Opinion | Editorials

European economies show mixed trends

There is a need for caution – there are still worrying spots across the Eurozone and the European Union

  • by Gulf News
  • Published: 20:00 August 24, 2013
  • Gulf News

Analysts and bondholders are poring over the latest economic data from the European Union — and they like what they see.

While there are lingering issues and poor performance from the Mediterranean economies of Italy, Spain and Greece, there are continued positive signs from the powerhouse economies of Germany and Britain.

According to the latest data released by government officials in Berlin and London, both respective national economics enjoyed strong growth during the second quarter, reflecting better public finances, increased production and sales, better export statistics and positive consumer sentiment. According to the data, consumer sentiment is at its highest point in two years: Workers who had feared for their jobs in the fallout of the economic and financial crisis of late 2008 now feel confident that they will have work. And they’re now willing to borrow and spend on big ticket items such as household improvements, expensive electronic and consumer goods and on new vehicles. That in return means more goods being produced to replace those flying off the shelves in Germany and Britain.

But there is a need for caution — there are still worrying spots across the Eurozone and the European Union. In the Netherlands, economic activity remains stalled, failing to float on the growth waves that have buoyed the economy of Germany.

And Greece remains a basket case. Strong intervention by European regulators, the European Central Bank and the International Monetary Fund, coupled with two bailout cheques so far, still have failed to put Athens on a course for growth. Its public finances are a mess and its people have a distinct dislike for the harsh economic medicine needed to cure their long-term fiscal woes.

In Germany, Chancellor Angela Merkel heads into federal polls in early September riding a wave of conservative popularity — her tough talk and astute economic management of the crisis have made her the maiden of Europe. The latest data shows the light at the end of the tunnel isn’t another train set to derail Europe’s economy.

Gulf News