According to forecasts by news agency Bloomberg, the euro area economy will contract by 4.1% in the first quarter of 2021, while economists previously forecast an increase of 1.3%. The amended forecast is based upon the recently announced lockdowns to mitigate the corona virus. The vaccinations and a softening of the lockdowns could lead to growth again in the remaining quarters of the year. In that scenario, economist expect potential growth of 4.8% for the second quarter and 3.1% for the third quarter 2021.
Households in the eurozone are still saving a substantial part of income because of the corona pandemic. This is reported by the European statistical office Eurostat. The so-called savings rate, the portion of net income that is put into savings accounts, amounted to more than 17% in the eurozone in the third quarter. That is significantly less than in the second quarter when the savings rate was almost 25%. In previous years, the indicator was 12% on average.
The United Kingdom’s economy is facing “dark times” due to the strongly increasing number of corona infections in the country and the new lockdowns according to Governor Andrew Bailey of the Bank of England (BoE). Bailey also said that recovery is in sight with the rollout of vaccines, but that the coming months will be difficult. Many economists now assume that the UK economy will contract in the first quarter of 2021.
The 6M Euribor increased with 1 basis point to -0.52% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.18% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
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