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ESG Economist - More consistent climate tax policies are necessary for the transition
On 1 July 2023, the Dutch Government raised the excise tax on fuels, reversing the cut in 2022. The former exacerbated the price difference between Dutch and German fuel by 14 cents per litre. This note examines whether Dutch households living near the German border responded differently to this policy change compared to households in the rest of the Netherlands. The findings reveal that households in the border region decreased their consumption of Dutch fuel more than households in the rest of the country by an additional 3.6 litres, per week. This suggests that people in the border region are more sensitive to relative fuel prices. When policies are not aligned, people (partly) shift their consumption towards the lower tax country. As we approach 2030, the first deadline for EU emissions’ reduction targets, aligning climate tax policies is important for effectively reducing emissions.
Fed Watch – Easing cycle will end in restrictive territory
We expect one or two more Fed cuts in the first half of 2025, after which the easing cycle is put on hold indefinitely, leaving the policy rate in restrictive territory. We expect inflation to ease in the first half of the year, allowing for further cuts, while some weakness in the labor market will provide the necessary call for action.
US Watch – Trump returns to office after working from home for four years
Next week Monday, Donald Trump will be inaugurated as the 47th president of the United States. Breaking with convention, the incoming administration prepared quite publicly, and effectively started to take over power long before the official inauguration. In the months since the election, Trump has touted a variety of, to put it mildly, unconventional policies. Allegedly, more than a hundred day-one executive orders are ready to be signed. The extent of geopolitical tension the incoming administration has already induced exceeds expectations. On the policy front, the internal inconsistency is most striking, with many policy objectives, and proposed policies, seemingly at odds with each other. This piece discusses six ways Trump is already making waves.
The Week Ahead - 20 - 24 January 2025
These are the Key Macro Events for the upcoming week.
Housing market - building according to need
The housing shortage is mainly caused by demographic change and less by population growth. The share of single-person households is increasing while we continue to build large homes. This leads to a shortage of smaller and affordable housing, especially in rural areas. Working from home could lead to less pressure in urban, but more in rural areas. Retiring baby boomers may cause a wave of relocations, making the problem worse.
Housing Market Monitor - January 2025 - Summary
We expect the price trend to continue and house prices to rise 7% in 2025. The driving forces remain rising wages, lower mortgage rates and the supply shortage. The number of transactions will increase 2.5% in 2025 and 1% in 2026. Price and transaction growth will return to the long-term trend in 2026.
ESG Economist - High decarbonisation pressure EU energy-intensive industry
The pace of emission reductions in the EU-27 is far below of what is minimally needed to reach the 2030 target. In the industrial sectors where it is relatively difficult to reduce emissions, collectively account for about 23% of total EU-27 GHG emissions.
The Week Ahead - 13 - 17 January 2025
These are the Key Macro Events for the upcoming week.
Global industry: Europe still the weakest link
Global manufacturing PMI drops back below neutral mark. Weakness broad-based; France and Germany weak spots in eurozone manufacturing. Supply weakened more than demand in December. Input price component up again, but still well below previous peaks. Rising spot container tariffs between China and US signal trade frontloading.
Eurozone inflation bounce to unwind in the coming months
Euro Macro: Energy drives inflation pickup amid broad downtrend – Flash HICP inflation for December picked up to 2.4% from 2.2% in November, in line with consensus but a smidge below our 2.5% forecast (in reality, both were on the borderline, with the outturn at 2.44% and our forecast at 2.47%). Core inflation held steady at 2.7%.