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Germany's larger-than-expected trade surplus in May suggests economic growth in the second quarter might be better than feared, Pantheon Macroeconomics chief eurozone economist Claus Vistesen says in a note. Germany's seasonally adjusted trade surplus jumped to EUR24.9 billion in May, from EUR22.2 billion in April, though that came as exports fell 3.6%, but imports fell further by 6.6%. That plunge in imports cautions against suggestion that consumption is now rebounding, though the correlation between imports and consumers' spending is far from perfect, he says. Indeed, real disposable income growth is rising strongly, he notes. (Edward Frankl, [email protected])
The U.K.'s new Labour government should have limited near-term implications on the country's banks, Citi says in a note. "We see limited taxation and spending changes, in part due to the U.K.'s weak fiscal position," the analysts write. The new chancellor has suggested there are no plans to change the bank tax or to introduce Bank of England minimum reserve requirements with tiered remuneration, they add. The broker expects second-quarter results to mark the trough in net interest margin of domestic lenders, before expanding as the structural hedge roll more than offsets interest-rate cuts from the BoE. Citi also forecasts that the big five banks will raise their revenue guidance for the year. (Elena Vardon, [email protected])
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