Where Is The Eurozone Economy Heading?

Published on 24/02/2012 in Your Spanish Home

With passing time the Greek situation is on the verge of being resolved and as of today 20th February the eurozone finance ministers will hold another meeting where they are expected to agree to the 130bn euro bailout to Greece.

Although reaching an agreement has certainly not been an easy one and even though we had Valentine’s day falling in between love was not in the air with Germany and Greece, instead at one stage the idea of allowing Greece to default was gaining momentum and with the elections scheduled for April the big question was, would a change of government renege on the deal.

So aside from Greece where is the eurozone economy going?

Are we slowly moving towards a recession particularly as eurozone GDP contracted by .3% between Q3 and Q4 with Spain, Italy and even Germany recording negative growth during this period, yet France recording a growth of .2%.

The big question still to be answered is how to stimulate growth and reduce unemployment and the road is a long one here with a bumpy run to come. Fortunately the currency market has not been too concerned during the last couple of weeks as the euro to the % has held between the range of 1.19 to 1.206.

Euro economyIn the UK the number of unemployed is causing further concern as the number reaches a 17 year high and now stands at 2.67 million or 8.4%, I suspect we will see this figure creep higher so Mr Osbourne’ s budget of the 21st March is going to be a very interesting one .

On a positive note however retail sales looked rosier and made a solid start to the year growing by .9% in January with small retailers coming out on top although online shopping is causing some raised eyebrows particularly as this increases and impacts upon unemployment.

Above all its the US that is on a roll as US politicians reached an agreement on extending existing payroll tax cuts and unemployment benefits until the end of 2012 and with prices slowing then the consumer finally has a little bit of relief.

With unemployment at a 4 year low and furthermore it seems new home starts(building) has seen an increase as prices appear to have reached the bottom of the pit and demand has started to increase, link this to improved manufacturing numbers then the future appears brighter. We have also seen Wall Street reach a 4 year high so people are starting to feel more confident about the future.

China is watching very closely as they want to ensure demand from the states remains strong as failure will hurt the Asian economies.

Written by: Steve Tiley (Moneycorp)

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For more information about how Moneycorp can save you money when sending money abroad, please visit the dedicated Eye on Spain/ Moneycorp website.

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david munster said:
29 February 2012 @ 00:52

I thought Moneycorp were experts but having read that blog I have had to do a rapid reappraisal. The Greek tragedy has just been given a postponement to allow more time for Angela and Co to prepare. The shit will hit the fan later this year. (I don't work for Moneycorp so don't claim to be an professional but we'll see who is right soon enough

James Atkinson said:
25 February 2012 @ 12:40

Mike is quite right. The situation in Greece is far from resolved. Their is an election coming up in April, and early indications are that the far right and left will do well. Not surprising in hard times that's a typical reaction, as in the 1930's. None of the new parties are signed up to the deal with Germany/France- why would they be. No greek without a job or hope would vote for them. No wonder the germans like Schauble don't want to see an election. The time gained by the deal, short though it will be is partly to allow the european banks to remove as much bad greek debt from their books before the ship finally sinks.

mike in Spain said:
25 February 2012 @ 09:41

The Euro needs to be dissolved, several countries with different economies cannot operate the same currency in this way and the politicians have been told this since they started talking about the Euro but not listened. All that is happening is these politicians are making most people suffer for the sake of their pride, they are all right jack as they are earning a fortune compaired to the general citizen. The Euro will never work properly, we need to break it up now and start to let countries get back onto the road of recovery in their own way.

midasgold said:
25 February 2012 @ 09:13

Steve - you say the Greek situation is being resolved. You must be with our politicians in fairyland. Greece is a dead loss and the sooner
these guys get some 8alls and admit that the only way out is to re introduce the Drachma the sooner this situation will be solved.

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