What if euro-area wage growth accelerates above 5% and entrenches a wage-price spiral?
Compensation per employee accelerates above 5% as unions index pay to past inflation, entrenching a wage-price spiral that keeps euro-area core HICP elevated and forces the ECB to hold rates higher for longer.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Compensation per employee accelerates above 5% as unions index pay to past inflation, entrenching a wage-price spiral that keeps euro-area core HICP elevated and forces the ECB to hold rates higher for longer. The trigger decomposes into signed root‑shocks — Inflation expectations ▲ · Inflation surprise ▲ · Labor shortage ▲ · Recession signal ▲ — which propagate through our causal graph to the markets below.