Euro area research: The road to recovery

Reopening has begun but not yet business as usual

Nascent signs of a revival have emerged but we expect the euro area economy to run below full capacity for some months still.
 

Consumers: to spend, or not to spend? That is the question

European consumers worry about rising unemployment but increased savings seem largely ‘involuntary’ rather than ‘precautionary’, leaving room for pent-up demand.

Labour market: job losses accelerate, despite help from short-time working schemes

Short-time working schemes have acted as an important circuit breaker but we still expect the unemployment rate to rise to around 10% in coming months.

COVID-19 recovery: from symmetric shock to asymmetric recovery

Differences in fiscal capacity and tourism exposure set the scene for a two-speed recovery, in which southern Europe lags behind northern Europe. Greater global trade dependency for northern countries could mitigate the asymmetry.

Recovery fund: mind the (investment) gap

The recovery fund is set to be an important goalpost in the future of the EU, not only when it comes to channelling financialsupport to countries with less fiscal space but also in stemming the risk of a renewed wave of anti-EU sentiment.

Inflation: short-term pain, long-term gain?

Disinflationary pressures from falling oil prices and discounting campaigns maintain the upper hand in the near term. However, unprecedented monetary/fiscal easing and cost push inflation in some industries leave room for a reflation spiral eventually emerging.

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