GDP contraction of -1.5% in Q1. Outlook reduced to +4% for the year. ECB accelerates its PEPP and could inject 60 bn euros/month. PMIs are optimistic. Interest rate increases temporarily curbed. Weakening euro.

Key points

• European GDP expected to fall by a further -1.5% in Q1
• The glaring failure of the vaccination campaigns calls for new support measures
• More optimistic leading indicators bolstered by Germany’s manufacturing PMI
• ECB steps up its action and urges governments to strengthen their fiscal policies
• New upward trend in interest rates temporarily curbed by ECB action
• The euro is logically suffering from an unfavourable growth differential
• European equities are already approaching their year-end price targets

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