May 25, 2022
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European Politics: The Balance of Power

  • Events in Germany, France and Italy all point to a shift in the balance of power within the EU. However, weak leadership in Germany is not in the best interests of advancing the shared Franco-Italian agenda for Europe.

By Alastair Newton

May 24, 2022
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Services Smash into Inflationary Despair

  • Services activity crashed in the UK and US as high inflation destroyed demand. Although the EA move was relatively modest, it suffers the same crisis in consumer confidence.
  • EA vacancies are booming beyond the decline in unemployment, indicating a mismatch, while productivity languishes below trend. Both are inflationary fundamentals.
  • The ECB is getting pushed to respond with a rate hike as soon as July, contrary to our view that it would end asset purchases then and start hiking in September.

By Philip Rush

May 20, 2022
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UK: Consumers Drown Their Sorrows

  • The bleak retail performance of the previous two months reversed to a surprising extent as sales surged by 1.4%. Demand for booze dominated falling non-food store sales.
  • GDP seems only slightly less weak in Q2 as this bounce will probably prove short-lived around Easter. Falling real incomes squeezes sale volumes rather than raising values.
  • Crashing consumer confidence has now reached record lows in contrast to the business optimism that seems set for a rude awakening as customers baulk at higher prices.

By Philip Rush