- A 30% US tariff on EU exports would send the EZ economy into recession in the second half of 2025.
- Markets don’t believe Mr. Trump’s tariff threats, but a US-EU escalation cycle is still a big near-term risk.
- The ECB will hold fire in July unless it is absolutely certain a 30% tariff is coming over the summer.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A third of Swiss pharma exports go to the US; a 200% tariff could pull GDP down 4% at the extreme.
- Offsetting factors remain and, in the near term, tariff front-running poses upside risks to our forecasts.
- The maximum direct hit to EZ GDP of a 200% US tariff on pharma is 1%.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Eurozone house prices rose at their fastest pace in four years in the first quarter…
- ...Advance national data suggest a slowdown in price growth in Q2, but we doubt it…
- ...Our new housing model points to an acceleration in house price growth this year and next.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Another big increase, before the recent delay in tariff hikes.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The looming deadline for the increase in “reciprocal” tariffs has been delayed again, now to August 1.
- The upside surprise in German industrial output in May points to a better EZ print than we expected.
- EZ services had a rough start to Q2, but surveys have improved and point to a better Q2 than Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Another bleak construction PMI read.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Back above zero, but unlikely to stay there for long.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Headline inflation in Switzerland rose above zero in June, by 0.2pp to 0.1%.
- It will fall back again in July, to zero, where we expect it to hold steady until Q4.
- Our forecasts remain well below the SNB’s; another rate cut in September, to -0.25%, is still likely.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up a touch because of an increase in Italy’s unemployment rate.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: June’s increase will more than reverse in July.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: German unemployment rate won’t hold steady for much longer; inflation expectations likely to continue to fall.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Pointing to downside risks for GDP in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Headline inflation edged up to the ECB’s 2% target in June, as energy deflation unwound a touch.
- Lower energy and core inflation will pull the rate down to 1.8% in July, where it will stay in August.
- This further drop in inflation over the summer should be enough for a 25bp rate cut in September.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: In line with our call for slightly softer German inflation in June.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: EZ money and credit data still positive on economic outlook.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Total HICP inflation prints for the Big Four suggest EZ headline inflation edged up to 2.0% in June.
- The ECB strategy review suggests the central bank is doing the right thing with the right tools; go figure!
- Money data still point to upside risks to GDP, but don’t capture what is happening in net trade.
Melanie Debono (Senior Eurozone Economist)Eurozone
