Research

Our central argument is that the euro crisis is no longer a risk. It is happening. The endgame is upon us, and we are all in it. The most important question to be answered now, is ‘how will it be resolved?’.

Annual BPI inflation stood at 2.2 per cent in November, a little higher than the figure for October. which was unrevised at 1.9 per cent.

German Chancellor Angela Merkel has described the current crisis as perhaps Europe’s darkest hour since WWII. That maybe overstating it somewhat, but it does underline both how serious it is, and the pan-European nature of what we continue to view primarily as a banking, as opposed to a sovereign crisis. Last week we argued that Italy would be safe as long as the euro was safe. This week we are saying that Spain and France will be safe as long as the euro is secure; but at the same time the euro is only as safe as Spain and France. The potential for a vicious circle is surely plain for all to see. In the attached note we not only look at the problems, but once again offer some potential solutions, and look at their respective drawbacks and advantages.

Annual BPI inflation stood at 1.9 per cent in October, compared to 2.2 per cent in September which was revised down from an initial estimate of 2.5 per cent.

In Is this Europe's Lehman's moment?, written by Danny Gabay and Yiannis Koutelidakis, we take a look at why the market has now turned its attention to Italy, whether it is right to have done so, and what the possible consequences might be. We consider the fundamentals of the Italian economy based on past performance and future projections and attempt to determine how they will affect its debt dynamics.