In one line: Decent headline, but rising unemployment fears is a red flag.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Little sign of recovery in consumer confidence, but maybe the election changed that.
Melanie Debono (Senior Eurozone Economist)Eurozone
RISKS TO OUR HAWKISH ECB CALL ARE FOR LESS EASING...
- ...ASSUMING ONLY SMALL US TRADE TARIFF INCREASES
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ consumers’ spending likely rose by 0.4-to-0.5% in Q4, and we look for the same in Q1.
- We still think a stabilisation in the saving rate will underpin consumption growth this year.
- Consumer confidence data point to a sticky saving rate, but are an unreliable guide.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Stung by plunge in net exports; consumption is now growing, but weakly.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Huge volatility under the hood of German Q4 GDP; inventories and net trade are key for H1.
- We see full-year 2025 growth of 0.5% in Germany, lower than previously but above consensus.
- EZ negotiated wage growth retreated in Q4, after the one-off-related jump in Q3; further falls are likely
Melanie Debono (Senior Eurozone Economist)Eurozone
- The failure of FDP and BSW to reach 5% paves the way for a CDU/CSU and SPD coalition in Germany.
- Germany’s new government has its work cut out; fiscal reform and defence are at the top of the list.
- EZ inflation rose in January, but a sharp fall in energy inflation will pull the headline down in February.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A local high, but still no perfect landing at 2%.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Steady; not a reflection of firms’ attitudes to election result.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up again, in line with our call for a rebound in GDP.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Ugly crash in the services PMI is a fluke, we hope
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Further increases are likely as political uncertainty abates.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Construction boost to growth in Q4 unlikely to repeat in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The upturn in the EZ PMIs stalled in February, due to a plunge in the French services index.
- Near-term outlook for services output is still decent, and the PMIs signal green shoots in industry, again.
- ECB hawks will focus on rebounding services prices; doves will note weak French labour-market data.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Isabel Schnabel has added fuel to the idea that the ECB’s easing cycle will end soon; we agree.
- President Trump’s latest tariff threat—on cars, chips and drugs—would have a small impact on EZ GDP.
- The CDU/CSU will win the German election, but not by enough for a majority; brace for coalition talks.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Europe will need to raise annual defence spending by €250B-to-450B over the next eight years.
- A joint EU financing programme for defence is coming; it could be a big package, close to €1T.
- Inflation and a low multiplier will eat up most of the boost to real GDP from rising defence spending.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Up sharply, consistent with a better outlook for the EZ economy.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Revisions in healthcare lifts CPI inflation from initial estimate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Political uncertainty is soaring in Europe, but EZ equities have never felt better; what’s up?
- We think markets are betting on another Hamiltonian moment in Europe, this time on defence policy.
- Europe will rise to the challenges it faces, but have markets bought into the hype too strongly?
Claus Vistesen (Chief Eurozone Economist)Eurozone
