It seems like years since we had some genuinely positive news about the eurozone’s economic outlook. So for many the news that the economy of the eurozone has grown by 0.4% in the first three months of the year was well over due. The official figures show that the recovery is beginning to speed up slightly, although many forecasters had been predicting a slightly larger rise than this.
The trend is encouraging though with this fastest quarter growth results for a couple of years. The growth is still slow but it’s looking sustainable and showing the possibility that it may increase.
There were other figures released before then which are of interest to eurozone economists. Germany’s economic growth was actually below the average at 0.3%, which represents a significant slow down from the previous 0.7% growth figure for the last quarter of 2014. The positive signs in the German economy in the areas of private consumption and investment in construction which both rose, were countered by a surprising fall in German exports.
Inflation in Germany is under control and is under the current ECB target of 2% or under. Most European countries have fairly well controlled inflation in fact the concerns are usually around the level being too low. An interesting economic documentary covered the risks of deflation, you can still catch the programme on the BBC iPlayer application although you’ll need to connect through a UK proxy to view it.
One of the bigger surprises was the long awaited improvement of the French recovery. The economy also hit a two year high for growth with it rising an impressive 0.6%. There are reports that confidence is returning to the economy with French consumer spending growing by 1.6%, although some of this will be due to the lower oil prices and the relatively weak euro rate. Industrial production levels are also on the rise, with a four year high being recorded.
Other countries are also fairing better with Italy also recording growth figures, for the first time in several years. Spain topped the Euro growth charts with a recorded 0.9% improvement in it’s economy, the fastest rate for eight years.
How much of this is a result of external factors like the fall in oil prices and the weak currency is difficult to tell. There is no doubt that there are several factors which are helping plus the increased level of fiscal stimulus from the European Central Bank. There is little doubt that the majority of this growth is being fuelled by domestic demand which would be similar to the initial recover in the UK economy too.
I’m not German so I can only imagine what they feel like, as one after another Eurozone countries are falling into huge pits of debt. Of course then comes the bail outs where the country in question comes cap in hand for money to bail out the mess that their economy has got into. We are seeing it in real time now with the Cyprus Government where of course the remedy is even tougher than normal by forcing Cypriots to bail out their banks.
It’s the next bit that always annoys me, the Anti German banners, placards with pictures of Angela Merkel sporting a Hitler style moustache. You’ll hear talk of bullying, of Germany imposing strict controls and trying to dominate smaller countries. Of course Germany invaded Greece many years ago but the German taxpayer would much rather not be involved with Greece’s problems at the moment.
The problem is that Germany has to help, but it shouldn’t be forgotten that these bailouts are partly funded by taxpayers in Germany. One by one the basket cases of Europe announce that they are about to go under, and expect loads of cash to solve their problems with no strings attached. It’s simply not going to happen, at least not until there is a central European taxation system.
The reality is that the reason the German economy is able to help is that it has practised for years the sort of austerity that is suddenly forced on these countries. Germans did not retire in their mids 40s on fat Government pensions like many Greek citizens did, and thus they are able to finance rescue plans using surpluses. The woes of the Eurozone were not inflicted on anyone by the Germans, although it has to be said they have benefited from a currency which is much more competitive than the German Mark would ever be in todays world.
If you look at German media and especially check in with some of the German TV stations that broadcast online you can see the growing resentment. Check out some of the main German TV station and you’ll see for yourself – you can look at them online, you just need to invest in a German proxy such as this – http://thenewproxies.com/german-proxy/ to access some of this content. This shields your real IP address to enable you to watch geo-restricted content using a German IP address instead.
You can see that patience is running thin with some of the abuse that Germany is getting whilst trying to help these economies survive. It’s not something we see when you’re outside the country particularly being bombarded with Anti-German companies.
It seems that for most countries in Europe having your own currency is a bit of an advantage. Poland has certainly benefited from maintaining a flexible exchange rate with the Zloty during the economic crisis. It’s an important factor to consider as the debate on whether to adopt the euro is happening right now.
Poland is the European Union’s largest Easter economy and critically the only member who have managed to stop their economy sinking into recession. There is no doubt that the ability to adapt and implement monetary policy helped the Polish Government sidestep the worst of the economic crash.
The Polish Government hoever did pledge to join the Euro when it joined the EU back in 2004, it is said is still keen to do so. However economists have estimated the effects of being in the Euro during the last five years and it’s a sobering report. The study suggests that the economy would have swung wildly between 6 percent reduction and nearly 10% growth during the last 5 years. Outside the Euro the Polish economy has grown consitently between 1 and 7% in total.
Poland still has it’s problems – unemployment is still around 15% and shows no signs of falling back. This is also despite the huge exodus of Polish workers to other EU countries. There are millions of Poles working abroad, a large proportion in the United Kingdom. This has led to a great demand for Polish goods and services in the UK ranging from food, drink and even a Polish proxy like this – http://www.proxyusa.com/polish-proxy-server so they can watch Polish TV over the internet. It’s a simple process which just involves changing your IP address by sitting behind a proxy server, you can see more here.
One things for sure, the stakes are high for the Euro and if a thriving economy like Poland stalls on joining the Eurozone then it will not look good. The Euro needs strong economies to reinforce the union and the currency alike but will the Polish people be keen on the risk it involves?