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Research Briefing | May 20, 2022

Eurozone: ECB minutes indicate that July rate hike is a near-certainty

Eurozone: ECB minutes indicate that July rate hike is a near-certaintyThe minutes from the April ECB meeting confirm the hawkish tilt initiated a few months ago continues to gain momentum. With a majority of the council increasingly concerned about the inflation outlook, this makes an interest rate hike already in July almost certain. This should not come as a surprise, however, as recent developments render hawks’ case arguably easier to make.

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Research Briefing | May 20, 2022

Eurozone: ECB minutes indicate that July rate hike is a near-certainty

Eurozone: ECB minutes indicate that July rate hike is a near-certaintyThe minutes from the April ECB meeting confirm the hawkish tilt initiated a few months ago continues to gain momentum. With a majority of the council increasingly concerned about the inflation outlook, this makes an interest rate hike already in July almost certain. This should not come as a surprise, however, as recent developments render hawks’ case arguably easier to make.

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Construction UK

UK commercial real estate costs will increase more sharply than inflation this year, resulting in the widest margin since records began in 2013, according to our new CRE Cost Monitor. Our model suggests CRE costs will peak at 11.3% y/y in mid-2022, against a CPI of 8.6%, a margin of more than 2.5ppts. Costs will then fall back to 8.8% by end 2022, 2.2ppts above our inflation forecast.

MPC

Although GDP rose 0.8% in Q1, the monthly numbers showed that growth was concentrated entirely in the first month of the quarter. Output stagnated in February and fell slightly in March, meaning activity had lost momentum even before the full weight of cost of living pressures hit.

London Monitor: Growth continues but the economy lacks vigour
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Research Briefing | May 13, 2022

London Monitor: Growth continues but the economy lacks vigour

Survey evidence paints a mixed picture of the London economy, with continuing growth but some signs of slowdown and of possible problems ahead. Employment has continued to rise, as have property prices, and travel and tourism are strengthening, but global economic challenges potentially impact London more than most cities. We forecast 4.3% GVA growth this year, 2.0% next year.

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Research Briefing | May 13, 2022

London Monitor: Growth continues but the economy lacks vigour

Survey evidence paints a mixed picture of the London economy, with continuing growth but some signs of slowdown and of possible problems ahead. Employment has continued to rise, as have property prices, and travel and tourism are strengthening, but global economic challenges potentially impact London more than most cities. We forecast 4.3% GVA growth this year, 2.0% next year.

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Parliament

Amid headwinds to the UK economy from high inflation and geopolitical uncertainty, loose financial conditions offer a bright spot. That said, financial conditions have become less supportive recently, a trend which could worsen as a result of mixed messages from the MPC.

UK households face a severe squeeze on their finances this year and have limited scope to cushion the blow by saving less. As a result, we expect the consumer sector to drop into recession in H2 2022, although a recovery in real incomes next year should allow spending to rebound strongly.

Eurozone financial conditions have tightened abruptly since the start of the Ukraine war, supporting our caution on near-term growth. Unless the chances of a quick resolution to the conflict rise, we think conditions will remain pressured in the near term and may even tighten.

This report, commissioned by Neptune Energy, seeks to quantify the company’s total economic impact across the UK, Norway, the Netherlands, Germany, and Indonesia, through its direct operations and the knock-on effects it creates in local supply chains and the wider economy.

We find that in 2021, Neptune Energy sustained an estimated $3.3 billion gross value added contribution to the UK, Norway, the Netherlands, and Germany, and supported 9,720 jobs. Additional value was also sustained in Indonesia.

UK High Street

A strong performance from March’s services and construction PMIs offered some indication that the economy carried a degree of momentum at the end of Q1, despite intensifying cost of living pressures. But firms have become much gloomier about the future.

ECB
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Research Briefing | Apr 8, 2022

ECB minutes show rising fears of higher medium-run inflation

ECB minutes show rising fears of higher medium-run inflation

The minutes from the March ECB meeting showed that inflation continued to dominate Governing Council’s discussions. The body remains split, but the balance is tilting in the hawks’ way, as more members of the Council stress the growing risks of inflation overshooting ECB’s target even in the medium term. But the dovish wing of the Council considers this a false alarm, as they see little signs of wage pressures and inflation expectations deanchoring from 2%.

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Research Briefing | Apr 8, 2022

ECB minutes show rising fears of higher medium-run inflation

ECB minutes show rising fears of higher medium-run inflation

The minutes from the March ECB meeting showed that inflation continued to dominate Governing Council’s discussions. The body remains split, but the balance is tilting in the hawks’ way, as more members of the Council stress the growing risks of inflation overshooting ECB’s target even in the medium term. But the dovish wing of the Council considers this a false alarm, as they see little signs of wage pressures and inflation expectations deanchoring from 2%.

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Poland
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Research Briefing | Apr 8, 2022

Poland: NBP surprises markets with a 100bps hike

Poland: NBP surprises markets with a 100bps hike

The National Bank of Poland (NBP) hiked the policy rate by 100bps at yesterday’s meeting, bringing it to 4.5%. The move exceeded both our and consensus expectations of a 50bps hike, but it looks warranted in the face of a growing inflationary pressures, more evidence of a wage-price spiral and increasing risk of medium-term inflation expectations un-anchoring.

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Research Briefing | Apr 8, 2022

Poland: NBP surprises markets with a 100bps hike

Poland: NBP surprises markets with a 100bps hike

The National Bank of Poland (NBP) hiked the policy rate by 100bps at yesterday’s meeting, bringing it to 4.5%. The move exceeded both our and consensus expectations of a 50bps hike, but it looks warranted in the face of a growing inflationary pressures, more evidence of a wage-price spiral and increasing risk of medium-term inflation expectations un-anchoring.

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French elections
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Research Briefing | Apr 7, 2022

How the Ukraine war could decide the next French president

How the Ukraine war could decide the next French presidentThe dominance of international events has shifted attention away from the medium-term economic programmes of the candidates in France’s crowded presidential election. According to our analysis, only three candidates have tabled programmes that we estimate would lower the public deficit – and only slightly. We also think their revenue expectations are overoptimistic.

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Research Briefing | Apr 7, 2022

How the Ukraine war could decide the next French president

How the Ukraine war could decide the next French presidentThe dominance of international events has shifted attention away from the medium-term economic programmes of the candidates in France’s crowded presidential election. According to our analysis, only three candidates have tabled programmes that we estimate would lower the public deficit – and only slightly. We also think their revenue expectations are overoptimistic.

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Energy Africa

As Western Europe accelerates a structural transition away from Russian energy dependence, Africa will play a salient role in filling this void.

Berlin
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Research Briefing | Apr 5, 2022

Europe: City employment growth will revert to pre-crisis norms

City employment growth will revert to pre-crisis norms

We forecast that as the distortions from the pandemic subside, employment growth across Europe’s major cities will generally outperform national economies in the years to 2026. Evidence that city population dynamics are reverting to pre-crisis trends, combined with a favourable sectoral setting, underpins this.

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Research Briefing | Apr 5, 2022

Europe: City employment growth will revert to pre-crisis norms

City employment growth will revert to pre-crisis norms

We forecast that as the distortions from the pandemic subside, employment growth across Europe’s major cities will generally outperform national economies in the years to 2026. Evidence that city population dynamics are reverting to pre-crisis trends, combined with a favourable sectoral setting, underpins this.

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Uk

An upward revision to the estimate for Q4 2021 took the quarterly UK GDP series to within a whisker of its pre-pandemic level. But the expenditure breakdown suggests the recovery has been very uneven and heavily reliant on the public sector.

Europe
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Research Briefing | Apr 4, 2022

Eurozone: Post-invasion reality: higher inflation, higher uncertainty

Eurozone Post-invasion reality: higher inflation, higher uncertaintySurvey data this week offer a glimpse into the European economy’s post-invasion reality. The Economic Sentiment Index (ESI) reading for the eurozone fell to a 12-month low, driven by dips in consumer confidence and industrial sector sentiment. Moreover, the final manufacturing PMI published today confirmed that the tailwinds coming from the removal of Covid restrictions will be met by extremely strong gusts coming from the war. The headwinds from the conflict are expected to last through 2022, impacting the recovery in industrial activity.

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Research Briefing | Apr 4, 2022

Eurozone: Post-invasion reality: higher inflation, higher uncertainty

Eurozone Post-invasion reality: higher inflation, higher uncertaintySurvey data this week offer a glimpse into the European economy’s post-invasion reality. The Economic Sentiment Index (ESI) reading for the eurozone fell to a 12-month low, driven by dips in consumer confidence and industrial sector sentiment. Moreover, the final manufacturing PMI published today confirmed that the tailwinds coming from the removal of Covid restrictions will be met by extremely strong gusts coming from the war. The headwinds from the conflict are expected to last through 2022, impacting the recovery in industrial activity.

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We are pleased to announce the launch of our new My Oxford research portal. This will represent a major improvement for clients in the way that they access and interact with our research.

Airplane
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Research Briefing | Mar 30, 2022

Travel and Tourism: Global Highlights & Risks

Travel and tourism global highlights and risks

Global recovery from the pandemic will be further deferred due to effects from the Russian invasion of Ukraine and we now expect global international arrivals to regain 2019 levels by 2025 instead of by 2024 on average. The largest change is evident in the European travel outlook, with impacts strongly weighted towards Eastern Europe. The conflict will limit travel activity due to three main effects: reduced travel from Russia and Ukraine, including the effects of no-fly zones and airspace closures as well as lingering sanctions; wider economic impacts of sanctions on inflation and disposable income; and sentiment effects due to safety concerns.

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Research Briefing | Mar 30, 2022

Travel and Tourism: Global Highlights & Risks

Travel and tourism global highlights and risks

Global recovery from the pandemic will be further deferred due to effects from the Russian invasion of Ukraine and we now expect global international arrivals to regain 2019 levels by 2025 instead of by 2024 on average. The largest change is evident in the European travel outlook, with impacts strongly weighted towards Eastern Europe. The conflict will limit travel activity due to three main effects: reduced travel from Russia and Ukraine, including the effects of no-fly zones and airspace closures as well as lingering sanctions; wider economic impacts of sanctions on inflation and disposable income; and sentiment effects due to safety concerns.

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Solar panel water heater in South Africa
Blog|25 March 2022

Africa’s energy conundrum: What we can learn from a small mountainous enclave

Jacques Nel
Jacques Nel
Head of Africa Macro,
Africa’s energy conundrum: What we can learn from a small mountainous enclave

A small mountainous kingdom at the southern tip of Africa has demonstrated how the world’s most energy-starved region can develop while not contributing its ‘fair share’ to climate change. The Lesotho Electricity Company and the Lesotho government recently entered into an agreement with a consortium to develop the country’s first independent power producer (IPP) project. The parties concluded a 25-year power purchase agreement (PPA), as well as the related connection and implementation agreements, for a 20-megawatt (MW) solar photovoltaic (PV) plant to be developed, operated, and owned by a partnership of international and local private sector firms. The project will be funded by the UK Renewable Energy Performance Platform with equity support from the Norwegian Investment Fund (Norfund), Lesotho Pension Fund, Scatec, One Power Lesotho, and Izuba Energy.

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UK Parliament

Back to Resource Hub Research Briefing | Mar 21, 2022 MPC’s dovish hike starts to rein in market expectations Though the MPC raised Bank Rate for the third successive meeting, March’s minutes revealed a clear change in tone. Growing concerns about the downside risks to growth from high inflation mean that we think another 25bps … Read more

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