Headlines

• Current data show that Europe avoided a contraction in Q4, but output fell in some industry-intensive economies
• Consumer confidence is recovering, but is generally lagging in Nordic countries
• The full impact of rate hikes on house prices has not yet been felt — we think the banking systems of Sweden and France look especially vulnerable to this
• Excess savings remains a cushion for most countries, but are dwindling in Eastern Europe where inflation and currency risks are high
• Overall, while the European economy defied expectations in 2022, we still think a recession is on the cards this year

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