Morning briefing: Germany leads the way

Consumer confidence in the eurozone’s largest economy is at its highest level since the foundation of the single currency back in 2001. The positive news from Germany will be taken as further evidence that recovery in the currency block is under way.

In Spain, business confidence remains negative, but that should not obscure the fact that the index is at its highest level since 2007. The measurement figure is expected to be -4.8, having dropped to -38 at the beginning of the crisis back in 2008. The improvement towards positive territory has been evident for some months, highlighting the upswing in sentiment across the Spanish economy.

Yet the picture of rejuvenation is far from complete. Figures from France due later this morning are expected to show GDP growth figure of just 0.1-0.2% year on year. Such a low level of growth is insufficient to bring about an improvement in the country’s employment situation, with over 10% of the country’s population currently out of work. Yet some analysts believe the weak GDP figures may be somewhat misleading, with exports and private consumption performing strongly in the past number of months. France was granted a reprieve from the EU earlier this month when it was granted an extension by the EU allowing it more time to implement the reforms which would bring the deficit below 3% of GDP.

Spanish traders will be hoping to gain back some of the losses incurred yesterday, as the Ibex 35 lost almost 1% in the day’s trading. In more positive news for the Ibex, Morgan Stanley have stated that they expect Spanish banks to be some of the best performing in the eurozone in the years ahead. The assessment is based on the thorough cleaning of balance sheets undertaken by the banks and the continued improvement in the economic situation in Spain.

 

 

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