The European Central Bank will extend back-to-back interest rate cuts at least until July in an effort to shield the weak euro zone economy, which faces an imminent threat from U.S. tariffs, according to a majority of economists polled by Reuters.
U.S. President-elect Donald Trump is set to return to the White House on Monday. His economic plans, which include at least 10% tariffs on all imported goods, have sent shockwaves through financial markets, raising worries more pain is ahead for the common currency union.
The ECB can ease policy further this year but must find a middle ground that neither induces a recession nor causes an undue delay in curbing inflation, which has turned higher, ECB Chief Economist Philip Lane said on Monday.
The bloc’s top two economies are mired in political turmoil and activity has remained sluggish. Germany’s economy contracted 0.2% last year, the Federal Statistics Office said. The euro zone economy ended 2024 in a fragile state, a PMI survey showed.
“Given the political situations in France and Germany, there is a high risk we will see inactivity in Europe which will certainly hold back investment, consumption and also makes Europe potentially weaker in reacting to Donald Trump,” said Carsten Brzeski, global head of macro at ING. “The ECB will have to deliver on rate cuts, because if they don’t, they risk undershooting inflation,” he said.
The ECB’s Governing Council started its easing campaign last June, delivering four interest rate cuts in 2024. They still have several more in store this year.
All 77 economists in the January 10-15 poll said the deposit rate would fall another 25 basis points on Jan. 30 to 2.75%. A 60% majority, 46 of 77, expect three more cuts by mid-year, in March and two in the second quarter, taking the deposit rate to 2.00%, largely unchanged from last month. The rest, 31, shared varied views on where the rate would be by end-Q2, ranging from 1.75% to 2.50%. It will be 2.00% until at least mid-2026, poll medians showed. A further 30 of 76 economists said the deposit rate would be below 2.00% by end-year while 13 said higher.
Markets are fully pricing in a cut this month and around 90 basis points of reductions in total this year. That is in stark contrast to just one 25 basis point reduction priced in by year-end from the U.S. Federal Reserve amid rising concerns of a resurgence in inflation.
“The threat of tariffs from the U.S. is affecting investment decisions already in the euro area and that’s contributing to the relatively weak growth outlook,” said Chris Scicluna, head of research at Daiwa Capital Markets Europe.
Scicluna was one of the top forecasters for the euro zone in Reuters polls last year, according to LSEG StarMine calculations. “It is possible they (the ECB) will cut rates by more than 100 basis points if the economic outlook deteriorates significantly further,” Scicluna added.
Growth across the 20-member currency union will likely be 1.0% this year and 1.2% next year, the poll showed.
The recent uptick in euro zone inflation, at 2.4% last month, is likely to be short-lived, based on the poll results.
Inflation was expected to drop to the ECB’s 2.0% target in Q2 and stay around there through Q2 of 2026 at least. But asked whether it was more likely inflation would be higher or lower than where they expect it, a majority of economists, 20 of 34 said higher. The rest said lower.
Germany’s economy will grow at a mere 0.4% this year and 1.0% in 2026, a significant downgrade from predictions in October.
Meanwhile, growth in France will slow to 0.8% this year from 1.1% last year and expand 1.1% in 2026.
With cost remaining a decisive factor for consumers, M&S said Friday (January 31) it’s continuing to cut prices of over 300 “family favourite” products with kidswear the latest target.
M&S
The high street retailer said it “re-affirms its commitment to delivering trusted value and everyday low prices on the products that matter most to its 32 million customers”.
The latest cuts include an up to 20% price reduction on over 100 products from its ‘everyday essentials’ Kidswear range.
Key pieces include its Cotton Rich Hoodie and Joggers as well as range of Sweatshirts, Leggings and T-Shirts which now start from £5.50, with the retailer saying the reduction in price will not compromise on the “quality or high sourcing standards it is known for”.
Alexandra Dimitriu, Kidswear director, Clothing & Home, said: “Now more than ever, customers are looking for trusted value. When it comes to clothing, we know value is more than just the product’s price – they also want confidence that it is made well and made to last and offers versatility.”
M&S reported positive figures for its festive trading period with total group sales increasing 5.6% to £4.064 billion, but much of the strength was concentrated in the Food area with Clothing, Home & Beauty, rising just 1% to £1.305 billion, with like-for-like sales rising ahead of the market at 1.9% as underlying sales grew 2.6%.
Burberry announced a key appointment on Friday with the luxury business saying it will soon have a new chief information officer.
Charlotte Baldwin
It has appointed Charlotte Baldwin to the role and she’ll join the business at the end of March. Baldwin will be responsible for leading Burberry’s global technology team and will join the executive committee. She’ll report directly to Burberry CEO Joshua Schulman.
He described her as “a highly experienced technology and digital leader with a track record of leading large-scale digital transformation”.
She hasn’t previously worked in the luxury fashion sector but has wide-ranging experience across some major-name businesses in Britain.
She’s currently the global chief digital and information officer at coffee chain Costa Coffee where she oversees the company’s technology, digital and data organisation.
Prior to joining that firm, she was the chief information, digital and transformation officer at private healthcare giant Bupa’s Bupa Insurance unit. She’s also held senior roles at Freshfields Bruckhaus Deringer, Pearson and Thomson Reuters.
Burberry has been navigating a tough period of late and Schulman joined in the top job last year, tweaking the firm’s strategy. His approach seems to be paying off with the company last week porting improved results, although the turnaround is still undeniable a work in progress.
Another day, another shopping centre delivering a “record-breaking” performance in 2024. This time it’s Gloucester Quays “capping off another year of considerable growth”, for the owner/operator Peel Retail & Leisure.
That included record Christmas trading at the key Gloucester mall, which helped overall sales for the year finish 6.7% ahead of the national average. Across November and December, retail sales grew 3.6% compared with 2023.
Looking at 2024 in total, an overall 7.4% year-on-year sales increase across its tenants was split between 6.1% for retail, and 8.5% for F&B.
But there was also double-digit growth from leading fashion, homewares, and outerwear brands including Next, Skechers, All Saints, Mountain Warehouse, Puma, Crew Clothing and Suit Direct.
It said sustained growth was seen across all categories “points to the increasing relevance of the Gloucester Quays experience”.
Paul Carter, asset director at Peel Retail & Leisure, added: “There have been various headlines this month about how challenged retail was around Christmas, so to have Gloucester Quays performing so well is a real credit to our team and our brands.
“These results also serve as a reminder of how relevant and in demand this outlet is. We have experienced consistent growth for several years, and that success can be put down to the quality of our offer and waterside environment. There is no doubt our catchment is responding to how we have evolved Gloucester Quays, as an urban outlet that combines a compelling shopping environment with dining and leisure to fit all tastes and needs, benefitting from a heritage waterside setting that few regionally can match.”
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