BofAML _ informe semanal previsiones económicas para Europa

Redacción - Viernes, 31 de Marzo

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Europe Economic Weekly: There is always a first time for everything •  ECB communication and data in the past days were a proper push-back on the idea that ECB forward guidance could change soon.
•   This week, we also look at immigration in Germany, the Italian real estate market and recent developments in Greece. •  UK: Article 50 triggered this week, negotiations pose downside risks in our view.

This week the UK went where no one had gone before: Article 50 was triggered. We see three takeaways which we discuss in our UK Hot topic. First, the UK still seems to want to have its cake and to eat it to. Negotiations could be tough. Second, the UK seems to be very gradually realising that with the Article 50 letter showing some very small moves towards the EU position. More will be needed. Quickly. Third, the exit bill remains the elephant in the room. It creates the risk that talks breakdown in next six months in our view. Our base case remains that talks don't fail and UK/EU agree a boilerplate free trade deal. That would, we think, have large costs mostly via services trade.

In the Euro area the main topic this week was, again, the future of the depo rate. ECB communication and data in the last few days were a proper push-back on the idea that ECB forward guidance could change soon, we think. Our view remains that a reversal of sequencing is unlikely in 2017. Next week will be important in terms of UK data and we think data will provide more mixed signals on UK growth momentum. The credit impulse shows signs of rolling over (see Chart 1)

Beyond developments this week we also look at other topics of recent interest. We tackle again the issue of immigration in Germany. German demographic trends are poor, immigration is an opportunity to boost potential growth. The refugee movement prompted a demand push through fiscal stimulus but labour supply effects will take time to unfold. This is different from EU worker migration, which lifts German potential growth instantly. This is an EU zero sum game with potential losses elsewhere. We also look at recent trends in the Italian real estate market. With uncertain wage prospects amid ample slack in the economy, Italy's real estate sector is embarking on a one-leg recovery for now. Finally, in Greece, we still think all important decisions may go down to the wire and we probably need a summer "fudge".

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