United Kingdom – Brexit enters a critical phase
In the autumn, the UK and the EU have to reach an agreement on the terms of the UK's departure from the EU and a ‘framework for a future relationship'. Our central scenario remains that a last-minute deal will eventually be reached (most likely at the European Council meeting on 13 December) and that a ‘cliff-edge' scenario will be avoided. Arguably, the political risks surrounding our scenario are varied and extreme, and can shift the Brexit process in one direction or another.
UK – Bank of England: On course for slow tightening despite Brexit uncertainty
The BoE increased its key policy rate by 25bp to 0.75% at the August monetary policy meeting. Well flagged prior to the meeting, the move was largely anticipated by the markets. The vote was unanimous (9-0), contrary to expectations for a split vote. However, it is difficult to extract a clearly hawkish sign for future meetings. We continue to anticipate one rate hike per year, with the next rate hike expected in May 2019.
Italy - Scenario 2018-2019: A stabilized growth
In 2017, Italian growth increased by 1.5%. Following the political events the country has been facing since March, we have revised our forecasts for the years 2018 and 2019 to 1.4% and 1.2% respectively.
France – Housing Market: Recent developments and outlook for 2018-2019
The French real-estate market experienced an exceptional year in 2017. The first signs of a cooling in the market have emerged since the start of the year. This contraction is set to continue in 2018-2019. Firstly, the gradual refocusing of the Pinel scheme and the PTZ on the most sought-after areas will reduce sales of new-build properties. Secondly, mortgage lending rates are set to increase slightly and the increase in house prices will reduce the households' purchasing power and encouraging buyers to take a more wait-and-see approach.
France – Scenario 2018-2019
In 2016, and for the third consecutive year, growth stood at around 1% in France. It then accelerated sharply in 2017, to 2.3%. For 2018 and 2019, we expect growth to remain strong, at 1.8% and 1.7%, respectively.
Germany – 2018-2019 Scenario: Q2 2018 Outlook
Following a first quarter characterized by a marked slowdown in activity, German growth is expected to accelerate slightly in the second quarter. Domestic demand will remain the main driver of growth thanks to sustained private consumption and still positive investment momentum. External demand is faded by the rise of US protectionist barriers that are likely to hit more severely German exporters.
World – Macroeconomic Scenario for 2018-2019: The end is not yet nigh
Despite tightening financial conditions in the US and a possible worsening of trade tensions, a cyclical downturn is not imminent. The heady days of simultaneous expansion are, however, now well and truly over. Growth is still running high in the US and remains vigorous in the Eurozone after a temporary loss of impetus, though it looks set to recede in the emerging economies – the first region to suffer from the killer combination of a rising dollar, rising US interest rates, and growing fears of protectionism.