The eurozone economy faces a nasty combination of slower growth and higher inflation, next week’s numbers will show.
Official figures will show that real GDP grew only slightly in the third quarter after a 2.2 per cent jump in the second. Consistent with this, Germany’s Ifo survey will show that businesses are reporting slower growth and weaker expectations than in the summer, while the National Bank of Belgium could say that business confidence has fallen to its lowest level since February.
An important lead indicator will also point to activity slowing further in coming months. The European Central Bank (ECB) Is likely to say that the M1 measure of the money stock has grown by around 11 per cent in the last 12 months, implying a slowdown in the inflation-adjusted growth rate since the summer. This matters, as this for years has been a good predictor of economic activity a few months later. It is still pointing to growth, just not as much as in recent months.