The eurozone will remain mired in recession in 2013 and leading nations such as France and Spain will miss debt-cutting targets, the European commission has admitted, backtracking on forecasts that the 17- country bloc will grow this year.
The European Union's executive body blamed a lack of bank lending to households and businesses, and record joblessness, for delaying the recovery. Unemployment in the eurozone is set to peak at 12% in 2013, or more than 19 million people, it said. Greece and Spain will be the worst-hit countries, with jobless rates of 27% this year.
The estimate highlights the widening chasm between Germany and France, the two largest eurozone economies, amid warnings this week that France is drifting closer to the bloc's periphery than its main economic rival. The commission predicts that Germany will grow by 0.5% this year, while France is expected to eke out just 0.1% growth. Joblessness among the French is expected to hit 10.7%, compared with 5.7% in Germany.
A senior ally of German chancellor Angela Merkel accused France of being a "problem child" in the eurozone. Michael Fuchs told German radio the French needed to save, implement economic reforms and work longer hours. "Other countries have done their homework a lot more intensively, for example Spain and Italy … but the French believed they could escape this," he said.
Marco Buti, the commission's director general for economic and financial affairs, said unemployment remained unacceptably high. This had grave social consequences, he said, and could weigh on growth in the future if it becomes entrenched. The figures also have consequences for the UK because the eurozone is the economy's largest trading partner and is the fulcrum of hopes for an export-led recovery in Britain's finances.
The commission said the threat of a breakup of the eurozone had receded and financial market conditions had improved substantially, but the impact had not yet fed through into the real economy. As a result, it said the 17 eurozone economies would contract by 0.3% in 2013 rather than grow by 0.1%, as previously predicted.
2 comments:
On 14 February, the Eurozone crisis live blog said: Germany drives region deeper into recession - even the robust German economy contracted
On 21 February, the Eurozone crisis live blog said: French economy worsens as Germany powers ahead
Over the course of one week, you could pick and choose between two articles, one claiming Germany was doing poorly, another claiming Germany was in great shape. I guess the editors don't know much more than you and I, but have a job to do and web pages to fill.
The productivity increases that have been gained from the 1980's onwards were creamed off by a very few people, they used this increased capital to speculate, causing an asset bubble and real estate bubble, precipitating the depression. So, what, do you suggest, would be different this time?
Post a Comment