spotlight on Europe‘s long-standing top political risk: if new elections were to sweep…
German politics after Merkel: stability or trouble ahead?
Three stages to choose a successor: German Chancellor Angela Merkel has shaped European politics like few other leaders in the past 15 years. She will leave office at the end of her fourth and final term next autumn. The three-stage process to replace her has just started.
European update: growth, fiscal deal, ECB, Brexit
Ahead of another but now almost final Brexit deal deadline tonight, let us lean back and take a look at the bigger European picture. Although the economic situation looks set to worsen near-term due to a renewed rise in Sars-CoV-2 infections, the medium-term outlook remains unusually bright.
ECB: extending a helping hand for longer
More support for longer. The European Central Bank (ECB) today delivered roughly what markets and we had expected. This may have been the ECB’s last big push to fight the Covid-19 recession, but it remains to be seen whether it is its last big push to fight low inflation. In response to a yet again sizeable…
Cancelling ECB-held debt? The worst idea of the year
In response to the Covid-19 mega recession, debt ratios are surging across the advanced world. At the same time, central banks are gobbling up most of the increase in public debt through their asset purchases. Perhaps unsurprisingly, a few pundits and mid-level officials in Southern Europe have…
EU summit preview: €1.8trn deal at risk?
EU leaders will have three tough nuts to crack at their virtual summit this Thursday: the EU’s financial future, a more coordinated approach to the second wave of the corona pandemic, and the chances for a modest post-Brexit deal with the UK. The first of these three will shape the future of the EU even more…
UK: GDP hit from November less bad than in spring
UK real GDP contracted by 2.6% mom in November as the return of lockdowns to contain the spread of the SAR-CoV-2 virus curtailed economic activity. It follows a gain of 0.6% in October. Albeit from a much lower base - after only a partial recovery during the summer from the initial pandemic shock -…
German economy 2020: a year (never) to forget
The Covid-19 pandemic wreaked havoc on the German economy in 2020 and thus crushed our early 2020 expectations of a return from near-stagnation to trend growth following the Trump-led trade wars in 2019. According to a first estimate of Germany’s statistical office Destatis, German real GDP contracted by…
European PMIs: resilient December - setback in January?
The major European economies fared better than expected in the first two weeks of December according to the latest PMI surveys published today. The surprisingly strong improvement in the composite PMIs for the Eurozone reflects the easing of the tough virus restrictions across some major…
German Ifo falls by less than expected
Less bad than expected: In response to a renewed partial lockdown in November and the likely extension if not tightening of restrictions until 20 December, German business climate soured for the second consecutive month in November according to the Ifo survey. But in line with the German PMIs yesterday, the Ifo…
European PMIs: November setback smaller than in spring
The second lockdowns are significantly weighing on economic activity in Europe, but much less so than the first lockdowns did in March and April. While the major setback in the European PMIs suggests that November is a month to forget, markets have good reasons to largely look through the data.
Eurozone inflation: an even stronger case for the ECB to act
Despite the record-breaking rebound of the Eurozone economy in the summer months from the mega-recession in March/April, inflation pressures remained very subdued in October, that is just before major parts of Europe tightened restrictions or imposed new lockdowns to contain the second…
ZEW survey: significant setback, but medium-term is positive
The significant surge of Covid-19 infections and restrictions over the past weeks has dealt a heavy blow to economic sentiment in Europe according to the ZEW survey. The rebound from the mega-recession in spring is officially over.