UK: Heightened political uncertainty versus hopes for a softer Brexit
The 8 June snap election was a shock for Theresa May as it resulted in a loss of the Conservative party's absolute majority in Parliament. Even though she decided not to resign, she is vulnerable to challenges within her party at any time. This hung parliament heralds a period of political instability and significant uncertainty over the sequence of future events. It also opens up a wide range of outcomes for Brexit. Meanwhile, a minority government is unlikely to last its full five-year term, increasing the risk of another snap election.
There are too many questions, there is no 'one solution', there is no core inflation, there is growth celebration. And an ECB that has provided a profusion of dovish elements to make markets feel, to make markets know that, despite the fact that the wording of the forward guidance changed, the ECB will remain on the path of an accommodative stance for a prolonged period of time.
France – Public Finance: The budgetary balances of the new presidency
Neither the details of the 2018 Finance Act nor the fiscal trajectory for 2018-2022 are as yet precisely known; they will be announced in October. But we can already set out their main outlines in light of Emmanuel Macron's election manifesto. Fiscal stimulus measures are expected to amount to 50 billion euros. To finance these and narrow the deficit, major cuts will be imposed, mainly in public spending, amounting to 70 billion euros. The deficit should be gradually narrowed to around 1% of GDP in 2022.
Emerging Countries – Monthly News Digest
Highlights: What changes are forecast for Turkey's current account balance? Which Middle East and North Africa countries are over-indebted? Côte d'Ivoire experiences mutiny episode 2. Heading for a slowdown in China. Inflation picking up in Mexico.
United-Kingdom - The approaching snap election and what it means for Brexit
On 8 June the British people will go back to the polls for a snap general election. Our base-case scenario is that the Conservatives will extend their parliamentary majority, as suggested by the majority of polls. However, the slump in the Conservatives' lead in voting intentions over the past two weeks suggests that the election's result should not be taken as a foregone conclusion.
France – Macroeconomic scenario 2017-2018 : A modest recovery but with signs of improvement
In 2016, over the full year, French growth came out at 1.1%, a pace very similar to that of 2015 (1.2%), and was therefore disappointing despite that much vaunted "alignment of the planets" (ie, the combination of a weak euro, record low interest rates, and cheap energy). We foresee an improvement in growth, to 1.3% in 2017 and to 1.4% in 2018. This scenario of modest recovery is in line with the recent business surveys.
France – Housing market: Recent developments and outlook for 2017-2018, Slight fall ahead
The housing market had a record year in 2016, with very high transaction volumes, reaching the level of the highs of the previous housing boom (2006-2007). The housing market continued upbeat in early 2017 but could see a slight dip in the second half and in 2018. Mortgage lending rates began to rise very slightly in early 2017. This trend seems likely to pick up gradually on the back of the slow rise in 10-year OAT rates. Moreover, prices are still high and have begun rising again.