EU-DIGEST

Europe bank chief warns on debt

Governments that have borrowed heavily to fight the economic crisis should not accumulate any more debt, the president of the European Central Bank has said. Jean-Claude Trichet said existing stimulus packages were "sufficient". "There is a moment where you cannot spend more and accumulate more debts. We are at that moment," he said.

Labels: ECB, EU, European Economy

German, French consumer confidence holds up despite slump

German, French consumer confidence holds up despite slump - - by Andrew McCathie

European consumer confidence continues to hold up in the face of deepening global gloom, key surveys released Wednesday said, as dwindling inflation helped to offset worries about the fallout from the worst economic downturn since World War II. The surveys showed consumer confidence in both Germany and France beating analysts' expectations as the 16-member eurozone's two biggest economies entered the new year. Indeed, while the Paris-based statistics office Insee said French consumer confidence rose to 9 month high this month, the Nuremberg-based GfK marketing institute said its forward-looking consumer confidence index came in at 2.2 points in February. This was higher than the 2 points predicted by economists.

Labels: ECB, EU, European Economy

ECB hasn't ruled out "non-standard" tactics-Trichet

The European Central Bank has not ruled out cutting interest rates to a record low, or employing "non standard" tactics to fight the economic crisis President Jean-Claude Trichet said on Thursday.Analysts expect the ECB to keep rates at 2.0 percent at its policy meeting next week, but in a Reuters poll most forecast it will cut them to an all-time-low of 1.5 percent in March. Economists are also speculating on whether the ECB might adopt unconventional measures such as following the U.S. Federal Reserve's current policy of buying up debt as an alternative way to boost the economy. "I said we could engage in non-standard actions and indeed we have already done so, notably on refinancing," Trichet told France's BFM radio from the World Economic Forum in Davos. He sent a similar message earlier, telling CNN that the ECB could use new, out-of-the-ordinary measures and he didn't want to rule anything out, or indeed in.

Labels: ECB, EU, European Economy

Financial crisis analysis: Europe's centrist parties are crumbling - by Damien McElroy

The trap for Europe's centrist parties is strengthened with each spell in power. "They can't stop the foreigners coming, they can't provide the revival that would come from new jobs and they can't give people the voice they want," said a former EU official. "Every upheaval only entrenches the system." The turbulence in the financial markets compounds the trend, though it has revealed winners among the established parties as well as manifest losers. As governments reach for a strong statist response to potential collapse, there is reward for those who demonstrate a firm grip. Opposition parties unable to match an incumbent government's mastery of interventionist policies, even if they are leftist like the French Socialists, are being eclipsed.

Labels: European Economy, Politics

Labels: EU, European Economy

ECB's Trichet Sees Risk of `Exploding' Inflation - by Gabi Thesing

European Central Bank President Jean- Claude Trichet, who may raise interest rates tomorrow, said there's a risk of inflation ``exploding'' if central banks don't act decisively. ``We central banks have a big responsibility,'' Trichet told Germany's Die Zeit newspaper. ``If we're not decisive, there's a risk of inflation exploding. If we act in a decisive way, we can master the situation.'' The ECB confirmed the comments, which were made on June 23 for an article to appear tomorrow.

Labels: EU, European Economy

Labels: European Economy

Trichet's Europe Outpaces U.S., Reaping Reward of Risk Aversion - by Simon Kennedy and John Fraher

As the U.S. teeters on the brink of a recession after the end of a five-year housing boom, growth in the 15 nations that share the euro is poised to outpace the American economy for a second straight year. The region's resilience lets Trichet, who today presides over the European Central Bank's monthly policy meeting, focus on fighting inflation instead of cutting interest rates. Because Europeans save more than Americans and splurge less on houses and stocks, the continent is better placed to withstand the global credit squeeze without the need for lower borrowing costs.

``To be thrifty is a good thing and definitely a plus for the European economy in this tough period,'' said Jean-Michel Six, chief European economist at Standard & Poor's in London. ``The attitude to debt and credit is clearly very different between the U.S. and Europe.''

Labels: EU, European Economy, Trichet

Euro group president Jean-Claude Juncker told Les Echos that 'there will not be a recession in Europe' this year. Growth in the euro zone will be below levels seen in 2006 and 2007, but 'will only be slightly below trend growth (of 2 pct),' he said in an interview published this morning. Juncker challenged IMF's reduced forecast of 1.6 pct GDP growth for the euro zone this year as 'not very credible', arguing that the European Commission's growth forecasts to be published mid-February would provide a better indication. He dismissed the idea of a US-style stimulus package given that the euro zone is not facing the risk of a recession,

Labels: EU, European Economy

European consumers hunker down in 2008 - by Sumeet Desai

Consumers across Europe are starting to think twice about spending money as confidence over the economic outlook crumbles in the face of the continued ructions in world financial markets. The French consumer mood soured to an all-time low in January, according to an official survey on Tuesday, as households struggled to pay higher bills for food, heating and lodging. And those results were taken even before Societe Generale, France's second-largest bank, admitted to suffering the biggest rogue trading fraud in history -- 4.9 billion euros. More than three quarters of the French population now think the crisis in markets -- European stocks are down more than 10 percent in the last month alone -- will have a significant impact on the economy. Nearly 70 percent say it will crimp their lifestyle, a newspaper poll showed on Tuesday.

Labels: EU, European Economy

EU: Trichet Says Market Tensions Receding, ECB `Ready' - by Christian Vits

European Central Bank President Jean- Claude Trichet said financial-market tensions are receding and the bank remains committed to fighting inflation. ``Tensions have receded while remaining significant,'' Trichet said today in a speech at a convention of Germany's Christian Democratic Union party in Wiesbaden, near Frankfurt. ``The ECB's Governing Council stands ready to counter upside risks to price stability, in line with its mandate.'' The ECB shelved a planned rate increase in September to assess the economic impact of the U.S. housing slump, which made banks reluctant to lend and pushed up credit costs. Since then, euro-region inflation has accelerated to the fastest pace in more than six years, prompting some ECB council members to call for a rate increase. Economic growth in the euro region is forecast to slow to about 2 percent in 2008 from around 2.6 percent last year, according to the ECB's December forecasts. The bank predicts inflation will accelerate to about 2.5 percent this year from 2.1 percent in 2007.Trichet also said today that he expects a ``relatively soft landing'' in Europe's housing market. While latest data suggest ``a cooling,'' house-price growth ``remains relatively elevated'' from a historical perspective.

Labels: EU, European Economy

Citigroup Sees Double-Digit Growth for European Stocks in 2008 - by Adam Haigh

European equities may post ``double- digit'' returns next year, with the U.K.'s FTSE 100 Index reaching 7,000 by the end of 2008, Citigroup Inc., the biggest U.S. bank, said.``European equities should be supported by lower rates, macro resilience, earnings growth, reasonable valuations and liquidity,'' Citigroup said in a note to investors dated today.

Labels: EU, European Economy

EU's Almunia sees 2008 euro zone growth around 2 pct; forex burden manageable

Euro zone GDP growth could reach around 2 pct in 2008, said EU economic and monetary affairs commissioner Joaquin Almunia. That figure would be 'reasonable', he told a news conference. The commission's most recent official projection for the region is 2.2 pct. Almunia added that France's growth projections are 'very optimistic'. French economy Minister Christine Lagarde this morning confirmed the government's 2008 forecast of a range of 2.0-2.5 pct. The commissioner also said France's trade deficit is 'not directly linked to exchanges rates', and more to do with where France exports to and which sectors it specializes in.

Labels: EU, European Economy

Euro zone production beats expectations

Factories and refineries in the euro zone ratcheted up their production faster than economists expected in October, according to official EU data. Industrial output in the euro zone climbed 0.4% in October from September and rose 3.8% over 12 months, figures from the Eurostat data agency showed. The result, adjusted for seasonal variations, beat economists' expectations for industrial output to rise only 0.2 over one month and grow 3.7% over one year.

Labels: EU, European Economy

Italy's Prodi sees strong euro impact on energy imports curbing trade deficit

Italy's prime minister Romano Prodi sees the strong euro cutting the cost of imported energy fuels, bringing down the country's trade deficit with the rest of the world, said a source close to Prodi. Speaking after yesterday's summit between Prodi and German chancellor Angela Merkel, the source said both countries with their strong industrial sectors are seeing a similar trend in the trade balances with the rest of the world.

Note EU-Digest: It is shameful how some corporations in Europe including petro-chemical corporations are profiting from the strong euro and not passing these benefits on to the consumer. Consumers in the EU are not seeing the price of gasoline (which is tied to the dollar) drop, or for that matter just about any product which is bought outside the EU and quoted in US dollars. For example Nike shoes (made in the Far East) selling in America for around US $ 65.00 (43 euro's) are still being listed in Europe for over 100 euro's. Instead of whining about the strong euro European politicians should go after corporations who are price gouching and getting away with making huge profits.

Labels: EU, European Economy, Germany, Italy, Merkel, Prodi

The European Central Bank is tracking inflation to ensure it does not swell in the 13-nation eurozone, which benefits at present from a sound economy and strong job growth, the bank said Thursday. The ECB's latest analysis "fully confirmed that the outlook for price stability over the medium term is suject to upside risks," it said in its monthly bulletin for November. The wording matched that of ECB president Jean-Claude Trichet on November 8, when the bank left its primary interest rate unchanged at 4.0 percent amid rising prices and persistent tensions in eurozone money markets. At the same time, a survey of professional forecasters contained within the report suggested that slowing economic activity and the euro's rise against other major currencies should help keep inflation in check through 2009.

Labels: EU, European Economy

Euro Advances for Second Day as European Growth Accelerates - by Kim-Mai Cutler and Ron Harui

The euro rose for a second day against the dollar as European economic growth accelerated more than forecast in the third quarter.

The European common currency held gains after Federal Reserve Bank of Dallas President Richard Fisher said U.S. economic growth is slowing and the country's clout in the global economy is diminishing. The euro also climbed against the yen as global stocks rallied, encouraging investors to return to so- called carry trades.

Labels: EU, European Economy

Germany - MAN Truckmaker 8-Month Sales Rise 13% as Eastern Europe Expands-by Jann Bettinga

MAN AG, Europe's third-biggest truckmaker, said sales in the eight months through August rose 13 percent to 9 billion euros ($12.7 billion), and it is sticking to its full-year targets as the company expands in eastern Europe. The order backlog in the period rose 22 percent to 12.7 billion euros, Chief Executive Officer Hakan Samuelsson told reporters on Oct. 5 in Krakow, Poland.

Munich-based MAN is targeting increased sales in eastern Europe and Russia as the regions' economies boom.

Labels: European Economy, Germany, Truck Manufcturers

Sarkozy sees French, German growth unaffected in lasting way by market turmoil

French President Nicolas Sarkozy, in a letter to German Chancellor Angela Merkel, said he is convinced that the current turmoil on financial markets will not affect the growth of the French or German economies in a lasting way, Sarkozy's office said.

Labels: European Economy, Merkel, Sarkozy

Leading EU nations see slowdown

Leading EU economies Germany and France saw a slowdown in the second quarter, with growth lower than forecast, according to official figures. Both countries' economies grew by 0.3% in the three months to June. While weaker trade in France indicated deeper problems, analysts said the German slump was seen as temporary and caused by a construction slowdown.

Labels: EU, European Economy

Moody's Economy.com forecasts at least two quarter-point interest-rate increases for Western Europe by year's end. It is expecting gross domestic product growth of 2.5% in the region, down from last year's 2.7%. "The slowdown should be fairly modest," said Katrin Robeck, a Moody's economist. "But it's likely to spread into 2008 across the euro zone. "In contrast, Poland, for example, is seeing far more robust economic activity. The country's 2006 GDP growth rate of 5.8% should increase to about 7% for the first quarter of 2007 when final data come out, she added. For the year, Ms. Robeck expects Poland's GDP to run in excess of 6%.

Ralf Oberbannscheidt sees Russia's growth continuing at a faster pace than Western Europe's. He manages three foreign closed-end funds under the DWS Scudder family, which is a unit of Deutsche Bank AG. Yet in recent months, he has decreased exposure to Russia and put some of those profits in Poland, Hungary and the Czech Republic. "We're looking at the energy and financials sectors in those markets," he said. "Housing markets are growing, and infrastructure improvements have been spreading for several years." Some of the larger and more stable economies in Eastern Europe help mitigate the political risk of investing in Russia right now, Mr. Oberbannscheidt says, noting that the country's presidential elections are coming up.

Labels: European Economy

EU sets record energy deficit with Russia

The European Union last year recorded a trade deficit of nearly € 70 billion with Russia owning to large energy bill, the EU’s statistical arm Eurostat said. Accounting for over 6 percent of EU exports and 10 percent of EU imports, Russia became the third largest trading partner of the 27-nation bloc last year, trailing worldwide after the U.S. and China.

The increased deficit was primarily due to an increase in the deficit for energy, only partially offset by an increase in the surplus for machinery and vehicles.

Labels: Energy, EU, European Economy

At last, German self-discipline is paying off - as the Spanish fiesta ends - by Hamish McRae

The tortoise is catching up with the hare. The continental European economy as a whole is growing strongly at last, with Germany in particular experiencing its fastest growth since 2000. Yet Spain, until recently the fastest-growing of the large European economies, is now falling back, and its property market is in serious trouble. What's up?

The message for Germany is that five years of cold turkey has worked. While it is not likely to become an especially vibrant economy for all sorts of reasons, including demography, it has offset the disadvantage of going into the eurozone at too high an exchange rate and having to experience too high interest rates. What about Spain? There, the reverse has happened. It went into the eurozone with an undervalued currency and, in contrast to the German experience, that has been compounded by a long period of negative real interest rates. When money cheap, people tend to borrow it. When they have borrowed it they tend to buy something with it. That, plus an influx of buyers from other European countries, including Britain, has led to an extraordinary property boom. Spain, with a population of 40 million, is building more homes than France, Germany and Italy put together, and their combined population is 201 million.But now the property boom there is coming to an end with rising eurozone interest rates.

Meanwhile there is a certain biblical morality about the way the single currency has affected the different economies. The wise and prudent Germans are being rewarded and the more profligate Spaniards punished. It is more fun, of course, to be in Spain, but the eurozone is not about fun, and the Spanish party is drawing to a close.

Labels: European Economy, Germany, Spain

IMF'S Europe director forecasts strong growth for the continent

Europe's economy is set for robust growth this year and next, the director of the International Monetary Fund's European department said Saturday.

Michael Deppler said structural reforms that have been implemented in European countries may help the European economy surprise analysts on the upside. "I think that people underestimate the extent that reforms have paid off," he said at the IMF's spring meeting.

Labels: European Economy

Germany Re-emerges As Europe's Economic Locomotive

Germany's economy has steamed into 2007 with the release of a slew of better-than-expected data underscoring the country's re-emergence as Europe's economic locomotive. Coming in the wake of stronger-than-forecast production, industrial orders and jobless figures, Germany's statistics office said Tuesday that exports from Europe's biggest economy jumped by 1.9 per cent month-on-month in February to produce an annual rise of 10.9 per cent.

"Everything suggests we should be in for a good 2007," said Guillaume Menuet, European economist with Merrill Lynch.

Labels: EU, European Economy, Germany

Europe rising

European stock market capitalization totaled $15.72 trillion compared with $15.64 trillion for the U.S. The Financial Times attributed this to the euro's strength against the dollar and the faster growth and better market performance across the pond, particularly in Eastern Europe. (It's probably also due to the private equity boom in the U.S., which has resulted in a record number of U.S. companies exiting the public stock market.)

Lest Americans obsess about this apparent evidence of the loss of U.S. primacy in commerce, know there's a caveat. The "Europe" referred to in the Financial Times stretches from the Atlantic to the Pacific and from the Arctic Ocean to the Mediterranean. It includes Russia and Turkey, two dozen stock markets in all.

Labels: EU, European Economy, Stock Market, USA

EU added 3 million new jobs last year as economy sped up

BRUSSELS, Belgium: The European Union economy added nearly 3 million new jobs last year, the EU statistics agency Eurostat said Wednesday — the highest number of new jobs created in any year since 2000 — as Europe picked up speed after several years of slow growth. The EU executive, the European Commission, said the figures, recording 2.9 million new jobs, were "the best for a long time." The 12 countries that used the euro currency last year added 1.9 million new jobs, the highest number since 2001, Eurostat said.

According to the most recent EU estimates, the EU economy grew 2.9 percent last year with domestic demand driving the upswing as Europe also profited from strong exports to the rest of the world.

Labels: European Economy