France, Spain, Germany and Italy helped by lower inflation and prospect of interest rate cuts
The eurozone has bounced back from its shallow technical recession after a stronger than expected performance by its “big four” economies in the first three months of 2024.
After two successive quarters of 0.1% contraction in the second half of 2023, the 20 nations that use the single currency posted growth of 0.3% between January and March.
Continue reading...Single currency zone’s stagnating GDP figure will add to pressure for ECB interest rate cut
The 20-nation eurozone has narrowly avoided recession after the region’s economy flatlined at the end of 2023, official figures show.
Zero growth in the single currency zone in the final quarter of last year followed a 0.1% economic contraction in the third quarter meaning that recession – defined as two consecutive quarters of contraction – was just averted. Economists polled by Reuters had expected the eurozone’s economy to shrink by 0.1% in the fourth quarter.
Continue reading...December data comes amid speculation over when European Central Bank will cut interest rates
Inflation across the eurozone rose in December after an increase in energy costs, reversing six months of consecutive falls and easing the pressure on the European Central Bank (ECB) to cut interest rates.
Figures from the EU statistical agency Eurostat showed consumer prices across the 20-country bloc rose at an annual rate of 2.9% last month, up from 2.4% in November. Economists polled by Reuters had forecast a slightly higher reading of 3% for December.
Continue reading...Exclusive: ‘Cushion’ for carmakers facing looming tariff under deal for vehicles traded between EU and UK from start of 2024
The European Commission has hatched confidential Plan B proposals to “cushion” the impact of a looming 10% tariff on imports and exports of electric vehicles, the Guardian has learned.
The proposal was presented to member states on Monday in response to pressure from carmakers to amend some of the conditions imposed when the UK left the EU in January 2021.
Continue reading...Rising interest rates have boosted profitability but are likely to limit demand and increase risk of bad debts, says central bank
The balance sheets of eurozone banks are showing “early signs of stress” after a rise in loan defaults and late payments by customers, the European Central Bank has warned.
Higher interest rates have boosted banks’ income and profits for the time being, the ECB said, but lenders are facing pressures from higher funding costs, worsening asset quality and lower lending volumes.
Continue reading...Respondents to survey for El País and SER also saw inflation as a bigger global threat than wars, energy, terrorism and climate change
22.6% of Spaniards have experienced “anxiety or depression” due to the rise in the cost of living, according to a new opinion poll conducted for El País and SER.
A further 57.7% feel discouragement or pessimism due to inflation.
Continue reading...Ireland and Austria post biggest declines, while Germany contracts by 0.1% and France grows by 0.1%
The eurozone is teetering on the brink of a winter recession after the latest official figures showed its economy contracted by 0.1% in the third quarter of 2023.
In a worse than forecast performance, the 20-nation single currency zone has now failed to grow in three of the past four quarters, leaving its economy only 0.1% higher than it was a year earlier.
Continue reading...Fresh signs of weakness in Chinese economy and weak UK and eurozone data spook investors
Fears about the health of the global economy have intensified following downbeat news about service sector activity in China, the eurozone and the UK.
Share prices fell in Asia and the pound dropped to a 12-week low against the US dollar after fresh signs of weakness in China triggered speculation that its post-lockdown recovery was running out of steam.
Continue reading...Key data this week will offer a hint as to whether the eurozone’s powerhouse can shake off recent stagnation
Engine of the eurozone, industrial powerhouse, export world champion – just some of the ways Germany’s economy has been described over the years.
However, recent figures have indicated that the good times have come to an end, with Europe’s largest economy stuck in recession.
Continue reading...GDP shrank 0.1% in first quarter of 2023 and final three months of 2022 after revisions to earlier estimates
The eurozone slipped into recession in the first three months of the year, after official figures were revised to show the bloc’s economy shrank as the rising cost of living weighed on consumer spending.
Figures from Eurostat, the EU’s statistical agency, showed gross domestic product (GDP) fell by 0.1% in the first quarter of 2023 and the final three months of 2022 after revisions to earlier estimates. A technical recession is generally defined as two consecutive quarters of negative growth.
Continue reading...Comments by Christine Lagarde come after central bank raises interest rates for seventh time in succession
The president of the European Central Bank suggested companies were taking advantage of high inflation when raising prices, after the bank raised interest rates by a quarter of a percentage point to tackle the cost of living surge.
Christine Lagarde said wage pressures in the eurozone had strengthened, as workers try to recoup some of the purchasing power they have lost due to inflation, but hinted some firms were engaging in so-called greedflation.
Continue reading...Concerns half-point could set off domino effect across financial industry knocked by Credit Suisse crisis
The European Central Bank has raised interest rates across the eurozone by 0.5 percentage points, despite fears that higher borrowing costs could set off a domino effect across a banking sector already reeling from a collapse in confidence in Switzerland’s second largest lender, Credit Suisse.
Officials at the ECB, the central bank covering the 19-member euro bloc, said inflation was likely to remain high “for too long”, forcing it to continue with its planned run of rate increases.
Continue reading...Concerns that a big driver of price rises may be firms using inflation as excuse to increase profit margins
Fears that Europe’s companies are exploiting high inflation to increase their profit margins have prompted a warning from the European Central Bank that it is closely monitoring potential price gouging of consumers.
Policymakers have repeatedly called for wage restraint but concerns are mounting that a bigger driver of the wave of price rises may be companies using inflation as an excuse to increase profit margins, a trend unions have described as “greedflation”.
Continue reading...Study says global economy is in steepest slowdown after a post-recession recovery since 1970
The world may be edging toward a global recession as central banks simultaneously raise interest rates to combat persistent inflation, the World Bank has warned.
The three largest economies, – the US, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession”, the bank said in a study.
Continue reading...Those in Europe’s inflation hotspot remain calm about rising prices, but a lack of government intervention could fuel further increases – and discontent
Like his cappuccinos, Taniel Vaaderpass, 33, isn’t bitter. His usually profitable company, OA Coffee, one of Estonia’s biggest coffee bean roasting companies, may have posted a loss for the first time last year and is set to do so again this year, but Vaaderpass remains strikingly sanguine as he sits on the terrace of the cafe he also owns on a cobbled street in the old town of Tallinn.
The central causes of Vaaderpass’s misfortune is a 240% increase in the price of unroasted green coffee and a 20% surge in the cost of the gas he uses to roast his imported beans. He also felt the need to give his staff a 10% pay rise in January despite the lack of company profits.
Continue reading...Cost of living crisis comes as 19-member currency bloc beats growth forecasts in second quarter
Inflation in the eurozone reached a record high of 8.9% this month, closing the gap with the UK’s 9.4% rate.
Dearer energy was blamed for the lion’s share of the increase from 8.6% in June, as the fallout from the Russian invasion of Ukraine continues to hammer European economies.
Continue reading...Problems in the US, China and eurozone will result in first contraction since start of pandemic, report says
The International Monetary Fund has slashed its growth forecasts for the next 18 months after warning that the world’s three biggest economies are all stalling and inflation is higher than previously forecast.
In a downbeat update to its April world economic outlook (WEO), the IMF said problems in the US, China and the eurozone had resulted in global output falling in the second quarter of this year – the first contraction since the start of the Covid-19 pandemic.
Continue reading...Call for voluntary cut until March 2023 with binding reduction targets possible when Moscow ‘likely’ halts supplies
The European Union’s executive body has urged member states to slash their gas consumption by 15%, as it warned that a complete shutdown of Russian supplies was “likely”.
The EU has been scrambling to wean itself off Russian gas since the invasion of Ukraine, but is alarmed about a potential energy crisis this winter.
Continue reading...Body revises economic forecast and says outlook for EU and eurozone heavily dependent on course of war
Europe’s economy faces the twin blows of slower growth and higher inflation as it struggles to deal with the fallout from Russia’s invasion of Ukraine, the European Commission has warned.
In its summer forecast, the governing body in Brussels said the “protracted war” was sending shockwaves through the eurozone and the wider EU, leading to a marked slowdown in activity next year.
Continue reading...Christine Lagarde is failing to heed the lesson of last decade’s crisis: act quickly and act clearly
Perhaps the European Central Bank was feeling left out as the financial world turned its attention to the US Federal Reserve’s interest rate hike. But emergency meetings of major central banks are supposed to produce more substance than the weak offering that emerged from Frankfurt after a morning of contemplation: a plan to accelerate work on a “new anti-fragmentation instrument”.
The fragmentation in question is the widening of bond yields between eurozone countries. In short, as interest rate rises have come into view, weaker economies are having to pay meaningfully greater rates to borrow than the likes of Germany – about 2.4 percentage points more in the case of Italy.
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