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In Europe 25th September 2014

Euro area: A chartbook of key economic indicators

LONDON | The Corner | According to experts at Barclays, the significant depreciation of EUR/USD (Fig 1) has been a key data event in the past few months. However, the sharp fall in oil prices has partially offset this positive effect on inflation, which has remained at 0.4% y/y in August. The inflation data remain crucial for the ECB, which has repeatedly emphasised that there is unanimous commitment to use all available tools to prevent a period of prolonged low inflation. We now expect QE on sovereign bonds, most likely by Q1 15.

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In Europe 23rd September 2014

Change of pace in Europe: Spain, Portugal, Ireland and Belgium will lead growth between 2015 and 2016

MADRID | By Julia Pastor | ECB’s Mario Draghi brought put the bleak panorama that the Eurozone’s economy is facing on the table, and we saw it again reflected in the not-so-promising September manufacturing PMI. The index came in at 50.5 compared to 50.7 in the prior month, whereas EZ Services PMI accelerated at 52.8 for September versus 53.1 in August. Even the composite index plummeted to its lowest fee in the last nine months and reached 52.3. In Germany, both manufacturing and services indexes have also decreased; while in France only manufacturing improved, although it is still contracting.

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In Europe 23rd September 2014

Fresh doubts about economic cohesion at the European parliament

BRUSSELS | By Alexandre Mato | The EU parliament needs to reinforce its economic policy co-ordination to achieve a common fiscal consolidation between Member States. These are the main tasks facing Jean-Claude Junker and his team in the months ahead. EU policymakers must now chart a cohesive strategy to combat growing policy divergences in Eurozone member states. 

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In Europe 23rd September 2014

Is low inflation to blame for Eurozone woes?

MADRID | J.P. Marín Arrese | Eurozone policy makers depict sluggish growth and low inflation as two sides of the same coin. This approach fails to grasp the subtle distinction between the two. Muted inflation undoubtedly stems from faltering demand linked to current stagnation. Yet it also reflects the ongoing real adjustment. Reviling it as the main wrongdoer, rather than treating it as a collateral victim, utterly misses the point in enforcing effective policy.

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In Europe 22nd September 2014

Why ABS drive will fail, Barclays reckons

MADRID | By Alberto Vigil at Barclays | The ABS purchases by the European Central Bank will not work basically because it is necessary for a regulatory change that does not penalise (in capital terms) either banks or insurance companies who have those securities. That is, if the ECB’s intention is to increase the amount of credit in the real economy, then it should have two specific goals: first, spreading the risk that banks assume when they provide credit; second, reducing banks’ costs of financing.

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In Europe 22nd September 2014

UPDATED: EU confidence: a rough Autumn ahead?

MADRID | The Corner | UPDATE: Consumer confidence fell to minus 11.4 in September from minus 10.0 in August. Economists had expected a fall to minus 10.5. In major countries, Spanish household consumption is very slowly gaining traction, while France’s economy loses momentum -expect very different behavior in  private consumption patterns in the future, Santander analysts commented on Monday. On the left: eurozone’s consumer confidence since 2002; on the right: EZ credit lending to the private sector since 2002.

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In Europe 22nd September 2014

Scotland wins the day

MADRID | J.P. Marín Arrese | Heavy turnout in the Scottish referendum ensured a clear victory for those rejecting independence. Yet, a huge share of citizens showed their readiness to switch-on the atomic bomb, regardless of the awesome consequences. 

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In Europe 20th September 2014

Run this way: The recurring pattern of Greek leaders

ATHENS | By Nick Malkoutzis via MacroPolis | As the Greek general elections of May (and then June) 2012 approached, every poor unfortunate European politician attempted to grab a moment in the spotlight by pontificating on whether Greece should or should not be in the single currency. While the euro vultures picked at Greece’s carcass, thousands of fear-stricken Greeks withdrew their money from local banks. Who knows, maybe in our strange world of acute fiscal adjustment and extreme political polarisation it is a sign of progress that Greece no longer needs foreigners to encourage a bank run. Local politicians can do the jobs themselves.

 

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In Europe 18th September 2014

Corporation tax: Irish soften stance amidst growing international pressure

MADRID | By Sean Duffy | The OECD´s announcement this week that it was initiating a plan to combat tax avoidance schemes from multinationals has been met with almost universal approval across Europe. Ireland in particular has been the subject of criticism from its EU partners. Until recently, the country had determinedly defended its tax policy, famously refusing to negotiate on the issue when the country was in need of an EU bailout back in 2009.