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BofAML _ Europe Economic Weekly: It’s (always) complicated
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    <strong>Artículo publicado en <a href="http://www.lacartadelbolsa.com">La Carta de la Bolsa</a> el Viernes, 17 de Febrero en la sección: Articulos</strong>
    <h3 class="titulo_articulo">BofAML _ Europe Economic Weekly: It’s (always) complicated</h3>
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    <p><strong><a href="http://rsch.baml.com/r?q=fVuJpXXgr4RyyfMnntu!jA&e=presthaya.fixter%40baml.com&h=tL8cfg"><img alt="" class="ilustraciones" src="http://lacartadelabolsa.com/images/ilustraciones/coin-155597__480.png" style="border-style:solid; border-width:1px; height:100px; width:140px" />Europe Economic Weekly: It's (always) complicated</a> </strong>• In a no-policy change scenario, based on market expectations for growth and yields, Italy's public debt is sustainable. • However, in our view the biggest risk is a return to economic stagnation combined with full return to pre-QE risk premia. • UK: Real income growth has halved since June. As inflation should peak at 3%, consumption growth should slow.</p>
    <p>With still unspectacular growth prospects and the further continuation of the ECB's QE in question, unsurprisingly we are receiving more and more questions on the medium-term sustainability of Italian public debt. We take a deep look at this today in <strong><em>Looking beyond 2017</em></strong>. In the benchmark case - which embeds the current market expectations for future interest rates, GDP growth and inflation - Italian debt is sustainable even if Italy does not engage in further austerity. In this case, debt would gradually move back towards 115% of GDP by 2026. However, in our view the biggest risk is a return to economic stagnation combined with full return to pre-QE risk premia. If so, despite the knock-on effect on growth, we think active fiscal consolidation would work. However, a fiscal tightening would face difficult political constraints.</p>

<p>Meanwhile growth data in the Euro area remains ok (see <strong><em>weekly view</em></strong>) but it is unspectacular while UK data remain surprisingly resilient. German GDP growth trotting along steadily without any remarkable acceleration or deceleration may be a good thing for the Euro area. Otherwise criticism of ECB support would probably grow even louder. But in the UK focus on the consumer, currently the only driver of UK growth, and it seems to us there is trouble ahead. Real wage growth has halved since the referendum and consumer confidence has fallen. The real income squeeze is underway (see more details on <strong><em>Here comes the squeeze</em></strong>).</p>

<p>On the other hand, the political picture remains complicated. In <strong><em>Italy</em></strong> developments this week opened the door for Renzi's resignation as the secretary of his party (PD) and also to a potential split of PD. All in all, the option of early national elections seems to be facing growing constraints, meaning elections now look more likely next year. And in <strong><em>Spain</em></strong> not everything is bright today. While the market focuses on the Netherlands, Italy and <strong><em>France</em></strong>, we remind our readers of the nagging Catalan issue for the otherwise stabilized Spain. Markets have been concerned about Catalonia before (it has been going on for some time), but they appear to have stopped paying attention some time ago. This could get complicated very soon.</p>

<p><img alt="" class="graficos" src="http://lacartadelabolsa.com/images/ilustraciones/Captura_de_pantalla_2017-02-17_a_las_16.52.23.png" style="border-style:solid; border-width:1px; height:320px; width:610px" /></p>
    https://lacartadelabolsa.com/index.php/266756
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