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Macro Flash

  • 24.04.2017 — FRENCH WRAP-UP: THE GOOD NEWS AND THE LESS GOOD NEWS

    Tail risks remain. But most likely, the French election can mark a turning point for France and Europe. If Macron wins on 7 May and manages to forge a coalition of pro-reform forces ‎after the 11 and 18 June parliamentary elections, France, the Eurozone and the EU could benefit significantly over coming years.

    Reform progress in France and Europe, the pro-mainstream precedents set by voters in the Netherlands and France and the likely boost to the European economic outlook could also help to keep the Italian political risks in check.

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  • 31.03.2017 — UK: HOUSEHOLD APPETITES FOR MAJOR PURCHASES HIGH DESPITE EXPECTED RISE IN INFLATION

    The risks to real household spending from rising inflation are grossly overstated. The latest GfK survey for March chimes with our key view, that rising inflation will not do too much damage to household spending appetites over the medium-term.

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  • 31.03.2017 — EUROZONE INFLATION SLIPPING AGAIN AS OIL PRICE EFFECTS FADE

    Not there yet: The market’s recent excitement about inflation risks in the Eurozone were premature. In March, headline inflation dropped from 2.0% yoy in February to 1.5% as past changes in costs of energy and food dropped out of the headline measure.

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  • 31.03.2017 — US PCE DEFLATOR EXCEEDS FED’S TARGET, BUT PRIVATE CONSUMPTION SOFT

    The US PCE deflator rose to 2.1% yr/yr in February, exceeding the Fed’s 2% target for the first time since April 2012, while the core PCE deflator is now up 1.8% yr/yr; the upward drift in inflation suggests continued Fed rate increases are appropriate. US private consumption rose only 0.1% in February and declined by 0.1% in real terms, likely due to transitory factors. Expect a bounce back in March and upcoming months: fundamentals such as improving incomes, solid job growth, buoyant confidence and rising household net worth are positive.

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  • 30.03.2017 — EUROZONE SENTIMENT IN Q1 HITS SIX YEAR HIGH

    Momentum is on the rise. Despite marginal slippage in March, economic sentiment in the Eurozone remains well above its long-term average. 

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  • 30.03.2017 — US CORPORATE PROFITS ROSE MODESTLY IN 2016Q4

    US corporate profits rose modestly in 2016 Q4 capping a strong year with a moderation in momentum. Before taxes and adjusted for inventory valuation adjustment (IVA) and capital consumption allowance (CCA) adjustments, operating profits rose an annualized 2.1% in Q4, following a more robust rise of annualized 25.4% q/q in Q3.  Yr/yr, operating profits rose a strong 8.8%.

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  • 24.03.2017 — EUROZONE PMIS SUGGEST GROWTH ACCELERATED IN Q1

    Spring is coming and Eurozone firms are cheerful – despite the political risks. The preliminary PMI composite improved from 56.0 in February to 56.7 in March. 

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  • 23.03.2017 — UK: STRONG REBOUND IN RETAIL SALES IN FEBRUARY, RISKS FROM INFLATION ARE EXAGGERATED

    The oil and employment boost is fading: The 4.4% average annual growth in retail sales ex. autos during 2015 and 2016, and the surge to 5.8% yoy in H2 2016, was totally unsustainable. Now that the boost from cheap oil is over and employment gains slow as the labour market reaches full employment, household spending will return to more normal patterns. 

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  • 23.03.2017 — EUROZONE CONSUMERS SHRUG OFF INFLATION CONCERNS

    Mood among Eurozone consumers in March recovers from its February dip. Consumer confidence rose to -5.0 in March, after -6.2 in February and -4.8 in January. Taken the three months together, the average for Q1 2017 advanced to the highest level since Q2 2007. 

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  • 22.03.2017 — US: TIGHT SUPPLY OF HOMES POINTS TO NEED FOR ROBUST CONSTRUCTION

    Sales of US existing homes fell by 3.7% to an annualized 5.48mn in February after reaching a post-recession high of 5.69mn in January. The very tight supply of for-sale homes is placing upward pressure on prices and constraining sales. On the other hand, the tight supply and favorable demographics both point to the need for an acceleration in residential construction which is still low.

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  • 21.03.2017 — UK: UPSIDE SURPRISE ON HEADLINE AND CORE INFLATION INCREASES PRESSURE ON BOE TO HIKE

    The price of Brexit: Even before Brexit creates any barriers to trade – at least two years away – UK households are already forking out more for German cars, Italian cheese and French wine. Thanks to the 13% fall in trade-weighted sterling since the Brexit vote (down 12% versus the euro), prices of imported goods are rising sharply. In February, headline inflation (CPI) hit its highest rate – 2.3% yoy - since September 2013, increasing from 1.8% in January, and beating expectations of 2.1%.

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  • 17.03.2017 — FRANCE AND ITALY: RISK UPDATE

    Jointly with a select group of investors, I’ve just spent almost three days discussing the economic and political outlook for France and Italy with senior officials from both countries in London, Paris and Rome. We visited the finance ministries, Banca d'Italia, the OECD, industry and banking associations, and the Italian parliament. We also spoke to a number of senior consultants including a French professor specialising on constitutional law. 

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  • 16.03.2017 — DUTCH RELIEF: THE IMPACT OF THE VOTE

    A victory for common sense and a great start for Europe's election season. Unlike the voters in the US and the UK, who fell for Donald Trump and the Brexiteers last year, a vast majority of Dutch voters opted for the pro-European mainstream yesterday.

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  • 16.03.2017 — UK: MPC MARCH MINUTES SHOW THE BOE SHIFTING FROM NEUTRAL TO HAWKISH

    Hawkishness creeping into the MPC: While the BoE’s policy stance did not change today, there was a notable shift in the guidance for future policy amid continued strong growth and rising inflation. Kristen Forbes, a known hawk, voted for a 25bps rate hike. Meanwhile ‘some’ committee members noted that given the resilient economic performance since the Brexit vote it would ‘take very little further upside news on the prospects for activity or inflation to consider that a more immediate reduction in policy support might be warranted’.

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  • 16.03.2017 — INDICATORS ON US OUTLOOK REMAIN STRONG

    Key US economic data on the outlook continue to come in strong. Although readings on some aspects of current economic activity are mixed, and some transitory factors likely will hold down Q1 GDP growth, the outlook for stronger growth is favorable. Two key manufacturing surveys received for the first half of March – Philly Fed and Empire State – suggest that firms continue to be exceedingly optimistic about the US economy. Housing starts have exceeded an annualized 1.25 million units for the last three months after averaging under 1.2million in 2016. 

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  • 15.03.2017 — UK LABOUR MARKET: UNEMPLOYMENT HEADS LOWER WHILE WAGE GROWTH DIPS

    Solid labour market in January despite a little disappointment on wage growth. The headline unemployment rate declined to 4.7% in January from 4.8% in December, driven by strong gains in employment (92k 3m/3m). Meanwhile, average weekly earnings growth ex. bonus surprised on the downside, falling to 2.3% yoy from 2.6% yoy in December.

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  • 15.03.2017 — US: HIGHER INFLATION, OPTIMISTIC SENTIMENT, SPARKLESS ACTIVITY DATA

    The economic data continue to reflect better sentiment and an acceleration in inflation, but unimpressive improvement in the activity/“hard” data. The Fed is on track to increase rates at its meeting later today and there is some upside risk on its future policy rate path. Even if activity data remain sluggish, as long as employment and inflation continue to improve at a robust pace, the Fed will be forced to act.

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  • 14.03.2017 — UK: HEADING FOR A HARD BREXIT AND SCOTTISH EXIT?

    No strings attached: That parliament has passed the Article 50 bill giving government unconditional permission to kick off the two-year divorce proceedings with the EU is a major victory for Prime Minister Theresa May. 

    Sturgeon versus May: SNP leader Nicola Sturgeon has announced that she wants to hold a second referendum on Scottish independence between autumn 2018 and spring 2019. 

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  • 13.03.2017 — UK WEEK AHEAD: ARTICLE 50, LABOUR MARKET, BOE MARCH MEETING

    UK Prime Minister Theresa May should have parliamentary approval to trigger Article 50 – the EU divorce notice - by the end of the week.

    With the labour market at close to full employment – unemployment below 5% and employment at a record high – job gains are starting to slow. 

    The BoE will publish the policy decision and minutes from the March MPC meeting on Thursday at midday.

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  • 10.03.2017 — UK INDUSTRIAL PRODUCTION: UPTURN CONTINUES DESPITE SMALL DIP IN JANUARY

    Two steps forward, one step back - but that’s the way it goes: The little monthly correction in industrial production in January doesn’t change the broad based upward trend. 

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  • 10.03.2017 — US: SOLID FEBRUARY JOBS REPORT

    US establishments added 235k jobs in February, lowering the unemployment rate to 4.7% and increasing pay for their employees 0.2% m/m, lifting the yr/yr rise to 2.8%. This solid employment report keeps the Fed on track to hike rates at its March meeting, but adds no additional clues on the future path of policy. Two additional hikes in 2017 – in September and December - continue to seem most likely. 

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  • 09.03.2017 — ECB: FIRMER RECOVERY BUT NO NEED TO CHANGE POLICY

    On behalf of Holger Schmieding: 

    Spring is coming and the ECB is celebrating. The European Central Bank today upgraded its assessment of the economic outlook, attributing the firming recovery and the fading of deflation risks partly to the success of its policies.

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  • 08.03.2017 — US: FEBRUARY ADP JOBS REPORT SHOWS OPTIMISM FEEDING THROUGH TO HIRING

    ADP/Moody’s estimate that US private payrolls increased by 298k in February, suggesting that the BLS will report similarly strong gains in its monthly jobs report on Friday. Optimistic sentiment is feeding through to hiring with small businesses, manufacturers and construction firms all increasing payrolls at a robust pace in recent months. With labor markets tightening, continued job gains of this magnitude will fuel fears of an overheating economy and force the Fed to hike more than currently expected.

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  • 08.03.2017 — UK BUDGET 2017: PUBLIC FINANCES HEADING IN THE RIGHT DIRECTION, BUT LACK EMPHASIS ON INVESTMENT

    From a macroeconomic point of view, Budget 2017 provides us with very little to get excited about. Capital spending continues to fall short of what the economy needs as it faces slower long-term growth from Brexit.

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  • 06.03.2017 — UK BUDGET 2017 PREVIEW – POLICY CHANGES UNLIKELY TO ALTER ECONOMIC OUTLOOK

    Since 2010 UK fiscal policy has been neither here nor there. The economy is in its 8th year of expansion, yet the cyclical adjusted deficit is still close to 3%.

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Macro Views

  • 24.10.2016 — US INFRASTRUCTURE SPENDING--A ROADMAP FOR THINKING BROADLY

    Now that the need for renewed increases in US infrastructure spending is widely acknowledged and is a focus of Washington policymakers, private companies and the investment community, there are many issues involved that will affect what legislation is ultimately enacted, how it affects the economy, jobs, interest rates and the Fed’s perspective on monetary policy, and of course the investment opportunities it will present. 

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  • 19.09.2016 — GERMAN POLITICS: THE ROUGH ROAD AHEAD FOR MERKEL

    Another blow for the German chancellor. As in the two other rounds of state elections earlier this year, Angela Merkel's centre-right CDU lost heavily in the city state of Berlin.

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  • 13.09.2016 — POLITICAL UPDATE: US ELECTIONS

    With eight weeks to go until the US elections on 8 November, the most market-friendly outcome remains the most likely result: Hillary Clinton becomes US president while the Republicans maintain control of the House of Representatives.

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  • 12.09.2016 — YIELDS ARE UP: GOOD NEWS OR BAD NEWS?

    Having first dropped on exaggerated expectations that the ECB may ease policy further, bond yields have risen visibly since the ECB disappointed such hopes yesterday.

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  • 07.09.2016 — EUROPEAN POLITICAL UPDATE: ITALY, FRANCE, AUSTRIA

    ITALY: CRUCIAL REFERENDUM IN LATE NOVEMBER OR EARLY DECEMBER. FRANCE: WARMING UP FOR THE VOTES. AUSTRIA: ANOTHER CLOSE SHAVE?

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  • 05.09.2016 — ECB PREVIEW: NO COMPELLING NEED TO ACT NOW

    The pace of recovery in the Eurozone remains “unsatisfactory” according to ECB board member Yves Mersch. Does that mean that the ECB will have to act again this Thursday? Not necessarily.

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  • 05.09.2016 — EUROPEAN POLITICAL UPDATE: GERMAN REBUKE FOR MERKEL; SPANISH STALEMATE

    GERMANY: WILL THE REGIONAL REBUKE FOR MERKEL MAKE A DIFFERENCE? Another embarrassing regional election result for chancellor Angela Merkel

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  • 16.06.2016 — Brexit update: UK polls now show small lead for “leave”

    Brexit opinion polls now show “leave” marginally ahead: With 10 days to go until the UK’s “in” or “out” referendum on European Union (EU) membership, polls are showing a significant gain in support for “leave”, as
    immigration has taken centre stage in the UK public debate.

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  • 16.06.2016 — The Brexit Brief: our guide to the “what if”?

    A serious shock. If UK voters decide on 23 June to leave the European Union, the UK and, to a lesser extent, Europe as a whole could plunge into a significant crisis. Markets would price in the risks, possibly overdoing it in a first knee-jerk reaction.

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  • 06.06.2016 — EUROPE: THE SIX-DAY CLUSTER OF RISKS

    The German court verdict on the ECB's OMT programme on 21 June, the Brexit referendum on 23 June and the Spanish repeat elections on 26 June: Europe is heading for a six-day cluster of risks. We expect Europe to dodge the bullets again, as it has done so far.

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  • 23.05.2016 — The Euro Plus Monitor Spring 2016 Update

    Once a year, Berenberg and the Lisbon Council examine the fundamental economic health and recent adjustment progress of 21 European economies. We published the last full set of results in The 2015 Euro Plus Monitor on 14 December 2015. In The Spring 2016 Update, we look only at the Adjustment Progress Indicator. In addition, we take advantage of recent data releases to update the rankings based on full data sets for 2015, including the second half of the year.

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  • 11.05.2016 — Brexit: Das Risiko des Jahres

    Ein Schicksalstag für Europa? Am 23. Juni stimmen die britischen Wähler über den Verbleib ihres Landes in der Europäischen Union ab. Meinungsumfragen sagen einen knappen Ausgang voraus, das Risiko eines britischen Austritts („Brexit“) liegt unseres Erachtens bei 35 %.

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  • 09.12.2015 — FED HIKE WILL RAISE QUESTIONS FOR DOVISH BOE

    Citing robust GDP growth, full employment and rising inflation in 2016, the Fed will probably hike rates next week for the first time since cutting them to almost zero six years ago. For the BoE, the first hike remains a distant prospect. This is odd since UK GDP, labour market and inflation data are starkly similar to the US and indeed both Mark Carney and Janet Yellen have long stated that the timing and pace of rate hikes will be data dependent. We argue that the BoE should be hiking soon too

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  • 27.11.2015 — UK INFLATION OUTLOOK WARRANTS EARLY BOE HIKE

    Waiting too long to hike could make “gradual tightening” challenging if inflation overshoots. The risks to the economy and inflation of beginning the rate hike cycle sooner rather than later are low. Given the need for a gradual pace of tightening, an early start will be necessary to negate the risk that underlying price pressures accumulate more rapidly than desired. This scenario might require more aggressive hikes to control and would risk destabilising the economy.

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  • 23.11.2015 — EUROPE: OUR BASE CASE

    After a near-term dent, we expect Eurozone growth to gradually rebound to an annualised pace around 1.7% over the course of next year as the impact of the emerging market crisis fades. A fiscal stimulus across much of the Eurozone of roughly 0.3% of GDP, including extra spending on refugees of at least 0.6% of German GDP in Germany, will support domestic demand.

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  • 02.11.2015 — EUROZONE ECONOMY: HOLDING UP WELL SO FAR

    We expect 1.6% growth for 2016, rising to 1.8% in 2017, after 1.5% this year. Near-term, we still project a temporary slowdown in growth for late 2015 led by export-oriented industry. But as the survey data have, on balance, turned up rather than down over the last two months, we are delighted to acknowledge that there may be at least as much upside than downside risk to our calls for late 2015 and the start of 2016

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  • 23.06.2015 — GREECE: TOWARDS A SKEWED DEAL?

    Good news: Greece has moved. While Athens still has to offer more to its creditors by the new deadline of Wednesday evening, both sides apparently see the proposals Greece presented on Monday morning as a basis for a potential deal.


    Bad news: Greece is putting forward the wrong kind of deal. Within the overall sustainability parameters set by creditors, Athens proposes almost exclusively tax hikes rather than pro-growth structural reforms and well targeted expenditure cuts.

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  • 17.06.2015 — GREECE: CLOSER TO THE ABYSS

    The rhetoric from Athens sounds more like the start of a blame game than a prelude to compromise.
    The Greek problem can still be solved easily if the government changes tack: But with every semi-deadline that Greece misses and with every rude word that the Greek radicals hurl at their creditors, the damage already done to Greece gets worse.
    Contagion risks: Expect some volatility, yes, but the EZ has spent the past three years strengthening its defences against contagion.
    Economic impact: For Greece, it gets worse by the day. For the EZ, we expect the sheer noise to cause a small dent to business confidence now but no major impact.
    We raise the Grexit risk from 30% to 40%.

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  • 02.06.2015 — ECB: PROGRESS, BUT NO REASON TO LET UP

    No decisions are likely to be made at the ECB meeting on Wednesday but ECB President Mario Draghi will use the press conference after the meeting to counter recent upward pressure on yields and the euro
    The economic situation and outlook of the Eurozone is currently better than at any time since early 2011.
    But the time to let up on the stimulus is still a long way off, as the ECB’s mandated target of HICP inflation is still far away.

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  • 26.05.2015 — GREECE UPDATE: TSIPRAS MOVING, BUT TOO SLOWLY

    ● Having made three impossible promises in his election campaign, Prime Minister Alexis Tsipras still refuses to get real.
    ● Cracks in Athens: At a Syriza central committee meeting late on Sunday, 95 members voted for a Tsipras-backed “compromise”. 75 voted to ignore lenders altogether and risk Grexit if they continue to set conditions.
    ● Chances are that Tsipras will eventually have to choose between serving his country or the strong left-wing of his party.
    ● Our best guess: Mr Tsipras is very gradually edging towards a less unrealistic stance. But far too slowly.

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  • 06.05.2015 — EUROZONE: TAILWINDS STILL BLOWING, A LITTLE LESS STRONGLY

    The Eurozone had a great start into 2015, by strong economic tailwinds.
    These tailwinds are blowing a little less strongly now, due to a mix of the ECB’s own success and unexpected weakness elsewhere, but thanks to the great start to the year, they are no longer needed as much.

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  • 15.04.2015 — RISK CONTROL IS WORKING

    Life is full of tail risks: what really matters is whether we can control such risks, which seems the case in 2015. In Europe, for example, a huge political accident in Athens has caused no ripple effects beyond Greece, suggesting that the Eurozone now has the means to contain such crises.
    For further information see our quarterly Economic Outlook.

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  • 26.03.2015 — BRITAIN'S LABOUR MARKET MIRACLE: WHY IT MATTERS

    Flexible labour market creates plenty of jobs with low wage inflation: In days gone by, the UK’s recent employment surge would have triggered rip-roaring inflation and a need for the central bank to kill the recovery. Not this time.

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  • 26.03.2015 — PORTUGAL: EASIER RIDE FOR NEXT GOVERNMENT

    Portugal’s upswing shows the success of the tough adjustment programmes imposed by the EU and IMF in the aftermath of the global financial crisis, just as Spain and Ireland did. Growth is back, unemployment has fallen, deficits are down and market access has been fully restored.

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  • 19.03.2015 — STEADY EDDIE UK BUDGET

    Prudence instead of giveaways: Chancellor George Osborne took quite a risk this close to a very tight election by trying to portray prudence instead of engaging in the usual pre-election bribery

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  • 17.03.2015 — WATCH OUT FOR STERLING-DRIVEN SURPRISES

    If we learnt one thing from sterling’s 2008 fall, it is that the exchange rate can have big long-lasting effects on inflation, but only second-order impacts on exports. Those facts surprised markets a few years ago. They may do so again if sterling’s recent rise persists.

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  • 04.03.2015 — ECB PREVIEW: YOU MAKE YOUR OWN LUCK

    The ECB may not believe its own luck: Ever since 22 January, when the ECB announced that it would start buying sovereign bonds from March onwards, many Eurozone economic indicators have surprised on the upside.

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  • 27.02.2015 — BRITISH EUROSCEPTICISM RECEDES

    We can sleep easier. With two more years of debating to go, support for EU membership could improve further. We expect the UK to remain in the EU.

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  • 23.02.2015 — SYRIZA GETS REAL - BUT WILL THE DEAL LAST?

    Having promised his voters three impossible things in his election campaign, new Greek prime minister Alexis Tsipras now seems to have made the right choice, namely to back down almost completely rather than to push his country into the abyss of Grexit.

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  • 19.02.2015 — GREECE: WHAT IF?

    Greece facing short-term crunch, then potentially Argentina-style inflation. Eurozone can contain ST wobbles. Greek precedent bad in LT, but strengthens rules.

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  • 05.02.2015 — GREEK CONTAGION RISKS? SPAIN AND ITALY LOOK SAFE

    2015 is not 2012: The Eurozone’s defences against financial contagion are much stronger. The European Central Bank’s 2012 Outright Monetary Transactions (OMT) programme looks set to survive German legal challenges. And, as part of its monetary policy stance, the ECB will soon buy large amounts of sovereign bonds anyway.

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  • 02.02.2015 — UK STILL GOING STRONG

    Wheels coming off?: The obituaries for the UK recovery were quick off the printing press this week when growth figures slowed a little in the fourth quarter. That was variously due to the housing market (when is it not about housing in the UK?), a lack of rebalancing, deleveraging or the Eurozone. A more sober assessment says there is nothing to worry about in these figures.

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  • 26.01.2015 — GREEK ELECTION: THE REALITY SHOCK AHEAD

    In a victory of anger over fear, of make-believe over reason, Greece has voted decisively for a populist insurgent who has made three impossible promises to his country in one campaign. Greece and its new prime minister, Alexis Tsipras, are in for a reality shock soon. 

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  • 05.09.2014 — UK: WHERE DO WE STAND?

    Cruising: We have shaved our UK forecasts a little in response to the economic fall-out from events in Ukraine. But we remain optimistic.Politics is the big risk.

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  • 03.09.2014 — SHOULD AULD ACQUAINTANCE BE FORGOT?

    The eerie quiet ahead of Scotland’s 18 September referendum on whether to leave the UK was broken this week. A 1 September YouGov poll showed a sharp fall in the anti-independence camp’s lead, taking it down to six points from a huge 22 point advantage in early August. It is a timely reminder that, as we have cautioned before (see, for instance, UK risks: politics is top of our list dated 21 July), the Scottish referendum result is particularly difficult to call and the possibility of a tight vote should not be dismissed

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  • 02.09.2014 — ECB PREVIEW: MOVING TOWARDS MORE ACTION

    The Eurozone has entered an economic rough patch: Many investors and policy makers expect the ECB to respond with a major new stimulus. It will likely deliver, but perhaps not quite as aggressively as some observers hope.

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  • 15.08.2014 — SLIGHTLY LATER UK INTEREST RATE HIKE LIKELY

    This week’s Inflation Report gave no clear sign of an imminent rate hike. In addition, uncertainty about the economic outlook has risen in recent weeks. As a result we now expect the first BoE rate hike to come in Q1 2015, later than our previous forecast of Q4 2014.

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  • 07.08.2014 — UK FORWARD GUIDANCE ONE YEAR OLD

    Was it a good year? Bank of England (BoE) Governor Mark Carney introduced “forward guidance” on 7 August last year. At best it has achieved little. At worst it has damaged the BoE’s credibility. While some criticisms of guidance come with hindsight, not all of them do.

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  • 07.08.2014 — FORECAST UPDATE: GERMANY DRAGS DOWN EUROZONE

    Recent hard economic data for key countries of the Eurozone have fallen short of our expectations. We adjust our forecasts accordingly.

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  • 06.08.2014 — SHOULD THE UK FEAR STRONGER STERLING?

    No. Sterling’s 10% appreciation over the past year has taken its toll on some international companies’ earnings. But it is a sideshow for the wider economy.

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  • 04.08.2014 — ECB PREVIEW: WATCH PUTIN, NOT MONTHLY INFLATION

    The drop in inflation to 0.4% in July has led to more warnings of deflation from some observers and calls for more radical action from the ECB. But inflation is only falling because of lower food and energy price inflation.

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  • 01.08.2014 — IS UK GROWTH SLOWING?

    Data releases have begun surprising on the downside. This week, consumer confidence and the manufacturing PMI fell. Not by very much for the former, but the reports add to a number of slightly disappointing releases in recent weeks.

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  • 01.08.2014 — MARKETS AND FUNDAMENTALS

    A macroeconomist's take on the latest market volatility.

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  • 01.08.2014 — BOE PREVIEW: WILL PRODUCTIVITY PICK UP?

    Test of our call for a November rate hike. We expect no change from the BoE at its rate setting meeting next week. But two key events in August pose a test for our call that the Bank of England (BoE) will hike in November. We look for the 20 August minutes of next week’s meeting to show one rate setter voting for a hike.

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  • 21.07.2014 — UK RISKS: POLITICS IS TOP OF OUR LIST

    Politics trumps most other risks: The Scottish referendum could split the UK, the general election could be followed by damaging economic policies, while the UK could vote itself out of a huge external market in 2017. We do not expect politicians to put a spanner in the works of recovery but these low-probability, huge-impact, events are worth watching very carefully.

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  • 11.07.2014 — FORECAST UPDATE: SOFTER CORE DRAGS DOWN EUROZONE

    Surveys suggest a bigger setback for reform laggard France than for other countries. We cut our growth forecasts for France from 0.8% to 0.5% for 2014 and from 1.5% to 1.2% for 2015. Together with a small Putin effect on Germany (2014 growth 2.0% instead of 2.1%), the French revision takes our Eurozone calls from 1.1% to 1.0% for 2014 and from 1.7% to 1.6% for 2015. In late 2013, our call for 2014 had been 1.2%.

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  • 04.04.2014 — THE UK CYCLE GETS GOING

    The start of a rebound: The evidence of a broadening recovery is mounting. As is typical in UK cycles, consumers did the early heavy lifting. That is now translating into surging optimism in the outlook, with firms planning to borrow to fund expansion plans and for M&A, as the Bank of England (BoE) Q1 2014 credit conditions survey out today (3 April) shows (Chart 1).

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  • 04.04.2014 — THE UK CYCLE GETS GOING

    The start of a rebound: The evidence of a broadening recovery is mounting. As is typical in UK cycles, consumers did the early heavy lifting. That is now translating into surging optimism in the outlook, with firms planning to borrow to fund expansion plans and for M&A, as the Bank of England (BoE) Q1 2014 credit conditions survey out today (3 April) shows (Chart 1).

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  • 02.04.2014 — ECB: ACTION POSSIBLE, BUT CONFIDENCE SHOULD PREVAIL

    Another sharp fall in inflation in March has put the European Central Bank’s (ECB) inflation forecasts at risk and increased the chance of further monetary stimulus. However, as the recovery has strengthened and broadened this winter, we expect the ECB to maintain its stance.

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  • 01.04.2014 — UK MACRO UPDATE: SPLITS IN THE UNIONIST CAMPAIGN

    The “no” vote lead in the Scottish referendum polls is narrowing and recent splits in the unionist campaign are unlikely to help. The latest disagreement was between the Westminster government and Alistair Darling, the former Chancellor who runs the Unionists’ campaign.

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  • 24.03.2014 — JOBS, TRADE AND FREE TRAVEL: HOW TO STABILISE UKRAINE

    Having finally mastered the euro crisis, Europe faces a big new challenge: how to stabilise Ukraine. Much is at stake. A thriving Ukraine would advance peace, prosperity and the rule of law across a major swathe of Europe, a weak and crisis-ridden Ukraine would invite Putin to stoke violent unrest and possibly start a war, with disastrous consequences not just for Russia and Ukraine but also for Europe as a whole.

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  • 20.03.2014 — UK BUDGET: LITTLE CHANGE

    Very small changes: Chancellor George Osborne forecast stronger growth and lower borrowing in his Budget. But this is a cyclical economic rebound, so the structural government borrowing position is not improving faster than expected.

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  • 18.03.2014 — PORTUGAL: SECOND CHANCE ... TAKEN

    Portugal is on track to repeat Germany’s successful conversion from the unsustainable sick man of Europe to a competitive and balanced growth champion. A wave of structural reforms and painful austerity laid the foundations. We expect Portugal to exit its bail-out programme in May without any tensions.

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  • 12.03.2014 — NO ROOM FOR GIVEAWAYS: UK BUDGET PREVIEW

    A cyclical upswing does not give room for giveaways: Amid a snowballing recovery, the UK fiscal deficit should fall faster than the government has forecast. But that largely reflects a cyclical upturn, rather than a structural improvement in the finances. There is no good news on the latter. Hence we do not expect Chancellor George Osborne to have any room to ease austerity in the 19 March Budget.

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  • 28.02.2014 — UK CONSUMERS ARE BECOMING MORE OPTIMISTIC
    • Rising optimism should drive strengthening UK consumption over the year
    • Consumer confidence is at its highest since 2007
    • Uncertainty has fallen dramatically
    • Optimism about the economy has also jumped
    • The recovery seems to be feeding through to consumers
    • Consumers will probably continue cutting their saving
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Macro Update

UK Macro Update

  • 28.04.2016 — What drives the UK current account deficit?

    The UK current account deficit has widened sharply from an average of 2.3% of GDP between 2001 and 2010, to a record of 7.0% in Q4 2015. Two trends are behind this negative outcome.

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  • 14.03.2016 — The day after Brexit: what would happen next?

    In the short-run, a vote for Brexit would be a demand-side shock: A sharp rise in uncertainty would harm business and household confidence, causing investment and spending to decline. Growth slows (recession possible), unemployment rises, the Bank of England (BoE) loosens monetary policy and fiscal deficits rise.

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  • 11.09.2015 — UK unlikely to leave EU, despite the local noise

    The EU matters. The EU accounts for 45% (£227bn) of UK exports and 53% of UK imports (£288bn). In 2014, the UK ran a trade deficit of £61bn with the EU in 2014.
    Almost 10% of the UK labour force is linked to commerce with EU. Both the coalition and the previous Labour government estimate that around 3m people earn their living by producing goods and services that are exported to the EU.

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  • 27.03.2015 — HAPPY CONSUMERS, HAPPY ECONOMY

    Have money, will spend: Only a few things are inevitable in life: death, taxes and UK consumers spending money. So here we are with booming retail sales in the UK.

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  • 20.03.2015 — UK LABOUR MARKET: YOUR FLEXIBLE FRIEND

    Plenty of jobs but soft wages: In days gone by, rip-roaring inflation would have accompanied the employment surge the UK has seen recently. Not this time. A greater proportion of the population are in work than at any point since records began in 1971, but inflation is nearly zero. What is going on? For markets and the BoE, the answer to this puzzle is key.

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  • 13.03.2015 — DO NOT EXPECT A BIG PRE-ELECTION GIVEAWAY

    We expect Chancellor George Osborne to announce small giveaways in his final budget on 18 March.

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  • 20.02.2015 — UK: INVESTMENT CYCLE WILL CONTINUE

    Strong investment: The urban myth holds that Britain’s recent upturn has been driven by an unsustainable consumption splurge that will end in tears.

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  • 06.02.2015 — UK: DELEVERAGING WILL NOT HOLD BACK THE RECOVERY

    Debt still rising: McKinsey this week updated its debt analysis, reporting that every industrialised country has more debt than in 2007. Should that be worrying from a UK perspective?

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  • 09.12.2014 — UK MACRO UPDATE: HAPPY DAYS

    What a Christmas present. Thank you oil men of Dakota. Cheap oil, cheap food, and cheap money give us all the reasons we need to forecast continued strong UK growth and low inflation. We cannot know how permanent the fall in oil prices will prove to be but the further Brent falls, and the longer it stays low, the bigger the upside risks to our already above consensus call for 2.9% UK growth in 2015 become.

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  • 05.12.2014 — I WILL GO COLD TURKEY... TOMORROW

    Chancellor George Osborne has allowed himself a little pre-election fiscal stimulus (Chart 1). Weak wages suggest sins of omission rather than commission. But Osborne has cut corporation and personal taxes, with the latter costing more than expected.

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  • 03.12.2014 — UK MACRO UPDATE: HELP FOR LENDING IN CONSTRAINED AUTUMN STATEMENT?

    Another day, another set of leaks about Chancellor George Osborne’s Autumn Statement – his mid-year mini-budget – later today. That hyperactivity in pre-announcing policies is probably intended to distract from the big picture.

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  • 01.12.2014 — UK MACRO UPDATE: FISCAL, OIL

    Read the leaks of the possible policy measures coming in Chancellor George Osborne’s mini-budget on Wednesday and you could be forgiven for thinking the deficit had already been eliminated. Papers widely report a £15bn road building programme (already announced by Prime Minister David Cameron), £2bn for the National Health Service and more funding for so-called ‘catapult’ innovation centres.

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  • 28.11.2014 — TAX CUTS ALL ROUND

    Growth boost: Consumers and many UK firms should be happier after oil’s recent drop. Cheaper petrol frees up spending power for Christmas presents and cuts input costs. Along with declining food prices and lower mortgage costs driven by falling inflation, that should help UK growth recover its fizz.

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  • 28.11.2014 — UK MACRO UPDATE: IMMIGRATION, SCOTLAND

    David Cameron's widely anticipated attempt to crack down on EU immigration, due in a speech today, could help his party gain a little support in the near-term, but it may also bring Brexit closer. It is a very dangerous tightrope to be walking.

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  • 27.11.2014 — UK MACRO UPDATE: NEAR-TERM CAUTION, LONG-TERM OPTIMISM

    Is the UK recovery fizzling out now after investment fell in Q3 for the first time in five quarters? No, there were plenty of positive signals from the GDP details published yesterday that keep our forecast on track. We look for growth to slow a little further to 0.6% qoq in the fourth quarter, before the further stimulus in the pipeline and fading worries over geopolitical tensions push growth back up to 0.8% qoq by the middle of next year.

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  • 27.11.2014 — UK MACRO UPDATE: NEAR-TERM CAUTION, LONG-TERM OPTIMISM

    Is the UK recovery fizzling out now after investment fell in Q3 for the first time in five quarters? No, there were plenty of positive signals from the GDP details published yesterday that keep our forecast on track. We look for growth to slow a little further to 0.6% qoq in the fourth quarter, before the further stimulus in the pipeline and fading worries over geopolitical tensions push growth back up to 0.8% qoq by the middle of next year.

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  • 03.11.2014 — DANGERS FROM APING UKIP

    Copying United Kingdom Independence Party (UKIP) policies comes with consequences. Over the weekend, Der Spiegel reported, citing sources in the government, that German Chancellor Angela Merkel considers it possible that the UK could leave the EU. A mild statement, but with the implicit message that there are clear limits to how far she would go to keep Britain in. Ultimately, we expect the UK to remain in the EU.

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  • 23.10.2014 — UK MACRO UPDATE: ANOTHER BIG ELECTION COMING

    Is a victory for the opposition Labour party in the May 2015 general election becoming more likely? The battle in Rochester is one key event that could raise those chances. A ComRes poll last night gave the United Kingdom Independence Party (UKIP) a 13 point lead over the ruling Conservatives ahead of a 20 November by-election in the Kent constituency.

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  • 20.10.2014 — UK MACRO UPDATE: HEADING FOR THE EXIT?

    Is the UK heading for a life of isolation out of the EU, heard by no-one and nursing a damaging economic model? Those risks will be raised if reports over the weekend turn out to be true, and David Cameron does soon propose undermining the free movement of people across the single market by imposing effective limits on immigration from the EU.

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  • 10.10.2014 — UK MACRO UPDATE: ELECTORAL UNCERTAINTY

    The United Kingdom Independence Party’s (UKIP) landslide win in Clacton and surge in Heywood last night adds to the uncertainty about next May’s General Election. Former Conservative MP Douglas Carswell triggered a by-election in his Clacton constituency by defecting to UKIP. He won nearly 60% of the resulting vote last night to return to parliament as a UKIP MP.

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  • 09.10.2014 — UK MACRO UPDATE: GROWTH SLOWING, HOUSING STABILISING, ELECTIONS TONIGHT

    GROWTH SOFTENING A LITTLE
    We cut our UK growth forecasts a little in early August as the economic fall-out from geopolitical tensions threatened to spread to the UK via manufacturing. The third quarter British Chambers of Commerce (BCC) survey, published this morning, confirms that process is underway, mirroring the message from the latest PMIs.

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  • 03.10.2014 — TOPPING OUT

    Third quarter looks strong: UK manufacturing is suffering from weak growth overseas, as Chart 1 shows. But the services and construction sectors have continued to power ahead, supported by low interest rates and rising confidence.

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  • 02.10.2014 — CAMERON'S CUTS

    Headline grabbing tax cuts, but how to pay for them? UK Prime Minister David Cameron yesterday tried to show some light at the end of the austerity tunnel. In his annual speech to the Conservative Party Conference yesterday Cameron committed a future Conservative government to tax cuts once the government budget is balanced, which the Conservatives plan to achieve in 2018.

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  • 15.09.2014 — MACRO UPDATE: SCOTLAND

    Scottish polls are tight heading into the finishing straight. The anti-independence campaign leads by an average of three points after a rash of polls over the weekend.

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  • 09.09.2014 — MACRO UPDATE: SCOTLAND, UKRAINE

    A new TNS poll released overnight put the anti-independence campaign in the lead by just one point ahead of the 18 September referendum on Scottish independence. That is a sharp narrowing from TNS’s previous poll in early August that had shown a 17 point lead for the No camp (excluding don’t knows).

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  • 08.08.2014 — UK OFF-BALANCE BUT ON TRACK

    PMIs seem to be overstating growth in some countries: Italy returned to recession in Q2 despite improving survey readings. German manufacturing growth has disappointed too. If a similar disconnect opens in the UK, our forecast would be at serious risk.

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  • 25.07.2014 — UK EDGING TOWARDS A NOVEMBER RATE HIKE

    On track for a November rate hike: Buoyant leading indicators suggest the UK can maintain the 0.8% qoq growth pace registered in Q2, in our view. Along with the appearance of more reasons to hike rates in this week’s minutes of the Bank of England’s (BoE) early July rate setting meeting, that leaves our call for a November rate rise on track.

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  • 07.07.2014 — UK: STRONG OUTLOOK BUT WITH POLITICAL RISKS

    The UK outlook is strong, but the extended period of upside growth surprises may be coming to an end according to the quarterly Deloitte survey of UK CFOs.

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  • 03.06.2014 — UK HOUSE PRICES SHAKE OFF WOBBLES

    Tighter regulations have squeezed the number of mortgage approvals but house prices have ploughed on regardless. The BoE should act this month to cut the risks of price rises spiralling yet higher.

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  • 03.06.2014 — UK HOUSE PRICES SHAKE OFF WOBBLES

    Tighter regulations have squeezed the number of mortgage approvals but house prices have ploughed on regardless. The BoE should act this month to cut the risks of price rises spiralling yet higher.

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  • 29.05.2014 — UK MACRO UPDATE: RATES NEED TO RISE SOONER RATHER THAN LATER

    If the BoE wants to increase rates gradually, then it should start the process “sooner rather than later.” That was the opinion of Martin Weale, one of the nine members of the Monetary Policy Committee (MPC), in an FT interview published today.

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  • 08.05.2014 — UK: Central bank readying for housing action?

    The Bank of England (BoE) is sounding off about housing market risks. As we have expected for some months now (see our Global Outlook 2014 note, 13 December 2013), the central bank will soon have to take action to rein in the upside risks to house prices.

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  • 08.05.2014 — The great tightening experiment: BoE policy

    Back to normal: As the recovery gains momentum, the Bank of England (BoE) will need to raise rates within the next 12 months. We still expect the first hike in Q1 2015. But the strength of the recent data means we raise the chance of a Q4 2014 hike from 30% to 35%.

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  • 16.04.2014 — UK: LIFT OFF AS EMPLOYMENT BOOMS AND WAGE GROWTH RISES

    The UK seems to be booming. The usual caveats apply, of course. The economy is recovering from a bad few years, unemployment is still higher than it was and real wages have been weak. But the economy is heading in the right direction, fast.

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  • 08.04.2014 — FIRMS PLAN FOR EXPANSION

    Optimism about the UK optimism is driving big firms to ramp up their investment plans. The Deloitte CFO survey, which this quarter got responses from 126 CFOs of major UK companies, reported strengthening investment intentions. 

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  • 28.03.2014 — UK MACRO UPDATE: IS THE BOE GETTING NERVOUS?

    There seems to be growing concern about the housing market inside Threadneedle Street. But it is much less obvious what they will do about it.

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  • 18.03.2014 — UK: SHAKE-UP AT THE BOE

    A shake-up at the top of the BoE was announced today. It represents a significant break with the past. two key Deputy Governor roles being taken by excellent candidates who have spent most or all of their career outside of the BoE.

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  • 17.03.2014 — UK MACRO UPDATE: MORE HELP FOR BUILDERS

    The Chancellor committed to extending his help for new home-buyers until 2020, in an interview on Sunday. It is the wrong solution to the problem at hand. In our view, both aspects of the “Help-to-Buy” scheme –help for buyers of new houses, plus the much larger mortgage guarantee scheme available to most borrowers – should be cancelled immediately.

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  • 12.03.2014 — UK MACRO UPDATE: EU REFERENDUM, BOE

    The opposition Labour party have some potentially damaging economic policies. But unlike the conservatives, they are not committing to an EU referendum by 2017.

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  • 11.03.2014 — UK: MANUFACTURING LEADING THE WAY

    The UK rebound continues apace, with manufacturing output rising 0.4% mom in January, a little above consensus expecta-tions, and 3.3% yoy. That is the strongest annual growth in around three years. The troubles in Ukraine, emerging market wobbles or, more parochially, the weather are not likely to derail this recovery, which should continue and possibly strengthen.

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  • 11.03.2014 — UK MACRO UPDATE: POLITICAL RISK

    Political uncertainty is a key risk to the UK’s increasingly solid recovery. There is plenty happening, not all of it good, on all three key events over the next year or so. We do not expect European elections (22 May), Scottish referendum (19 September) or the general election (7 May 2015) to derail the UK recovery.

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Global Macro Update

  • 24.07.2015 — CHINA SLOWS, IRAN HELPS, EUROZONE EXPANDS, GREECE TALKS

    China: The slowdown continues

    Iran: A little tail wind for the world economy

    Eurozone PMI: Just a small greek impact

    Greece: And now for the hard part

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  • 16.07.2015 — FED HIKE, GREEK CHANGE, ECB SUPPORT, EUROZONE STRENGTH

    FED: on track

    EUROZONE: strong car sales

    GREECE: a broad pro-european alliance

    ECB: a little help for Greece

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  • 18.06.2015 — MACRO UPDATE: GREECE, US FED, UK

    Greece: no news is bad news at this stage. There is no sign that Greece will shift its position to allow for a deal at today’s Eurogroup meeting of finance ministers.
    US Fed: on track for a September hike.
    UK: Stronger wage growth amid significant gains in employment and the likely upward revision to GDP data for late 2014 and early 2015 should keep the BoE on track for a first rate hike some six months after the Fed.

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  • 08.06.2015 — TURKEY UPDATE: SHORT-TERM PAIN AHEAD?

    Turkey has elected a new parliament. The ruling Justice and Development Party (AKP) won the election with 40.7%, but failed to secure an absolute majority in parliament.Turkey has elected a new parliament. The ruling Justice and Development Party (AKP) won the election with 40.7%, but failed to secure an absolute majority in parliament.

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  • 22.04.2015 — GREEK UPDATE: ALEXIS'S CHOICE

    If it can’t go on like this, it won’t. At some point in the next 3-5 weeks, Greek PM Alexis Tsipras will have to make the tough choice: does he want to go down in history as the prime minister who completed the modernisation of his country Or as the one who led his country into the abyss of Grexit?
    Whatever he does, he will get into trouble with major parts of his own power base.

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  • 20.04.2015 — STIMULUS FROM CHINA, MIXED MESSAGES FROM ATHENS

    China:
    • Keeping the orderly slowdown on track: if Chinese growth slows down a bit more than the authorities want, they add a little stimulus.
    Greece:
    • A ray of hope: after a long period of no progress, IMF’s Poul Thomsen detected “a little more momentum” in the talks between Greece and its creditors in the last few days.
    • Murky Russian story: Reports that Greece may get a €3-5bn cash advance from Russia were contradicted, but even if true would not change the underlying situation.

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  • 15.04.2015 — ECB SUCCESS; GREEK LIMBO

    With the ECB no news is good news. After more than a month of full-scale sovereign bond purchases, the ECB’s programme is fully on track.
    No progress has been made in Greece, as it is still shying away from the hard decisions.

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  • 07.04.2015 — GREECE THREATS, US HEADWINDS

    The newsflow from Greece over Easter was not encouraging, with snap elections emerging as a new threat. In the US, a cold winter in parts of the country, as well as the strong dollar, trigger a weak jobs performance in March.

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  • 24.03.2015 — MACRO UPDATE: TSIPRAS IN BERLIN, CHINA SLOWING

    Global macro update: Tsipras in Berlin, Chinese PMI falling.

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  • 16.03.2015 — MACRO UPDATE: GREEK GAMES; FED’S PATIENCE

    Greece and the Eurozone in different storylines. In the US, the Fed is the short-term issue, the debt limit a medium-term concern.

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  • 09.03.2015 — MACRO UPDATE: GREEK PRESSURE, GERMAN/CHINESE TRADE

    Greeec: Tsipras tunring into Papandreou? German trade weak in January, Chinese exports strong in early 2015.

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  • 09.03.2015 — MACRO UPDATE: GREECE, EMERGING MARKETS, EURO PMIS

    Tsipras plays with the idea of a euro referendum. Germany January trade was weak. Chinese trade in early 2015 was strong.

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  • 04.03.2015 — MACRO UPDATE: GREECE, EMERGING MARKETS, EURO PMIS

    Greece remains a big risk, emerging market central banks stimulate a bit, euro PMIs rise, driven by France.

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  • 02.03.2015 — MACRO UPDATE: CHINA, GREECE, UK

    China has all the tools it needs to counteract any slowdown. That much is evident from the PBOC’s action over the weekend to cut interest rates for the second time in three months.

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  • 16.02.2015 — MACRO UPDATE: GREEK TALKS, JAPANESE GROWTH

    For Greece and for Japan it is time to get real. Greece's new government needs to perform a U-turn to avoid the Grexit abyss. Japan needs to shun the temptation of relying only on monetary and fiscal stimulus.

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  • 12.02.2015 — PUTIN'S CEASEFIRE

    The new Minsk ceasefire may decrease economic risks emanating from the Russa/Ukraine crisis in 2015. But Putin seems to be getting away with this renewed aggression. Whether or not that will make him more dangerous in the future is an open question.

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  • 05.02.2015 — MACRO UPDATE: ECB REMINDER TO GREECE, GERMAN ORDERS, CHINA

    Greece gets another warning shot from the ECB, German factory orders rise in December and Q4, China adds some more stimulus.

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  • 18.12.2014 — MACRO UPDATE: US, GREECE

    Amid a rapidly growing economy facing a new boost from cheaper oil, US rate setters finally dropped the "considerable time" language from their post-meeting statement yesterday, instead preferring to say they would be 'patient in beginning to normalise' interest rates.

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  • 16.12.2014 — CHEAP OIL IS THE SOLUTION, NOT THE PROBLEM

    The collapse in oil prices is a game changer for the world economy. Like every major shift in relative wealth and relative prices, it is disruptive. Markets now seem to worry a lot about the temporary negative side effects. That makes little fundamental sense.

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  • 09.12.2014 — OIL PRICE ROUT: CHRISTMAS COME EARLY

    The rout in oil prices could be a massive game changer for the world economy. For users of energy, it is equivalent to a huge tax cut. In fact, it's even better than that: the cut will not show up in bigger fiscal deficits and hence future liabilities of the energy users. Instead, Russia and other energy producers will have to foot the bill.

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  • 08.12.2014 — MACRO UPDATE: CHINA TRADE, GREEK BUDGET, UK CONSUMERS

    The latest volatile trade data point to slowing in Chinese spending. Imports fell 6.7% yoy, down from 4.6%yoy growth in October and below consensus. Exports rose 4.7% yoy, weaker than expected and down from 11.6% yoy in October.

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  • 17.11.2014 — MACRO UPDATE; JAPAN GDP, UK VOTE, G20

    Japan fell back in recession with hugely disappointing third quarter GDP. Output contracted 1.6% qoq annualised compared to consensus expectations of a 2.2% fall, marking the return to technical recession. That followed a 7.3% annualised decline in Q2 after the government hiked sales taxes.

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  • 10.11.2014 — MACRO UPDATE: CHINA, UKRAINE, CATALONIA

    China: resilient. The latest trade data point to continued solid growth in China. Exports rose a solid 11.6% yoy in October, down from 15.3% in September but beating consensus. Imports rose 4.6% yoy, down from 7.0%. That was a little below consensus but far better than the average of 2.8% yoy growth over the past 12 months. The data suggest trade made a solid contribution to Chinese growth in October.

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  • 31.10.2014 — MACRO UPDATE: GERMANY, UKRAINE, JAPAN

    German retail sales drop, but consumption remains fundamentally sound. Ukraine gets Russian gas over the winter. Japan gets more monetary stimulus, but that is not a sustainable way out of the long-run malaise.

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  • 30.10.2014 — DATA WRAP: STRONG US GROWTH, WEAK GERMAN INFLATION

    The US economoy grows strongly in Q3 2014, German inflation falls to 0.7%.

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  • 30.10.2014 — MACRO UPDATE: FED, EUROZONE TRENDS

    The Fed ends QE, but keeps the guidance. In the Eurozone, some positive news, some mixed.

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  • 27.10.2014 — UKRAINE: MODERATE PRO-EU PARTIES WIN ELECTIONS

    The Ukraine risk continues to fade as radical anti-Russian parties fail to gather support.

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  • 13.10.2014 — MACRO UPDATE: EUROZONE, GREECE, CHINA

    France and Germany take spotlight at the Eurozone finance minister meeting. Greece avoided elections for now, but the risk is not over. China's export data should soothe nerves.

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  • 05.09.2014 — UNEVEN RECOVERY

    Global Outlook: An Uneven Recovery
    - US: fiscal drag over, economy responds to low rates = solid growth
    - China: sufficient growth, risks well contained
    - Emerging world: the good, the mixed and the ugly
    - Eurozone: crisis over – but Putin shock hits the core, interrupts upswing
    - Britain: back to boom-bust?
    - Tail risk: Russia wages open war against Ukraine?

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  • 04.09.2014 — MACRO UPDATE: GERMAN ORDERS REBOUND; STEADY BANK OF JAPAN

    Brighter news for Germany's manufacturers at the start of Q3 as orders rebound. In Japan, the BoJ resists pressure to do more.

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  • 29.08.2014 — MACRO UPDATE: GERMAN RETAIL SALES; JAPAN WEAKNESS

    Both German retail sales and the Japanese economy had a weak start in Q3.

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  • 26.08.2014 — HOW FAR WILL PUTIN GO?

    How far will Putin go in his semi-covert war against Ukraine? Since March, this has been the key issue clouding the European economic outlook. We do not know the final answer yet, and Putin himself may not have made up his mind yet. But the last few weeks have provided further clues. Some of them are worrying.

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  • 11.08.2014 — MACRO UPDATE: TURKEY, ITALY, ESTONIA

    Erdogan's election victory is good for short-term stability; Renzi's commitment to the deficit target shows that Italy's problems are not fiscal; Estonia is growing again.

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  • 06.08.2014 — MACRO UPDATE: UKRAINE, GERMAN ORDERS, SCOTLAND

    Tensions in Ukraine rise further, German factory orders dip, Scotland independence risk recedes.

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  • 30.07.2014 — RUSSIAN RISKS AND THE IMPACT OF SANCTIONS

    While the people of Ukraine are the victims, Russia and its president are likely to be the ultimate losers of their covert war against Ukraine.

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  • 25.07.2014 — MACRO UPDATE: UKRAINE CONFLICT, GERMAN CONSUMERS

    The battle lines in Ukraine are hardening. But German consumers are undeterred so far.

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  • 24.07.2014 — CHINA AND SPAIN ON TRACK, PUTIN OFF TRACK

    China rebounds following the government’s mini-stimulus package, Spain has turned into one of the fastest-growing economies in Europe, the risk of serious Russian recession keeps rising.

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  • 21.07.2014 — WHAT NEXT AFTER RUSSIA'S THREE BIG MISTAKES?

    With three bad mistakes, Russia has manoeuvred itself into an uncomfortable corner. Despite its clear military edge on the ground in Eastern Ukraine, its strategic situation looks weak.

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  • 15.07.2014 — MACRO UPDATE: CHINA, JAPAN STIMULUS ON TRACK

    The Bank of Japan kept its asset purchases rate unchanged, while Chinese monetary data shows stimulus reaching the economy.

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  • 10.07.2014 — MACRO UPDATE: US FED, CHINA TRADE

    The Fed will finish QE in October 2014 and Chinese trade reached growth rates in line with recent averages after weakness earlier this year.

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  • 01.07.2014 — MACRO UPDATE: JAPAN CONFIDENCE EASING, CHINA STABILISING

    Japan's Abenomics is running into tax trouble, while China's mini-stimulus as mini-impact.

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  • 25.06.2014 — MACRO UPDATE: GERMAN CONSUMERS, FRENCH BUSINESS, UK CARNEY

    German consumer get bullish, French business are disappointed and the UK central bank governor strikes a cautious note in interest rates, which earns him being called an "unreliable boyfriend".

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  • 13.06.2014 — CHINA: SHIFT TOWARDS CONSUMPTION

    The rebalancing of the economy away from investment towards more consumption is making progress.

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  • 10.06.2014 — MACRO UPDATE: GREECE, UKRAINE

    While Greece's cabinet reshuffle is a PR gimmick, the serious risks in Ukraine are receding.

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  • 04.06.2014 — PORTUGAL’S COURT DELAYS, US FED DISCUSSING EXIT

    The €700m decision by Portugal's court will not be the last setback to overcome. The Fed's balance sheet would shrink by a mere 0.2% in the first year if it allowed a passive rundown of purchased assets.

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  • 02.06.2014 — MACRO UPDATE: PORTUGAL, SPAIN, CHINA

    Portugal's court strikes again, Spain cuts taxes and Chinese sentiment stablises.

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  • 02.06.2014 — MACRO UPDATE: PORTUGAL COURT, SPAIN BOOST, CHINA SENTIMENT

    Portugal's court strikes again, Spain's government cuts taxes and Chinese economic sentiment stabilises.

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  • 19.05.2014 — GREEK POLL, ECB CUT, IRISH UPGRADE, UKRAINE RISK

    The first round of regional elections produced no clear winner. More importantly, it had no clear loser. At the margin, this reduces slightly the risk that the fragile coalition of centre-right New Democracy with the centre-left Pasok could fall apart after the second round of regional elections coupled with the EU parliamentary elections next Sunday.

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  • 16.05.2014 — FORECAST UPDATE: EUROZONE, ECB, JAPAN

    Yesterday’s data for Q1 GDP data were surprisingly weak. Eurozone growth decelerated slightly to a quarterly annualised rate of 0.76% (0.19% qoq) from an average rate of 0.92% for the three quarters before (0.23% qoq). The Q1 result was well below our 0.4% qoq forecast.

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  • 08.05.2014 — FED YELLEN, UKRAINE IMPACT, GERMAN ORDERS AND TAXES

    As usual, pundits will dissect every word Yellen says at her semi-annual testimony today. But why bother? Even she simply cannot know the precise state of the US economy in late 2014 and early 2015.

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  • 23.04.2014 — PORTUGAL HELP, CHINA STABILISATION

    Portugal’s relatively small 10-year bond auction today is likely to be another milestone on the way to a clean bail-out exit on 17 May. 10-year sovereign bond yields have dropped below pre-crisis levels to 3.7%, only 40bp above their euro era lows of 2005. After Fitch raised the outlook on its BB+ credit rating from negative to positive, Portugal could soon regain its first investment grade rating with one of the major agencies.

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  • 22.04.2014 — UKRAINE RISK, GERMAN TAX BONANZA, SPANISH BANKING

    UKRAINE: NO EASING OF TENSIONS | The pre-Easter Geneva accord seems to have changed little on the ground. Instead, the shootout at a separatist checkpoint in Sloviansk with at least 3 casualties and the refusal of pro-Russian activists to leave occupied buildings threatens to unravel the accord. One small positive is that OSCE monitors are becoming more active in Eastern Ukraine, for example by trying to investigate the events in Sloviansk.

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  • 16.04.2014 — UKRAINE RISK; CHINA SLOWING SOFTLY

    WILL RUSSIA SHOW ITS HAND?
    The Ukrainian government has ordered military action against the Russian-backed insurgents in Eastern Ukraine after several deadlines to vacate public buildings in ten towns went unheeded.

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  • 10.04.2014 — CHINA TRADE, GREEK BOND SALE, DOVISH FED

    Chinese trade unexpectedly declined in March, but the fall exaggerates the underlying slowdown. Exports fell 6.6%yoy in March, well below consensus expectations of a 4.8% rise and the first time since 2009 that they have fallen for 2 months in a row. 

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  • 08.04.2014 — BOJ HOLDS, ECB DEBATES

    Japan’s central bank gave no indication of any imminent additional monetary stimulus after its meeting today. But that could still change once the impact of the April sales tax increase on domestic demand and inflation feeds through to economic data.

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  • 01.04.2014 — FRANCE, RUSSIA RETREAT, CHINA

    President Hollande is visibly preparing France for tough reforms by appointing his tough minister of the interior Manuel Valls to Prime Minister. Valls and his cabinet will have the unpleasant task of spelling out €50bn of spending cuts for 2015-2017 to fund tax cuts and deficit reduction.

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  • 31.03.2014 — MACRO UPDATE: UKRAINE, FRANCE, GREECE

    Two pieces of news suggest a possible easing of tensions around Ukraine. First, Putin called Obama and Russian foreign minister Lavrov then met his US counterpart Kerry for talks about Ukraine, with the US side demanding a withdrawal of Russian troops from the border and Russia suggesting to turn Ukraine into a federation. 

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  • 24.03.2014 — MACRO UPDATE: FRANCE, CHINA

    Heavy defeat in the first round of the municipal elections should serve as another warning shot to French President Hollande. In the best case, it may trigger more reforms. If the government does not manage to boost economic growth and lower unemployment significantly in the next few years, winning another term in 2017 will be impossible.

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  • 12.03.2014 — JAPAN CONSUMERS, ITALY REFORMS

    2014 is shaping up to be a crucial year for Prime Minister Abe. After the easy part of Abenomics, trying to stimulate the economy for a while, the hard work of fiscal and structural reforms needs to begin. Japan’s first major step to reduce the extremely high budget deficit of 10% of GDP in 2013 is a big increase in sales tax from 5% to 8% in April. 

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  • 03.03.2014 — CHINA PMI

    China should expand solidly again this year. The Markit manufacturing PMI was confirmed at 48.5 this morning, down from 49.5 in January. But the non-manufacturing PMI rose to 55.0 from 53.4, not far off its average of the past three years. The official manufacturing PMI, which has a larger sample size than the Markit equivalent, was 50.2 in February, roughly in-line with its average during 2012 when the Chinese economy grew 7.7%. Growth is gradually slowing in China, but it will probably remain strong for the foreseeable future. 

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