European Economy


Europe’s bog deepens

There was a hint from yesterday’s China PMI that the good news from global trade was looking very toppy. There was therefore a good chance that the powerhouse of Europe, German, was going to disappoint with its PMI number overnight, and it certainly managed that. April data indicated a decline in German private sector output,


Another week of fumbling in the Eurozone

Firstly to Italy where there is still no outcome of the election. To add to the trouble it is supposedly up to the President of Italy to sort out the political mess but his seven year appointment will end on May 15 and now the same broken parliament is supposed to vote on a new


Eurozone data stinks up again

The Cypriot drama is beginning to wane, but if you read the MoU you’ll understand that this story is far from over: The economic adjustment programme will address short- and medium-term financial, fiscal and structural challenges facing Cyprus. The key programme objectives are: to restore the soundness of the Cypriot banking sector by thoroughly restructuring, resolving


Pain across the Eurozone

Just a quick note to start. Italy still doesn’t have a government. Now moving on… Fitch are a bit late to the Cyprus party, but when they do bother to turn up it’s rarely with good news Fitch Ratings has taken rating actions on the three largest Cypriot banks following the agreement the Eurogroup reached


Cyprus joins Europe’s fools

So as I reported yesterday afternoon Cyprus has agreed on the pre-requisite for a €10bn Troika initiated bailout.  I thought I’d spend a bit of time today going over some of the finer details that have come out since then. Firstly the 8 points release in the statement by the EZ financial ministers: 1. Laiki


Cyprus saved!

Europe has released details of its new deal with Cyprus: The Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme. This agreement is supported by all euro area Member States as well as the three institutions. The Eurogroup fully supports the Cypriot people in


Cyprus undoes Eurozone progress

The Cyprus saga continues and, as I type, there is still no resolution in sight. Russia has reported there is no deal coming and talks between the Cypriot government and the IMF, which were believe to be going well as late as Saturday, appear to have stalled again. The EU seems even more resolved to


Europe deteriorates

The Cyprus show continued overnight with on going talks with Russia: Cyprus and Russia are discussing cooperation in the banking and energy sectors in addition to a loan, and any deal to solve the island’s debt crisis should also be in Moscow’s interests, the Cypriot finance minister said on Thursday. “There’s a lot of teams now working


Playing chicken with the Eurozone

So the Cypriot parliament voted firmly against the Eurozone/IMF rescue package with the incumbent party abstaining and the Opposition voting against it. In the end the package received no votes at all. There are now reports that the Cypriot banks will remain closed until the 26th of March while the ECB has said it is


Cyprus matters

So as I spoke about on Monday Cyprus is the latest country to receive a EU bailout. It’s been a while coming but Cyprus has been slowing going down the gurgler since joining the euro and the problems of its big sister, Greece , were always going to take out the country in the end.


Who pays in Cyprus?

Cross-posted from FTAlphaville. The “stability levy”/”bail-in” for depositors in Cypriot banks might not come to passin quite its original, burning-everyone-almost-equally form, thanks to the small matter of democratic politics. But let’s go with what we’ve got so far: the under-€100k deposits will be taxed 6.75 per cent, and over-€100k will lose 9.9 per cent. Out of the aggregate


Europe experiments on Cypriot depositors

It’s been a while coming, but Cyprus has finally joined the ranks of nations to receive a sovereign bailout. Over the weekend the Eurogroup met and approved a €10 billion package for Cyprus. This was significantly less than the original request and had come with some extremely controversial requirements including a partial bail-in of bank depositors. Russia


Europe is right to worry

I’ve stated many time over the last 2 years that I consider the current economic policies within the Eurozone to be delusional. As I covered back in December 2011, when I referred to them as Europe’s suicide pact, there were two reasons for this. Firstly, the entire premise of the fiscal compact and its associated


European recession grinds on

The latest Eurozone  manufacturing PMI data came out on Friday night and the story is much the same that we have seen over the last year. Final Eurozone Manufacturing PMI unchanged at 47.9 in February (flash: 47.8) Germany stabilises but downturns seen in all other nations bar Ireland Upswing in new exports–especially for German goods


Italy hides Europe’s worsening data

The fact that the world’s attention is currently fixated on the goings on in Rome may not be such a bad thing for the Eurozone because the news from everywhere else certainly isn’t getting any better. I posted earlier in the week that Portugal has already revised down its economic target for this year, but


Italy rejects Berlin

And so, as I pondered mid-last year, democracy returns to Italy and brings with a new round of political instability. While the rest of Europe hoped Italy would swallow the bitter bill of austerity by voting in Bersani coupled with Mario Monti, the Italians themselves have had other ideas. It appears there has been a


Austerity poster child slides further

As the world waits for a definitive outcome to the Italian election in wishful hope of swift and positive transition back from technocracy, the news from the rest of Europe’s periphery continues to worsen. Overnight the Greek central bank reported that non-performing loans rose to 22.5% at the end of September 2012, up from 16%


Europe waits for Italy

Back in July 2012 I posted on the potential for renewed European economic instability due to the 2013 Italian election outcome. The election is occurring as I type and I must admit that the parallels to last year’s Greek election are quite easy to draw, and it isn’t just the country’s economic situation that makes that


France leads European PMIs lower

European Flash PMIs for February were out last night and the news wasn’t great with most measures rolling over from January’s spike: Flash Eurozone PMI Composite Output Index (1) at 47.3 (48.6 in January). Two-month low. ƒFlash Eurozone Services PMI Activity Index (2) at 47.3 (48.6 in January). Three-month low. ƒFlash Eurozone Manufacturing PMI (3) at 47.8 (47.9 in January). Two-month


Draghi holds

Another EU summit begins with national leaders and the EU parliament at loggerheads over the EU budget, and a long night expected: EU leaders face tough late-night negotiations on the bloc’s 2014-20 budget Thursday under the watchful eye of a newly assertive European parliament unhappy at the prospect of major spending cuts. In November, leaders


Europe’s imbalances widen

While the latest European PMI is showing some improvement it has become apparent that imbalances are growing ever-greater in the zone: Germany – output grew at the fastest rate for just over a year- and-a-half – contrasting with ongoing downturns in France, Italy and Spain. Output in France fell at the steepest rate of these four


Spain re-enters the market’s head

The Spanish political crisis continues to evolve and is now threatening the country’s political stability: Spain’s opposition Socialist Party called yesterday for the resignation of the Prime Minister, Mariano Rajoy, over a corruption scandal as a poll showed the lowest support on record for his centre-right People’s Party (PP). Media reports over the past two weeks


European PMI’s less pungent

Eurozone Manufacturing PMI was out on Friday night and the news was a little better than expected. Final Eurozone Manufacturing PMI at 11-month high of 47.9 (flash: 47.5, December: 46.1) Output rises in Germany, the Netherlands and Ireland, but downturn deepens in France Price pressures remain subdued, as cost inflation eases and output prices fall


Spain heads for crisis

The Spanish scandal that I mentioned earlier in the week continues to slowly blossom into a political crisis. The Spanish newspaper, El Pais, has published evidence  that between 1990 and 2009 members of Rajoy’s ruling party ran special accounts in order to hide payments from business people and make payments to party members. Many members, including Mariano


Spain bucks the happiness trend

Market and real economic divergence continues apace in the European periphery and, much like Italy, Spain is again showing worrying signs that further fiscal tightening is creating far more severe negative consequences than “expected”. The deterioration in the economy is once again leading to a re-assessment of targets: European Union budget enforcer Olli Rehn signaled