Would inflation rates in the Eurozone increase, if owner-occupied housing costs were introduced? Analysts at DWS doubt it. They put more faith in wages, which play an important role in the price of services (excluding rents).
The sudden rise in covid-19 cases in Italy changes the picture for the European economy. Indeed, the activity restrictions already imposed by the national and regional authorities will be implemented in some of the country’s most crucial regions in terms of output. Lombardy, Veneto and Emilia-Romagna alone account for 40% of Italian GDP and 6% of total Euro area GDP. AXA IM suspect that the demand-side effects will emerge in the next batches of data and discuss options for the ECB.
Peter Isackson | Until January 31 of this year, there was both a tunnel linking Britain to the continent and a powerful (metaphorical) bridge called the European Union. Now the tunnel is all that connects England and Europe. Johnson’s engineers are hard at work dismantling that symbolic bridge, which may explain why Boris feels the still-united kingdom needs a new physical bridge — a symbol to replace a symbol.
JP Marín-Arrese | Those betting Brexit would take a heavy toll on Britain, discover much to their surprise that the EU stands as the first collateral casualty. The vacuum left in the budget by the UK departure has fuelled bitter acrimony between the Member States, especially in those receiving large amounts of Community money, like Spain. Its PM Sánchez has described the proposal tabled by the Council Chair as deeply disappointing.
Europe is experiencing a tech-boom that attracts funders that were previously focused on Silicon Valley. If the trend continues, Europe could finally rival the Californian tech-hub with its own innovations. The region currently boasts 99 unicorn companies, compared to only 22 such companies in 2012.
In its latest monthly report, the European Central Bank has published an interesting study on the recent evolution of the wealth of European families.The monetary authority’s objective is to relate families’ net wealth component (assets less debt) to their spending decision. It’s a fact that, in theory, net wealth accumulated with job prospects are both key for household consumption. In addition, wealth also has theoretical consequences for the design of monetary policy.
Yesterday, ratings agency Standard & Poor’s published a report where it calculates that China’s coronavirus crisis will subtract one or two tenths off economic growth, both in the Eurozone and in the UK, in 2020. This is due to the impact on exports to China and on business investment. In Spain’s case, the figure may be excessive. This is because the impact on imports from China must also be taken into account and will work in Spain’s favour.
Political uncertainty about the Brexit procedure caused the United Kingdom’s (UK’s) gross domestic product (GDP) to stagnate in the fourth quarter of 2019. However, the strong decrease in political uncertainty since the 12 December parliamentary election should allow the UK economy to rebound back to growth during the first quarter of this year, explains Janwillem Acket, chief economist at Julius Baer.
With a monetary policy that has already used up almost all of its ammunition, the only factor that could restart the inflation would be a powerful tax stimulus. There is a path that is not being given enough attention and that could well be the missing link: the sustainable tax stimulus.