Research Briefing | Jun 9, 2021

Eurozone | As the recovery takes off, post-Covid debates begin

Ipad Frame_Eurozone-As-the-recovery-takes-off-post-Covid-debates-begin

The eurozone is heading into a strong economic rebound this month, driven by a services sector boom as restrictions are dialled back. Services PMIs skyrocketed in May to multi-year highs in all four of the eurozone’s largest economies. Meanwhile, the manufacturing sector remains healthy.

What you will learn:

  • Headline inflation exceeded 2% in May for the first time in years, mainly due to rising energy prices, although core inflation remained below 1%.
  • Price swings are likely in the next few months as economies reopen, and the current surge in food and industrial prices will eventually passthrough to CPI inflation.
  • The EC confirmed fiscal rules will remain suspended until the end of 2022, but it’s not clear what fiscal framework will prevail after that.

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