What a difference three months make: in Eurozone matters, not much, actually. Although the latest Eurostat data have seen core euro economies slightly tumbling, with Germany pulling up its GDP by a mere 0.1 percent while France’s was -0.2 percent, the general tone–also of -0.2 percent–for the whole region brought little shock.
The first quarter of the current year has left the common currency area reeling, to be sure, but it does so amid a debate about the blessings of austerity as the main pro-recovery policy from Brussels and the way it is being implemented in some peripheral economies. The scenery is a changing one, rather than purely volatile or pessimistic. Berlin and Brussels are learning the hard way that there are sectors of the southern European economies in need of a financial cushion, which in turn would make easier to act tougher against waste and inefficiency, particularly in public budgets.
The Barings Asset Management survey to find out about the agenda of financial intermediaries in the City sends the European Commission a message worth reflecting on. Up to 71 percent of professionals worry that the Eurozone seems unable to return to growth, “one of the biggest macro-economic challenges to investment over the next six months.” 60 percent are concerned about the capacity of over-leveraged economies to cut government debt, five percentage points more than in December, 2012
“Considering the recent turmoil in the Eurozone, it is unsurprising that intermediaries are concerned about overall global economic health,” Rod Aldridge of Barings explains, “Leaving aside Cyprus, the macroeconomic picture does remain tough, albeit marginally less tough than it was in the Autumn.”
Wealth management advisor Towry said today its British clients fear what may happen to the Eurozone. Andrew Wilson, head of investment, thinks that “with France entering its second recession in four years, along with the recent troubles for the likes of Cyprus and Italy, the date that an electorate chooses to leave the Eurozone is being brought ever closer, for better or for worse… There remains much political will behind keeping the Eurozone together, but there will be much more pain to come with other countries requiring write-downs on its debt.”
The trouble is that it isn’t the first time this is said, and it will not be the last, either. The Eurozone must live up to what Europeans expect from it: a rational plan to create jobs, strengthen welfare services and free the private initiative from bureaucratic burdens.