Research Briefing | Sep 3, 2021

Eurozone | Firms’ margins won’t furnish long-lasting lift to inflation

Ipad Frame-Eurozone-Firms-margins-wont-furnish-long-lasting-lift-to-inflation

Profitability has staged an impressive recovery, but the rise in Q1 operating margins to a 12-year high materially overstates corporate health. Excluding direct transfers to firms, operating margins remain below their weak 2019 average.
What you will learn:

  • Gradual withdrawal of fiscal support is bound to offset part of the profitability boost from the expected added recovery in demand near term.
  • Labour costs should remain well under control, though. Widely used furlough schemes have cut firms’ wage bills. But underlying pay growth also slowed to new lows during the pandemic.
  • Soaring commodity prices and global supply shortages have boosted non-wage costs, especially for durable-goods producers. But we continue to think that once bottlenecks ease, input prices will soften quickly.
Back to Resource Hub

Related Services

Post

European Retail City Index

Research Briefing Eurozone | Firms’ margins won’t furnish long-lasting lift to inflation Which European City Centres Offer the Best Opportunities for Retailers?

Find Out More

Post

Motor vehicles, energy and the other parts of industry in the line of fire from USMCA tariffs

The potential damage to large swathes of industry in Mexico and Canada from blanket US tariffs could be devastating and significantly greater than the impact on GDP as a whole.

Find Out More