France – Housing Market: Recent developments and outlook for 2018-2019
The housing market saw a record year in 2017. We do not feel it likely that the market will overheat in 2018-2019. On the contrary, a slight dip is forecast. For one thing, the gradual refocusing of the Pinel buy-to-let scheme and the PTZ interest free housing loan on areas of housing shortages is forecast to cut new-build sales by 9% in 2018. Secondly, the gradual increase of lending rates combined with rising home prices will nibble away at households' ability to buy and make buyers more hesitant and wait-and-see.
Europe – Foreign trade – Trade war: the price to be paid
The announcements concerning the Trump administration's trade policy present a serious challenge for the European Union. If it fails to bring the US back to the WTO's negotiating table, the European Union could either enter into bilateral negotiations, or lodge a complaint with the WTO in order to obtain compensation. Both options carry a cost, be it having to renounce multilateralism, or face an escalation of the trade conflict with the US.
France – 2018-2019 scenario: Robust growth in 2018-2019 despite increased recruitment difficulties
Q1 GDP showed slowing growth. This was expected and was justified by one-off factors; this does not suggest, however, that the French economy has begun a cyclical downswing. Over 2018 as a whole, the pace of growth is forecast to remain robust. France is experiencing increased recruitment difficulties that reveal a level of activity that it now nearing its potential, and a problem of labour suitability.
United-Kingdom 2018-19 Scenario: outlook as at Q1 18
Negotiations on Brexit have moved forward since a preliminary divorce agreement was signed last December. The United Kingdom has ended up softening its red lines somewhat, without this leading to a major political crisis. The European Union has shown some flexibility while remaining firm on its fundamental principles. An agreement on a transition period was concluded in March. However, the hardest part is yet to come, with the Irish border issue to be settled by June.
France – Stability Programme 2018 : Public deficit narrowing faster than expected
In mid-April, the French government presented its "Stability Programme" for 2018-2022. The document describes its public finance strategy over that period. The public deficit is narrowing more rapidly than expected. Reduced to 2.6% of GDP in 2017, it is forecast to reach 2.3% in 2018. Following a slight increase in 2019, to 2.4%, due to switching the CICE to a reduction in employer social contributions, it is expected to continue shrinking, with a small surplus forecast for 2022. The public debt ratio is expected to gradually fall.
Germany – 2018-2019 scenario: Outlook at Q1-2018
After a strong growth in 2017, we expect activity growth to be also robust in 2018 and a slight slowdown in 2019. The unemployment rate has not yet reached its bottom and underemployed part-time workers represent a potential source of additional workforce to meet the increased demand. Domestic demand remains the main pillar of growth, while external demand may suffer from a more protectionist environment than in the past.
Emerging Countries – Monthly News Digest
Highlights: Slovenia is the good student of the European Union. Despite weakening, the Qatar economy is proving fairly resilient to the embargo. The IMF welcomes Nigeria's emergence from recession but warns about an economy that is still convalescent. China has a new vice Prime Minister. As a sign, among other things, of culpable interference between the Argentinian state and the Central Bank, inflation is picking up.