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Eurozone Publications

Below is a list of our Eurozone Publications for the last 6 months. If you are looking for reports older than 6 months please email, or contact your account rep

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euro area

5 July 2022 How Can the EZ Avoid a Recession in the Next Few Quarters?

Forecasting recessions is risky, but that’s where we think the EZ is headed, all the same.

A thawing of the relationship with Russia and excess household savings could prevent the downturn...

...So could stronger-than-expected capex and net exports; we doubt any of these will ride to the rescue.

Claus Vistesen (Chief Eurozone Economist)Eurozone

24 June 2022 Winter is Coming and the Eurozone Economy isn't Ready

The details of the June PMIs are not pretty; we are more convinced the EZ is entering a slowdown.

We now think the EZ will be unable to avoid entering a technical recession in Q4.

This will set a weak base for next year; we forecast just 1% GDP growth in the EZ in 2023.

Melanie Debono (Senior Eurozone Economist)Eurozone

17 June 2022 The SNB will Not Hike as Quickly as the ECB, CHF will Weaken

The SNB threw a bazooka yesterday, hiking interest rates and doing a U-turn on its approach to the CHF.

As a result, the franc saw its biggest intra-day jump vs. the euro since the Frankenshock of 2015.

We look for the Bank to hike rates again at each of this year’s two remaining meetings, before pausing.

Melanie Debono (Senior Eurozone Economist)Eurozone

15 June 2022 What Degree of Fragmentation is Too Much for the ECB?

We think the ECB’s pain threshold for BTP spreads is 300-to-350bp, much higher than in the past.

An explicit commitment to an active use of PEPP reinvestments is the most likely initial response.

BTP spreads will rise further in the near term, but Italian 10-year bonds are attractive in their own right

Claus Vistesen (Chief Eurozone Economist)Eurozone

14 June 2022 What are the Neutral and Terminal Rates in the Eurozone

The neutral rate in the EZ is falling over time; it was likely negative immediately after the financial crisis.

We estimate the long-run neutral real rate to be 0.7% in the EZ, but the ECB policy rate won’t get that far.

We see the terminal ECB rate at 1.2-to-1.3%, 0.7-to- 0.6pp below current market-pricing.

Claus Vistesen (Chief Eurozone Economist)Eurozone

7 June 2022 ECB Hikes Could Lift Mortgage Rates by 300bp Through 2023

Mortgage rates in the EZ tend to trend in line with the main ECB policy rates, so they will rise this year.

Around a fifth of mortgages incur a variable rate and so are sensitive to changes in ECB policy rates.

Households can withstand higher borrowing costs, but growth in house prices will slow significantly.

Melanie Debono (Senior Eurozone Economist)Eurozone

6 June 2022 Look Closely, and the Data Point to Early Signs of Weakness in the EZ

A rebound in services activity is supporting EZ GDP growth; we see softness everywhere else.

We still see EZ GDP rising by 0.5% quarter-on- quarter in Q2, before a sharp slowdown in H2.

Unemployment in the euro area is still falling, but at a slowing rate; this trend will continue in H2.

Claus Vistesen (Chief Eurozone Economist)Eurozone

31 May 2022 ECB Hawks will Use the May HICP Data to Push for 50bp in July

Advance inflation in Germany and Spain hints at an upside surprise in today’s EZ HICP data for May.

Core HICP inflation in Germany will rise above 4% over the summer, adding to the pressure on the ECB.

The EU still hasn’t agreed on a Russian oil ban, but all eyes on Brussels today for a breakthrough.

Claus Vistesen (Chief Eurozone Economist)Eurozone

30 May 2022 EZ GDP Growth will Slow Soon, but Every Cloud has a Silver Lining

Real M1 growth is still falling; it now indicates that the EZ will stall in the second half of the year.

The incoming real slowdown will be mainly due to higher inflation; nominal growth will remain decent.

We see relative resilience in the labour market and investment, but bond yields will rise further.

Claus Vistesen (Chief Eurozone Economist)Eurozone

25 May 2022 Ignore the Softer Services PMI; the Sector is Booming

We continue to expect a pick-up in services activity to drive GDP growth higher this quarter, to 0.5% q/q.

Eurostat’s “new” services index shows activity was already rebounding in February.

This will offset continued weakness in the manufacturing sector, which is set to remain in the doldrums.

Melanie Debono (Senior Eurozone Economist)Eurozone

24 May 2022 The ECB is Clear as Rain; the First Rate Hike will Come in July

The ECB is nailing its colours to the mast; the deposit rate will be hiked in July and September.

The euro is a decent predictor for import price inflation in some goods, but not for the core HICP.

Soaring PPI inflation points to sustained upside risks for core consumer goods inflation in Q2.

Claus Vistesen (Chief Eurozone Economist)Eurozone

23 May 2022 The EZ's Current Account is in the Red, for the First Time since 2012

The EZ’s current account plunged to a deficit at the end of Q1, and it will likely stay there in Q2.

EZ portfolio outflows are plunging, reflecting rising economic uncertainty and market volatility.

Construction in the euro area performed solidly in Q1, but it will slow sharply in Q2.

Claus Vistesen (Chief Eurozone Economist)Eurozone

19 May 2022 EZ Core Inflation will Remain Above 3% Through 2023

EZ headline inflation will remain above 7% through Q2, mainly due to higher core and food inflation.

We now see EZ core inflation above 3% through 2022, adding to our conviction of a rate hike in July.

Inflation expectations are rising in the euro area, but we see little evidence of a wage-price spiral.

Claus Vistesen (Chief Eurozone Economist)Eurozone

18 May 2022 We Remain Bullish on Eurozone Labour Market Prospects

EZ GDP rose a tad quicker than initially estimated in Q1, lifting the carry-over for full-year growth in 2022.

Employment in the EZ is rising quicker than implied by GDP growth, but we still think it will slow in H2.

Women are driving the gains in EZ employment and labour force participation; that’s good news.

Claus Vistesen (Chief Eurozone Economist)Eurozone

EZ Datanote: GDP & Employment, Eurozone, Q1 2022

 In one line: Growth should accelerate a touch in Q2 but employment growth will probably ease from here. 

Melanie Debono (Senior Eurozone Economist)Eurozone

EZ Datanote: Trade Balance, Eurozone, March 2022

 In one line: Still widening, and the March headline likely will be revised lower. 

Claus Vistesen (Chief Eurozone Economist)Eurozone

16 May 2022 Is it Safe for Investors to Start Buying Eurozone Equities?

The medium-term outlook for EZ equities has improved significantly in the past 12 months...

...But earnings expectations have to fall further in the near term, weighing on prices over the summer.

EZ manufacturing will slow sharply in Q2; core inflation pressures in France have intensified.

Claus Vistesen (Chief Eurozone Economist)Eurozone

EZ Datanote: Industrial Production, Eurozone, March 2022

 In one line: Ugly; industry will be a drag on growth in Q2 as the German powerhouse takes a hit.

Melanie Debono (Senior Eurozone Economist)Eurozone

13 May 2022 The EZ Primary Budget will Stay in the Red, but the Debt Ratio will Fall

The euro area’s primary budget balance swung to a significant deficit during the pandemic.

We think the primary deficit will narrow through 2024, but the balance will remain in the red.

Net interest costs will rise, but we think the debt-to-GDP ratio will fall, due to robust nominal growth.

Melanie Debono (Senior Eurozone Economist)Eurozone

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